Hadid v Lenfest Communications Inc

1. The application be dismissed.
2. The cross-claim of the first and second respondents be dismissed. 3. The applicant pay the costs of the proceeding, other than the costs of the cross-claim of the first and second respondents, of the first, second, third, fourth and sixth respondents.
3. The first and second respondents pay the applicant's costs of the cross-claim.
4. Orders 3 and 4 not be entered before 15 February 2000.
5. The parties have liberty to apply on 5 days' notice. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules

1. Nature of proceedings 1
2. Background 3 (a) Statutory framework: "cascading" bids 3 (b) Successive failures: ultimate cascades to New World and UCOM Australia 8 (c) UCOM: principal members of the team 8
3. Narrative 11 (a) Introduction of Bain and Nomura 12 (b) Lenfest introduced; deposits paid 14 (i) First conversation between Mr Hadid and Mr Lenfest, 28 August 1993, about 4.00 am 15 (ii) "Free carry" 19 (iii) Exchange of correspondence following first conversation 20 (iv) Ms O'Connor speaks to Mr Lenfest: morning, Saturday, 28 August 1993 21 (v) Second conversation between Mr Hadid and Mr Lenfest, early morning 29 August 1993: substantial agreement reached 21 (vi) "Operating company" 25 (vii) Agreement reduced to writing 25 (viii) Payment of deposit 28 (c) Dealings between LCI and Mr Hadid up to the first LCI visit; "solicitation agreement" 29 (d) 30 August to 3 September 1993: UCOM and Bain 33 (e) First LCI visit: 4 to 8 September 1993 38 (f) Bain: meeting of 10 September 1993 and beyond 45 (g) Visit to the United States; troubles with the ABA 54 (i) Funding the licences 55 (ii) TPL 56 (iii) Time Warner 57 (h) Second LCI visit: 28 September to 8 October 1993 59 (i) Further involvement of Bain during and following second LCI visit 63 (j) UCOM/LCI: period between second LCI visit and subsequent visit by Mr Plant: 8 to 20 October 1993 70 (k) Mr Plant's visit: 21 to 27 October 1993 74 (i) Mr Plant's meetings; his advice to Mr Heller 74 (ii) Further dealings between Mr Hadid and Dr Burt 82 (iii) First suggestion of Project Midsummer 84 (l) LCI and UCOM: events surrounding and following disclosure of Project Midsummer proposal to Mr Plant 85 (i) The TPL suggestion 85 (ii) Proposal and counter‑proposal 87 (iii) Banking arrangements: negotiation of facility 91 (iv) Dr Burt and Mr Hadid: TPL's role 91 (m) Project Midsummer: the St Louis meetings 92 (n) "Action Plan" of 4 November 1993 98 (o) Activity preceding the third visit by Mr Heller 101 (i) Ms Combs' intervention 101 (ii) TPL retainer terminated 103 (iii) UCOM/LCI negotiations 103 (iv) UCOM and Bain 106 (p) Mr Heller's third visit: 10 November 1993 to final negotiation 108 (i) UCOM and LCI 108 (ii) The Meridian interlude 117 (iii) Bain's activities: 10 to 14 November 120 (q) 15 and 16 November 1993: Regent Hotel negotiation 123 (r) 16 and 17 November 1993: negotiating the terms of the agreement 128 (s) The signing and its aftermath: shouting and slamming of doors? 136 (t) Mr Price's activities subsequent to St Louis meetings; final negotiation of agreement between LCI and Australis; agreement reached and announced 138 (u) Mr Hadid's reaction to the announcement: correspondence and conversations on and after 18 November 1993 141 (v) Licence A - Century 153 (w) Drama commissioning agency; commencement of proceedings 158
4. Mr Hadid's pleaded case 161 (a) Sources of obligations of LCI and Mr Lenfest 161 (i) Joint Venture Agreement 161 (ii) Solicitation Agreement 163 (b) Duties arising from (and from carrying out) the Joint Venture Agreement and the Solicitation Agreement 163 (c) Sources of obligations of Bain and Dr Burt 164 (d) Obligations of Bain and Dr Burt 165 (e) Project Midsummer and its consequences 166 (f) Representations 168 (i) Licence A 168 (ii) "The Representations" (lack of investor interest) 168 (iii) Alleged infringement of s 52 of the Trade Practices Act and s 42 of the Fair Trading Act 170 (g) Breach of particular duties pleaded 170 (h) Conspiracy to cheat and defraud 172 (i) Inducement to breach contract 172 (j) Corporations Law breaches 173 (k) Contumelious disregard; relief claimed 174
5. Defences and cross‑claims against Mr Hadid 174 (a) LCI and Mr Lenfest 175 (b) Bain and Dr Burt 176 (c) Australis and Mr Price 178 (d) Cross‑claims between respondents 178
6. Credit 179 (a) Witnesses for Mr Hadid 182 (i) Mr Hadid 182 (A) Nomura, New York 183 (B) Alan Elkhatib 188 (C) Response to Bain's letter of 13 October 1993 195 (D) Free carried interest 204 (E) Conclusion 220 (ii) Dr Gadir 221 (iii) Mr Egan 221 (iv) Mr Noah 228 (v) Mr Cooper 232 (vi) Other witnesses called by Mr Hadid 239 (vii) Response to attacks on credit of Mr Hadid and witnesses called by him 239 (b) LCI witnesses 240 (i) Mr Lenfest 240 (A) MDS 240 (B) The "underwriting" representation 243 (C) Drama commissioning agency 251 (D) "Miscellaneous" matters 260 (E) Conclusion as to Mr Lenfest 269 (ii) Mr Heller 269 (A) The Meridian option 269 (B) Other matters relating to Mr Heller 271 (C) Conclusion as to Mr Heller 280 (iii) Mr Plant 280 (iv) Witnesses called by Bain, Dr Burt and Mr Price; "missing witnesses" 283
7. "Joint Venture Agreement" and "Solicitation Agreement": terms, express and implied; fiduciary obligations; duty of skill and care? 284 (a) Was there a "solicitation agreement"? 285 (b) Express oral terms of agreement of 29 August 1993 299 (c) Implied terms? 306 (d) Fiduciary duties; duty of skill and care? 308
8. Bain and Dr Burt: contract; fiduciary obligation; duty of care 316 (a) Contract 316 (b) Other duties 319 (i) Provision of information to Bain 320 (ii) Bain and Dr Burt as advisers 326
9. An interpolation: credit of Dr Burt 346 (a) The Meridian option 346 (b) The drama commissioning agency; Regent Hotel negotiations 346 (c) Miscellaneous matters 349 (d) The "deception" of Ms Combs 364 (e) Conclusion 368
10. The licence A representations 368
11. Project Midsummer - discussion and findings 373
12. Events following St Louis: discussion and some conclusions 389
13. Representations as to Australis; as to whether other parties interested in acquiring or investing in licence B; as to LCI having to "go it alone" 398 (a) The events of 10 and 11 November 1993 399 (b) The alleged statements made on 15 and 16 November 1993 417
14. Failure to disclose Project Midsummer or possible Australis transaction: misleading or deceptive conduct, or other breach of duty? 426 (a) Principal and derivative liability 426 (b) The positions of Bain and Dr Burt; LCI and Mr Lenfest 428 (c) Misleading or deceptive conduct, or other breach of duty? 436 (d) Pleading of contravening conduct 447
15. Conclusion as to claims based on Trade Practices Act and Fair Trading Act 449
16. Conclusion as to claims of breach of fiduciary obligation, and participation in it; breach of contract and inducement of it; and negligence 450
17. Conclusions as to conspiracy claim 450
18. Corporations Law claims 452 (a) Section 1000 452 (b) Section 995453 (c) Sections 849 and 851 455
19. Overall result of findings; some comments on the evidence 464
20. Defences 470 (a) Documentary releases 470 (b) Alleged oral release of Bain and Dr Burt 473 (c) Acquiescence 482 (d) Estoppel 484 (e) Want of parties 484
21. Damages 485
22. Cross‑Claim by LCI and Mr Lenfest 501
23. Conclusion 502

1. Nature of proceedings 1 The applicant, Albert Hadid (Mr Hadid), claims damages (including exemplary damages) from five of the six respondents: the first respondent, Lenfest Communications Inc (LCI), a United States corporation based near Philadelphia, a substantial part of the business of which is the provision of subscription television services (pay TV), by cable, in south‑eastern Pennsylvania; the second respondent, Harold Fitzgerald Lenfest (known usually as Gerry Lenfest) (Mr Lenfest), the chairman, president and chief executive officer of LCI; the third respondent, Bain Capital Markets Limited (Bain) which was, at the time of the events with which this judgment is concerned, a substantial Australian stockbroker and underwriter, wholly owned by Deutsche Bank AG; the fourth respondent, Wayne Leonard Burt (Dr Burt), at the time of those events a director of the Corporate Services Division of Bain; and the sixth respondent, Rodney Price (Mr Price), who was chairman of the fifth respondent, Australis Media Limited (Australis). While the trial was in progress, an order was made, in other proceedings, that Australis be wound up; no leave was sought under s 471B of the Corporations Law, with the result that the applicant (and, for that matter, the other respondents) could no longer proceed against Australis and no remedy is now sought against it. 2 The final formulation of Mr Hadid's case appears in a second further amended statement of claim, filed by leave on 16 July 1998. Where I use the expression "the statement of claim", that is the document to which I refer. Mr Hadid bases his claims for relief on causes of action which include breach of contract, breach of various alleged fiduciary obligations, negligence, deceit, conduct infringing s 52 of the Trade Practices Act 1974 (Cth) and s 42 of the Fair Trading Act 1987 (NSW), breaches of various provisions of the Corporations Law and conspiracy to cheat and defraud. Mr Hadid also alleges that each of the respondents (a word which I use, and will continue to use, to refer to the "live" respondents, that is all of them other than Australis) are liable as accessories in respect of breaches of various duties on the part of other respondents. Thus there are, for example, allegations of inducement to breach contract, knowing assistance or participation in breaches of fiduciary duties and involvement, of the kind defined in s 75B of the Trade Practices Act and s 61 of the Fair Trading Act, in infringements of those Acts. 3 The claims arise from events following the conditional allocation, on 25 August 1993, of the right to acquire two licences each of which would entitle its holder to provide pay TV services, by satellite, through four channels. Both were conditionally allocated to companies controlled by Mr Hadid: one, known as the "A" licence, was allocated to Focus Telecommunications Pty Ltd, which shortly afterwards changed its name to UCOM Australia Pty Ltd (I shall refer to it as "UCOM Australia"); the other, licence "B", was allocated to New World Telecommunications Pty Ltd (New World). UCOM Australia and New World were two of a group of associated companies having substantially the same shareholders and directors, all, in practical terms, controlled by Mr Hadid. I shall use the expression "UCOM group" to refer to that group of companies and the expression "UCOM" to refer generically to companies within it - including, of course, UCOM Australia and New World.

(a) Statutory framework: "cascading" bids 4 The Broadcasting Services Act 1992 (Cth) provided, in Pt 7, for the allocation of licences for subscription television broadcasting. It dealt, first, with the allocation of satellite licences. There were initially to be three such licences, known as "A", "B" and "C" Licence C was to be allocated to a subsidiary of the Australian Broadcasting Corporation (s 93(2)) and was to provide two subscription television broadcasting services, that is, two channels. The Minister was to determine a price‑based allocation system for allocating licences A and B, each of which was to allow the provision of services over four channels. No other licences for the provision of broadcast television services by satellite were to be allocated before 1 July 1997 (s 96(3)). 5 Section 96 also provided for the allocation of licences for subscription television broadcasting by means other than satellite. There were two such means in contemplation. One was delivery by cable, as to which there were no temporal constraints on the allocation of licences. The other was known as MDS. That was a microwave transmission system: it had the advantage over satellite delivery that the technology was well tried and readily available and the equipment required (particularly at the receiving end) relatively cheap. It had the disadvantages that whereas a satellite transmitter might have a "footprint" including most of the populated parts of Australia, an MDS transmitter had an effective transmission radius of about 50 kilometres and that, because microwave transmissions travel in straight lines, a receiving antenna must have line of sight to the transmitter: there were thus obvious difficulties, for example, with hilly terrain, difficulties which required, if there were to be substantial coverage of metropolitan Sydney, a number of "repeat" transmitters. 6 The Broadcasting Services Act offered to the holders of the three satellite licences, if they established their services reasonably quickly, protection against competition from already established MDS broadcast services: licences for the provision of television broadcasting by a service dependent on an MDS system as its means of transmission were not to be allocated before services commenced under licence A, B or C, or 31 December 1994 if none of those services had then commenced: that was the combined effect of subss (3A) and (3B) of s 96. 7 Before considering in more detail the statutory process for allocating satellite broadcasting licences, it is necessary to note the distinction between broadcasting services and narrowcasting services. Narrowcasting services were those directed to special interest groups (for example ethnic communities) or particular locations, events or periods or otherwise having a limited appeal or limited reception: s 18. By 10 August 1993 Australis held licences to transmit over eleven of eighteen available MDS frequencies in Sydney, eleven of nineteen available MDS frequencies in Melbourne, two of nineteen in Canberra and one of nineteen in Adelaide. It was able to use those frequencies for narrowcasting transmissions; if it were to use them for broadcasting services it would require licences allocated under s 96 of the Broadcasting Services Act. 8 Thus, satellite licences A and B were available for allocation in circumstances where their holders would have an opportunity to commence broadcasting services no later than the commencement of competitive MDS services and well before any additional satellite licences were issued; and, although there were no restrictions on the allocation of cable licences, the evidence is that it was the common expectation that, because of practical considerations, the commencement of cable services would be delayed at least for several years. 9 The principal statutory distinction between licence A and licence B lay in "cross‑media" restrictions applicable exclusively to licence A. Broadly, the effect of those restrictions, in Div 3 of Pt 7 of the Broadcasting Services Act, was that a person in a position to exercise control of a large circulation newspaper, a commercial television licence or a telecommunications carrier was not to have "company interests" exceeding 2 per cent in, or to be in a position to exercise control of, licence A. There were foreign ownership restrictions applicable to both licences: a foreign person might not have "company interests" of more than 20 per cent in either licence, and aggregate company interests held by foreign persons might not exceed 35 per cent. Then there were cross‑ownership restrictions as between the two licences: a person in a position to exercise control of one might not have company interests exceeding 2 per cent in, or be in a position to exercise control of, the other. 10 On 19 January 1993 the Minister determined, under s 93(1) of the Broadcasting Services Act, a price‑based allocation system for allocating licences A and B. In broad terms it worked as follows. Applications for either licence were to be made by written tender. The Minister was to advertise nationally for tenders for both licences, stating when, where and in what manner tenders might be lodged. A tender might be for either of the licences or for both; if tendering for both, the applicant was to state its preferred choice of licence if it bid the highest price for each. A tender was to "contain" an application fee of $500, a statement of the price bid, a copy of the applicant's "industry plan" and a statement of the proposed ownership and control structure of the applicant company. In particular, an applicant was to provide information as to aspects of its ownership or control relevant to the restrictions on cross‑media interests and foreign control. Allocation, however, was to be strictly in accordance with price. Paragraph 8(1) of the determination was as follows: "8(1) The Secretary must give notice in writing to the applicant which bid the highest amount for licence A or licence B (the 'first applicant') that: (a) subject to the Trade Practices Commission's approval under subsection 93(7) of the Act; and (b) unless the ABA decides that subsection 98(2) of the Act applies to the applicant; that applicant will be allotted the licence upon payment of the price bid." 11 I shall return to the role of the Trade Practices Commission and the Australian Broadcasting Authority (ABA). If, however, the applicant failed either of those hurdles, in effect the process began again: a notice under par 8(1) was to be given to the second highest bidder, and so on, if notified tenderers failed to obtain the Commission's approval or were subject to an unfavourable decision by the ABA. If the two hurdles were surmounted, the ABA was to notify the applicant that the licence would be allotted to it on payment of the amount bid; the applicant then had 30 days to pay that amount. If it did so, the licence was to be allocated to it; if it did not, then (par 8(8)) the whole process was to begin again, on the footing that the applicant which had failed to pay was "taken not to have lodged a tender." 12 Section 97 of the Broadcasting Services Act provided for the part to be played by the Trade Practices Commission. It was to provide, on request by the ABA, a report as to whether, in the Commission's opinion, if the allocation of the licence to the applicant were an acquisition by it of an asset, there would be an infringement of s 50 of the Trade Practices Act because the allocation would have the effect, or be likely to have the effect, of substantially lessening competition in a market and the allocation would not be authorised under s 88 of the Trade Practices Act if the applicant had applied for an authorisation. Under s 98 of the Broadcasting Services Act the ABA had power to decide that an applicant was not "suitable" as a licensee or applicant for a subscription television broadcasting licence. It might make such a decision if satisfied that allocating a licence to the applicant would lead to a significant risk of an offence against the Broadcasting Services Act or the regulations or a breach of conditions applicable to the licence. In making such a decision, the ABA was to take into account such matters as the business record, and record in situations requiring trust and candour, of the applicant and of each person who would, if the licence were allocated, be in a position to exercise control of the licence. 13 The system thus determined had the obvious consequence that the field of potential applicants was not limited to persons or corporations of considerable financial substance. If one were prepared to risk the loss of the cost of preparing a tender plus $500, one could bid on the basis that, if the bid were successful, there was a substantial period of time within which one might attract other investors capable of providing the funds necessary to pay for the licence and to meet the initial costs of establishing and operating a pay TV service. If the successful bidder were unsuccessful in that endeavour, then it lost only the amount initially at risk and the costs of seeking to attract investment. Potentially, also, actual allocation of the two licences might be delayed for a considerable period. A successful tenderer need not pay the price bid until 30 days following the ABA's notice following a favourable report by the Trade Practices Commission; the Commission had 45 days within which to report (s 93(7)) and that period commenced only on receipt of a request from the ABA which, no doubt, might in turn be delayed while the ABA itself gave some consideration to matters relating to suitability. One might well not know, therefore, for at least three months after the close of tenders whether the process might have to start again and, if the highest tenderers comprised a number of insubstantial companies which failed successively to attract the necessary investment, the period between tender and final allocation might be very considerable indeed. 14 That problem was compounded by an element of the allocation system which occurred to at least two groups of bidders. A single bidder, no doubt, could not itself lodge a series of tenders at successively lower prices: that was so because it if were (for example) to be the highest tenderer and accordingly received a provisional allocation, but ultimately did not pay the price bid, it would be "taken not to have lodged a tender." That consequence would not follow, however, if there were a series of bids lodged by separate companies in common ownership; and that course was adopted by two groups, one being a group known by the name "Hi Vision" and the other the UCOM group associated with Mr Hadid. That an aspiring tenderer might proceed in that way occurred to Mr Leo Grey, a barrister who was a member of the syndicate controlling the Hi Vision group. Mr Hadid's evidence was that he, virtually simultaneously and coincidentally, thought of it himself. Whether that is so or not does not particularly matter. There was a degree of association or cooperation between Hi Vision and UCOM. Its precise extent is not altogether clear from the evidence and does not matter. There was some sharing of facilities and of information; and, as will appear, when ultimately all the Hi Vision bids proved unsuccessful, persons formerly associated with Hi Vision assisted, and made information available to, UCOM. But it appears that their bids were prepared, and particularly their bid prices set, independently and that whatever association existed between them was insufficient to suggest to the ABA that, in circumstances where Hi Vision was the successful bidder for one licence and UCOM was the successful bidder for the other, an infringement of the cross‑ownership restrictions in the Broadcasting Services Act would result. 15 The Hi Vision group lodged, through separate companies, a total of seven bids. The five highest of those bids, ranging from $211,999,715 to $150,000,755, were for licence B; the other two, for $130,999,165 and $130,990,165, were for both licences. The UCOM group, through separate companies, lodged ten tenders. They ranged from $177,000,999 to $37,001,000. All the Hi Vision, and the four highest of the UCOM bids, were higher than any bids lodged by other tenderers. The result of the process established by the Minister's determination was, therefore, that on 30 April 1993 the first provisionally successful bidder for licence B was the highest bidder in the Hi Vision group and, for licence A, the highest of the UCOM tenders. Because neither group had the capacity to fund, from resources available to it, any of the prices which its various emanations had bid, ultimate success depended on attracting participation by other investors. Should it prove difficult to attract that participation, however, the potential for prolongation of the process was obvious. 16 That potential was mitigated, however, by an amendment of the Broadcasting Services Act which took effect on 14 May 1993, some two weeks after tenders closed. The amendment applied to any applicant given notice of provisional allocation after it took effect. Thus it did not apply to the initially successful Hi Vision and UCOM bids but, if those proved ultimately unsuccessful, it would apply to all the others. Its effect was to require the payment of a substantial deposit, 5 per cent of the price. Section 98A, inserted in the Broadcasting Services Act by the amendment, required that deposit to be paid within three business days after the day on which notice of provisional allocation was given. If the deposit was not paid, the bidder was taken not have lodged a tender and there was a "cascade" to the next highest bidder. Section 98B provided that the deposit would be repaid, with interest, if the Trade Practices Commission made an adverse report; but if the ABA decided the applicant was not suitable or if, within the time required, the applicant did not pay the bid price then the deposit was forfeited.

(b) Successive failures: ultimate cascades to New World and UCOM Australia 17 Between late April and late August 1993 both Hi Vision and UCOM made substantial efforts to attract investors, both in Australia and overseas. Hi Vision, in particular, employed among others Nomura Australia Limited (Nomura), a subsidiary of a large Japanese investment bank, and a New York investment bank, Wasserstein Perella & Co (Wasserstein Perella), which was associated with Nomura. Those efforts, however, were unsuccessful: after the initially successful bids failed, Hi Vision was unsuccessful in its attempts to raise the deposits payable in respect of its remaining bids and UCOM likewise, its first bid having failed, had been unsuccessful in its attempt to raise the deposits payable on subsequent bids. The result was a series of cascades until, on 25 August 1993, licence B was conditionally allocated to New World and the A to UCOM Australia: the price bid by New World was $117,001,000 and UCOM Australia had tendered $97,001,000. Each, if its bid was to remain alive, had to pay a deposit, equal to 5 per cent of its bid price, within three business days, that is by the close of business on the following Monday, 30 August 1993.

(c) UCOM: principal members of the team 18 The directors of both New World and UCOM Australia were Mr Hadid, Dr Simon Gadir (Dr Gadir) and Mr Stephen Joseph Blanks (Mr Blanks). Mr Hadid had graduated in computer science and pure mathematics. His business career had been concerned substantially with computers. He had been involved in the establishment of Osborne Computer Company and, in August 1993, was Chief Executive Officer of Complete Technology Pty Ltd (Complete Technology), a reseller of computer hardware and software which carried on its business from premises in Stanmore. He claimed to have had a long‑standing interest in film, television and video, which had begun with an involvement in making and presenting films at the University of Sydney. Dr Gadir had degrees from the Hebrew University in Jerusalem and a PhD from Macquarie University. He had worked on policy research and media analysis in the office of the Premier of Victoria and later had established his own marketing and research consultancy. In 1987 he became Manager, Corporate Development of Village Roadshow Corporation Limited. Before joining the UCOM group shortly before the lodgment of the tenders for licences A and B, he had been a shareholder in the Hi Vision group. Thus he had substantial experience generally in media and communications and he had a particular interest in pay TV. Mr Blanks was a solicitor, practising as principal of his own firm in Balmain. The main areas of his practice included intellectual property, trade practices and commercial litigation. 19 New World and UCOM Australia each had 100 issued shares. Of those, Mr Hadid held 84, Dr Gadir 10 and Mr Blanks 2. The remaining four shares were held by three others who played no significant part in the events with which this case is concerned. Mr Hadid thus had a controlling shareholding and the evidence establishes beyond doubt that he was the dominant and controlling force in the UCOM group. 20 Mr Robert Lynch (Mr Lynch) was employed by UCOM, apparently in a senior corporate secretarial role. His precise position does not, I think, appear in the evidence but it is clear that he occupied a position of some trust and responsibility; he took part in a number of the significant discussions with which the case is concerned and prepared, or played a part in preparing, some significant documents. He did not give evidence. Mr Frank O'Brien (Mr O'Brien) was engaged under a title described in a UCOM information memorandum dated July 1993 as Director of Technology. He also participated in a number of the significant discussions and some of the notes he made are in evidence. He was not, however, called to give oral evidence. Mr Danny Mackay (Mr Mackay) was engaged as Director of Programming. His expertise and experience lay in television programming and film distribution. His role in the relevant events was relatively insignificant; he did not give evidence. Mr Craig Ritchie (Mr Ritchie) had financial modelling skills and experience. He was engaged as a consultant to assist in the preparation of successive versions of financial models and projections for a pay TV business based on the licences. He took part in a number of relevant meetings and discussions; he did not give evidence. 21 Mr Albert Joseph Noah (Mr Noah) was involved in the Hi Vision syndicate; he was both a shareholder and a director. On 25 August 1993 - the day on which the conditional allocations were made to New World and UCOM Australia - it was evident that Hi Vision was finally excluded from the tendering process. Mr Noah had known Mr Hadid for about eight years. His earlier employment had included work in the design, installation and sale of computer systems and software. He had training and experience in financial modelling; his principal function with Hi Vision had to do with financial modelling and the preparation of business plans and he had been involved in some negotiations with potential investors. On 25 August he approached Mr Hadid seeking engagement as a contractor with the UCOM group on the footing that he could assist with information which had been acquired in the course of Hi Vision's activities. He played a substantial role from that time in financial modelling on behalf of UCOM and he was a significant participant in the events shortly to be described. Mr Noah gave evidence. Mr Ian Malcolm Wright (Mr Wright) (who gave evidence) was also a director of Hi Vision. He offered his services to UCOM on 25 August 1993. He also provided certain Hi Vision information to the UCOM group and had a significant involvement in later events. 22 Mr James Egan (Mr Egan) was a corporate consultant engaged by the UCOM group in about July 1993. He was Managing Director of a company called First Australia Capital Corporation Limited; it carried on business from an office in Bligh Street which was used a great deal in the course of the activity following 25 August and was frequently referred to in the evidence as the UCOM city office. In fact there was an agreement between UCOM and Mr Egan, constituted by a letter dated 13 July 1993, which provided for the use by UCOM of Mr Egan's premises, on a month by month basis and an initial brief to Mr Egan "to guide the preparation of an information memorandum for investors, and financial & corporate structures maximising advantage to UCOM, to the stage of completion of such documentation." The letter referred to the prospect of further assignments in the future. In fact, Mr Egan played a substantial part in the ensuing activities, attending many of the significant meetings which occurred between the end of August and late November 1993; he gave evidence, and was one of the relatively few witnesses able to refresh his recollection from contemporary notes which he had taken (there is nevertheless, as will appear, considerable controversy as to a number of aspects of his evidence). 23 Finally, Turnbull & Partners Limited (TPL) was appointed as financial adviser to the UCOM group. This appointment was made initially by an agreement dated 25 August 1993 between UCOM Pty Limited, acting on behalf of the companies in the UCOM group (including New World and UCOM Australia), Complete Technology and TPL. TPL was appointed sole financial adviser for the principal purposes of raising funding for licence A and finding a purchaser of licence B. TPL was to be paid a retainer of $10,000 per calendar month, to be offset against commissions of 3 per cent of funds raised through the sale of licence B and 4 per cent of the funding raised for licence A. The obligations of the UCOM group under the agreement were guaranteed by Complete Technology. TPL were merchant bankers. They had substantial media experience and connections. As will appear, their role changed somewhat as matters progressed. They played, however, a significant part in the events. Principally involved on behalf of TPL was Ms Cass O'Connor (Ms O'Connor); the Managing Director, Mr Malcom Turnbull (Mr Turnbull), was involved also. Neither gave evidence. 24 A number of other people may be described, loosely, as having had an involvement on the UCOM side. It is convenient, however, to introduce them later in the narrative.

Narrative 25 A narrative of the events following the provisional allocations on 25 August 1993 is necessary if the claims and cross‑claims in the pleadings are to be intelligibly discussed. Additionally, there are serious differences, a number of which at least will have to be resolved, in the evidence as to many of the significant events. Again, however, intelligible discussion of the detail requires, first, a narrative. 26 In very brief summary, Mr Lenfest provided the deposits required to maintain the bids for the two licences. He did so on terms negotiated over the weekend of 28 and 29 August 1993. Those terms, among other things, entitled LCI to an interest, on capitalisation, in the successful bidders. They also, according to Mr Hadid, gave rise to obligations, including fiduciary as well as contractual duties, on the parts of LCI and Mr Lenfest. 27 There followed attempts, involving both LCI and Mr Hadid (and his group) to attract investors in the licences, both in Australia and overseas. Bain (represented principally by Dr Burt) participated as (at least) a potential underwriter. The terms on which it did so imposed on it, according to Mr Hadid, contractual, tortious and fiduciary duties. 28 By early November 1993, the attempts to attract investors had not borne fruit. Dr Burt in late October conceived, and then put to LCI and Australis, a proposal whereby LCI would acquire all the shares in New World, would fund the amount payable on issue of licence B and would then transfer New World to Australis in exchange for the issue to LCI of Australis securities. 29 Ultimately, that proposal was in substance adopted and put into effect. As a result of negotiations between LCI and Mr Hadid, in which Dr Burt (on behalf of Bain) acted as "mediator", Mr Hadid and the other shareholders agreed to sell to LCI their shares in New World: that was the first, necessary step in implementing the proposal. Mr Hadid and the other shareholders did not know, and were not told, that further steps (particularly, steps involving Australis) might shortly follow. 30 Mr Hadid's claims are based on an assertion that, in the circumstances in which the sale of the New World shares came about, each respondent breached a number of duties owed to him and engaged in misleading or deceptive conduct. 31 It is now necessary to go in some detail to the evidence about those, and surrounding, events.

(a) Introduction of Bain and Nomura 32 Mr Rowan Scott Johnston (Mr Johnston) was in August 1993, like Dr Burt, a Director, Corporate Services, of Bain. He had been employed by Bain since late 1987. He gave evidence (which was not challenged and which I accept) that in May 1993 he had had a meeting with two officers of Nomura, Mr Andrew Price and Mr David Johns (Mr Johns). Andrew Price (as I shall describe him, to distinguish him from the sixth respondent, Mr Rodney Price) told Mr Johnston that Nomura and its United States associate, Wasserstein Perella, were working towards raising capital for Hi Vision; they had been unsuccessful to date; they inquired whether Bain might be interested in working with them. During a subsequent meeting, in late July, Andrew Price handed to Mr Johnston a bundle of documents apparently assembled by Wasserstein Perella in connection with its efforts on behalf of Hi Vision. It included 10 year financial projections prepared in June 1993 and an offering memorandum also dated June 1993. Mr Johnston knew Ms O'Connor of TPL, who had earlier been employed by Bain as a media analyst; she had left Bain in about 1992. Late in August 1993 - presumably on Thursday, 26 August - either Andrew Price or Ms O'Connor telephoned Mr Johnston and invited him to attend a meeting at TPL's office on Friday, 27 August. The meeting took place. Ms O'Connor was there; so were Mr Johnston and Dr Burt; so were Andrew Price and, probably, Mr Johns. Mr Hadid arrived about twenty minutes after the meeting began. 33 There is some dispute as to exactly what was said but the matters in dispute are by no means critical. Certainly there was discussion of the position that UCOM was in (it had to find substantial deposits within three days, over a weekend), of the situation generally in relation to pay TV (Dr Burt in a previous employment had assisted in a fund raising for the original shareholders of Australis) and of the prospect of an underwritten capital raising in which Bain might participate. There is a conflict of evidence as to whether Mr Hadid, immediately after the meeting and again on the telephone later in the day, asked Dr Burt whether he (or Bain) was prepared to act as an adviser to UCOM. Dr Burt says that Mr Hadid did so and that he, Dr Burt, refused, saying that Bain's interest was solely as a potential underwriter. Mr Hadid denies asking Dr Burt (or Bain) to act as an adviser. At all events, Ms O'Connor sent Mr Johnston and Dr Burt, by fax, shortly after the meeting a letter setting out what was described as a "brief time chart and strategy outline" for two alternative strategies for financing the licences. It is abundantly plain that no clear path forward had emerged from the meeting. The letter described strategies in very broad terms, one being to sell one of the licences for an amount sufficient to pay the deposit on the other and to provide "some payback to current bid holders and transaction costs." The other was to finance the deposits without first selling either licence. The letter indicated, without descending to detail, that negotiations were in progress with other parties in relation to both those strategies. It concluded: 'Rowan and Wayne, I understand this is brief and not very concrete. However, the process has been one in which there have been interested parties present, most of whom have spent a lot of time and money on potential involvement but all of whom need a catalyst. The most likely catalysts are the paid deposits, which is why we have been concentrating on Strategies 1 & 2 rather than post‑payment."

(b) Lenfest introduced; deposits paid 34 One of those who assisted UCOM in its attempts to raise funds was Ms Margaret Combs (Ms Combs). She was well known and respected in the United States cable television industry: she was a former president of the Cable Television Administration and Marketing Society and had been recently appointed as Chief Executive Officer of Americana Television Network Inc. The precise sequence of events is a little difficult to piece together from the evidence and, fortunately, does not greatly matter. Mr Hadid appears to have spoken to Ms Combs twice on 27 August. By coincidence, Ms Combs was telephoned the same day by Mr Donald Heller (Mr Heller). Mr Heller was Vice President of LCI. He telephoned Ms Combs for a purpose unconnected with pay TV in Australia. Ms Combs proceeded to ask whether LCI might be interested in an investment opportunity in Australia. Mr Heller's account was that Ms Combs told him: "… that there was a tendering process that had taken place that a small entrepreneur had gained the rights to satellite licences that were going to be offered in Australia. There were four channels allowed to be broadcast under each of the licences. They were designated A and B. She indicated to me that Time Warner and TCI were a bidder. She also indicated to me that TCI and Time Warner Comcast had bid together. She told me that she had spoken to Continental Cable. She also told me that Bain and Nomura had agreed to do an underwriting. She also told me that Turnbulls would be the financial adviser and that the deposits or that money was needed to be committed for deposits on the licence and that that is what they were looking for." 35 It should be interpolated that TCI (Tele‑Communications, Inc) was a very substantial United States cable TV company which in turn owned Liberty Media Corporation, the owner of 50 per cent of LCI (the other 50 per cent of LCI was owned by Mr Lenfest and his family). Continental and Comcast were also very substantial United States cable TV companies. 36 Mr Heller made a note of the conversation which substantially supports his recollection (though it does not specifically note that Nomura and Bain "had agreed to do an underwriting": the relevant entry is simply "Nimora [sic] & Banes & Co [sic] of Australia.") Mr Heller told Mr Lenfest what he had heard from Ms Combs. Mr Lenfest and Mr Heller then arranged a conference call to Ms Combs and spoke to her together. Mr Heller's evidence was that Ms Combs repeated substantially what she had earlier told him; Mr Lenfest's account was similar but added that Ms Combs informed them that there was an exciting opportunity for pay TV in Australia and that she knew Simon Gadir and Albert Hadid and had a very high opinion of them. At all events, Mr Lenfest encouraged Ms Combs to suggest that Mr Hadid "provide me with more information and give me a call." 37 That, apparently, is what Ms Combs proceeded to do. Mr Hadid faxed to Mr Lenfest, at 4:09 am, Sydney time, on Saturday, 28 August, a UCOM information memorandum, including financial projections for a single licence satellite pay TV business, prepared in July 1993. There followed a series of conversations of critical importance to the case.

(i) First conversation between Mr Hadid and Mr Lenfest, 28 August 1993, about 4.00 am 38 Mr Hadid telephoned Mr Lenfest shortly after sending him the information memorandum. The time was shortly after 4.00 am in Sydney and shortly after 2.00 pm the day before, Eastern United States time. Mr Hadid had previously arranged that Andrew Price would be asked to join in the conversation at some time during its course, and that was done. Apart from the time during which Andrew Price took part in the conversation, the only participants in it were Mr Hadid and Mr Lenfest. No one else heard it; neither Mr Hadid nor Mr Lenfest made (or, at least, retained) a note of the conversation; Andrew Price prepared a note relating to his participation. There are very significant differences between the accounts of Mr Hadid and Mr Lenfest. As Mr Lenfest gave the briefer and less complex version, it is convenient to summarise his evidence first. 39 According to Mr Lenfest, Mr Hadid described what he called a "unique opportunity", in that he had both licences with four channels of programming each; that pay TV had not come to Australia "primarily because of the influence of Mr Packer who to protect his own broadcasting interests had prevented cable, any kind of pay TV from arriving" (Mr Lenfest gave evidence that he had not previously heard of Mr Packer); that if cable television came to Australia, satellite television would have a five to ten years' "window"; that MDS was not an effective competitor because MDS licensees were restricted to narrowcasting and could not broadcast until, as Mr Lenfest recalled it, 1 July 1997. Mr Lenfest's account continued that Mr Hadid told him that the deposits were required to be paid by 5.00 pm on Monday, Australian time; UCOM was looking for a United States operator to be involved, and if LCI paid the deposits Nomura "would be able to complete the financing required and … our deposits would be returned." Mr Hadid also said, according to Mr Lenfest, that there would be a 30 per cent "free carry" in each licence, and LCI could choose the licence in which it wished to have a substantial interest and receive half of the free carry; Mr Hadid proceeded to explain the restrictions on foreign ownership, a consequence of which (and of the cross‑ownership restrictions) was that LCI could have a 2 per cent interest in the other licence. There was discussion about the satellite's coverage of population centres and the technology to be used. Mr Hadid said that TPL was involved as financial adviser and that he had tried to arrange for Ms O'Connor to participate in the conversation. 40 Andrew Price then joined the conversation and, questioned by Mr Lenfest, said: "Mr Lenfest, I represent Nomura in Australia, I will confirm to you that Nomura will be in a position to complete the financing and your deposits will be returned." 41 Mr Lenfest asked whether Andrew Price would confirm that in writing; Andrew Price responded that he would. According to Mr Lenfest's account, the conversation concluded with the following remark on his part: "Albert, this sounds like a very good opportunity. My wife, Marguerite, and I are driving down to Ocean City on the Shore … why don't you prepare, you know, a simple letter what this offer is and we will have further discussions tomorrow." 42 Mr Hadid's version of the conversation was very different. According to him, it was Mr Lenfest who volunteered that it was an excellent opportunity; then in answer to a question about what LCI sought for taking the risk of paying the deposits, Mr Lenfest said, "I understand that you believe you can retain 30 per cent on the licences," which Mr Hadid confirmed. According to Mr Hadid's account he told Mr Lenfest that MDS and cable could compete before 1997 and Mr Lenfest responded "… we know about cable and MDS, cable is years away and MDS … has problems with your city terrains." Mr Hadid responded that cable would compete gradually and that MDS was "mostly in the hands of Steve Cosser" (then the Chief Executive Officer of Australis and its largest shareholder). After further discussion of the likely competition from MDS and the possibility of a "shared monopoly" (which Mr Hadid claims to have said would not be allowed in Australia) Mr Lenfest said, "… but the thing you've got, one has to watch out for is Packer and Murdoch are very greedy, one has to get those licences up very quickly … ." There followed further discussion of the regulatory and competitive environment in Australia. 43 According to Mr Hadid, Mr Lenfest then said: "I'll think through what licence we're interested in but I am happy to do a deal with you … are you at the moment using any banks to raise funds for the licences." 44 Mr Hadid then explained that they were using TPL, that they had recently met Nomura and that Nomura were trying to help and seemed keen; and that there had been a meeting that day with Bain and they seemed very interested but it was "early to say how committed they are but they appear to be quite committed": they seemed very keen and both they and Nomura seemed very interested in working on an underwriting. At that point Andrew Price was telephoned and joined the conversation. After Andrew Price had made some supportive but cautious comments about what Nomura might do, the following exchange occurred: "… Mr Lenfest asked him … 'can you - will you underwrite' and Andrew said 'it's hard to say but we're working - we are working quite solidly with Bains and are keen to do the underwriting. We are committed to the pay TV industry in Australia and I can give you … a lot of confidence or I can give you - sorry, some confidence that the prospects of underwriting … being successful are there' and Mr Lenfest … said 'in that case you're prepared to help basically' and he said 'yes, we're prepared to do more than that. With you coming in that will give all of us more confidence and it would give the market more confidence. I would certainly like to do business if I can.' " 45 I have recorded this conversation, and will record later conversations, without making alterations to the transcript: so that punctuation and the use, or non‑use, of quotation marks will appear as they do in the transcript. I have, however, in an attempt to make the accounts of some long conversations a little clearer than they might otherwise be, started a new line with each change of speaker. 46 In cross‑examination, Mr Hadid abbreviated Andrew Price's response to Mr Lenfest's question to "it's too early to say." 47 At that point Andrew Price's participation in the conversation came to an end. Mr Lenfest then said (according to Mr Hadid): "Don't worry about them, they're all elusive, I wouldn't rely on one or two contacts anyway and I would [sic] rely on your local contacts alone. I can raise the money here in the US and I have a very strong relationship, solid relationship with established financiers who will do it." 48 Mr Hadid referred again to the restrictions on foreign ownership and to a likely need to raise funds in Australia. Mr Lenfest said: "I agree with you. I am happy to do that but if the need comes, we won't need them to raise the finance, I can do it without them." 49 After a reference by Mr Lenfest to the hard time UCOM had been having in the marketplace, there was some discussion about the advantages likely to accrue from LCI's involvement because of its connections with Liberty and TCI. There was then a reference to the circumstance that TCI, Time Warner and Comcast had lodged a joint tender for one of the licences; that reference provoked the following comment from Mr Lenfest: "… yes, they are big bullies, [Albert], … that's the way they have to do it to be able to control the business world wide and keep it between themselves … but now that … we're going to be on the same team together and our joint venture means they will not treat you as … enemies and when you come to the United States, Albert, John Malone, who's the chairman … of TCI and a director of my company, you will meet him. He'll be very helpful and he could also help us with News Limited and so on." 50 Mr Lenfest then said that if he paid the deposits he would expect, "when we raise the money", to get the deposits back or buy shares at his option and would want half the free carry in one of the two licences. When Mr Hadid indicated agreement with those propositions, Mr Lenfest said: "I'm feeling very good about it … let's say the deal is done. Why don't you … put what we discussed over in a contract and send it to me but keep it simple, don't send me a major contract, just send me something like a simple letter." 51 An arrangement was then made that Ms O'Connor would speak to Mr Lenfest during the ensuing few hours. Mr Hadid's account of the conclusion of the conversation was as follows: "And I said, I will do that, Mr Lenfest, but can we say that … the deal will be done? And he said, we can say the deal will be done - we can say the deal will be done and I'll talk to you tomorrow after I have had a chance to read the information and … consider the deal points we discussed." 52 In addition to the arrangement that Mr Hadid would send Mr Lenfest a short letter, it was arranged that Mr Lenfest would send Mr Hadid, by fax, copies of the LCI letterhead. 53 That recital is sufficient to demonstrate the very significant differences between the two accounts of the conversation. I shall need to examine the differences in more detail later. Some of Mr Lenfest's responses to Mr Hadid's version may, however, be noted now. Mr Lenfest agreed that the ownership of LCI was discussed, and said that he described it. Mr Lenfest thought that he mentioned Dr John Malone (Dr Malone) as the Chief Operating Officer of TCI, as a member of the LCI board and as probably the most respected person in the American cable industry. Mr Lenfest denied, however, knowledge of any prior involvement of TCI with respect to pay TV in Australia or of any partnership between TCI, Time‑Warner and Comcast; he denied that anything was said about such a partnership. Mr Lenfest denied also that he made any mention of Mr Packer (of whom he had not previously heard) or Mr Murdoch (whom he knew by reputation but had not met); he did not recall any mention of Bain; significantly, he denied any discussion of whether he or LCI could raise money in the United States to pay for the licences and that he told Mr Hadid that if the need arose he could raise finance to pay for the licences. He denied saying anything to the effect that the deal was done.

(ii) "Free carry" 54 Free carry, and what the various parties thought and said about it, was the focus of a good deal of attention in the evidence. In its simplest form (at least, in the UCOM version) it referred to a shareholding in a licence‑owning company to be acquired by UCOM or LCI without payment, on the footing (assuming a 30 per cent free carry) that, on capitalisation of the company, other investors would subscribe the full amount required to acquire the licence, pay associated costs and provide working capital, in return for a 70 per cent equity interest in the company. The term "free carry" might include more complex arrangements having the same economic effect. In broad terms, the UCOM view was that the equity representing the free carry would (though its holders had in the end paid no money for it) rank equally in all respects with the equity paid for by other investors. The evidence of the LCI witnesses was that they would not expect "carry" to be "free": the "carried" equity would be subordinate to the "paid" equity, in the sense that holders of the former would receive no return until the holders of the latter had recovered their outlay (or at least part of it). These are topics to which I shall have to return.

(iii) Exchange of correspondence following first conversation 55 At about 6:40 am, Sydney time, on 28 August 1993 Mr Hadid faxed to Mr Lenfest a short letter. The substance of it was: "Further to our discussion we would like to confirm the following figures based on an exchange rate of $0.67 cents per dollar for your consideration of our proposal. Your investment of U.S. $7.169 mill will secure half of the free carry in one of the two Australian Pay TV Licences, the other half will remain for our group. As discussed, we believe at the existing prices we will achieve 30% free carry, this will mean 15% for each party. We will return your investment of U.S. $7.169 mill or we are prepared to convert the U.S. $7,169 mill into shares in the compnay [sic] at your option on reasonable terms and conditions which are acceptable to you but which terms and conditions shall be no more onerous than the terms and conditions upon which any other investor (including UCOM group) invests in the licence." 56 Mr Hadid added his telephone number and those of Andrew Price and Ms O'Connor. He attached copies of each of their business cards. 57 Mr Lenfest reciprocated by sending a copy of the letterhead of "The Lenfest Group": that appears to have been faxed from Pottstown, Pennsylvania (where Mr Lenfest's office was situated) late in the afternoon of 27 August, Eastern United States time. Both in conversations and in correspondence "The Lenfest Group" was used to describe the entity with which Mr Hadid dealt; the parties proceeded on the footing that "The Lenfest Group" was synonymous with LCI.

(iv) Ms O'Connor speaks to Mr Lenfest: morning, Saturday, 28 August 1993 58 Shortly after faxing his letter to Mr Lenfest, Mr Hadid sent a handwritten fax note to Ms O'Connor, exhorting her to wake up and telephone Mr Hadid. The fax reflects, understandably enough, a degree of euphoria following the conversation with Mr Lenfest: "Guess what? We have had a very exciting prospect, if I was to judge by what was said, then the deal is done?" 59 Mr Hadid gave evidence that Ms O'Connor came to UCOM's office a short time afterwards: possibly between 7:00 and 8:00 in the morning. A number of others were then at UCOM's office, according to Mr Hadid: Andrew Price was there; Dr Gadir, Mr Blanks and Mr Lynch were there; so was Mr Martin Przybylski (Mr Przybylski), a partner of Sly & Weigall, solicitors. At some point there was a telephone conversation with Mr Lenfest in which Mr Hadid introduced Ms O'Connor to him, and Mr Lenfest and Ms O'Connor had a conversation. Mr Hadid did not give evidence of its content because, after introducing Ms O'Connor, he did not hear what was said; and Mr Lenfest's evidence is somewhat confusing on the topic because, although he accepted that the conversation with Ms O'Connor occurred after the first conversation between Mr Lenfest and Mr Hadid but before any further negotiation had taken place between them, his account of the conversation with Ms O'Connor seems to assume that some of the further negotiation had already occurred. Fortunately, nothing seems to turn on this. It is necessary only to note that Ms O'Connor was introduced, on the telephone, to Mr Lenfest, and they had a discussion; and that later evidence suggests that Ms O'Connor put to Mr Lenfest that UCOM should have the option on capitalisation, instead of repaying LCI's deposits in cash, to require them to be applied in subscribing for shares in the licence‑owning company.

(v) Second conversation between Mr Hadid and Mr Lenfest, early morning 29 August 1993: substantial agreement reached 60 Mr Hadid and Mr Lenfest spoke again in the early hours of the morning, Sydney time, on Sunday, 29 August. Dr Gadir was in the UCOM office and participated in the conversation. Mr Noah was there also but he did not participate or hear what was said. Again no one took notes of the conversation (or, if anyone did, the notes were not retained). Again, the accounts differ, in some respects very significantly. I shall begin with Mr Hadid's version. 61 According to that version, the conversation began with a comment by Mr Lenfest that he had considered matters and had looked at the information memorandum and projections which Mr Hadid had faxed to him; and he expressed the view that, though the plan should be "revisited", it looked "pretty good" and Mr Lenfest thought that the figures would hold up. Mr Lenfest then said: "Our assessment is that we believe that 30% vendor shares as he called them are quite possible to achieve from the figures providing that we pay for the licences and use 70% of the shares to raise the money that would be needed to pay for the licence fees and the operations of the licences." 62 When asked by Mr Hadid whether he would consider paying for the licences Mr Lenfest said that he would reserve it as an option but would first "look into the market as to other US investors." Mr Lenfest said that he would be prepared to pay the deposits; he wanted in return half the free carry in one licence and 2 per cent in the other. Additionally, should the free carry achieved be less than 30 per cent, Mr Lenfest would require 60 per cent of actual free carry achieved and on the basis that, in any event, LCI would receive a free carry of not less than 13.5 per cent. The following discussion ensued: "I said, Mr Lenfest that's not what we talked about yesterday. What if we don't achieve the free carry? He said, well, that's precisely the point. You're in control, we both think 30 per cent is achievable, now, if we don't achieve 30 per cent then obviously I would have to accept less. Now, if … you can't achieve … enough to give me 13 [sic] per cent then we can only do a deal if we both consent to it. Because you're in control of the joint venture, I would need that assurance for the risk that I am taking … and … when the time comes we both have to accept the realities of the market. And I said, fine, I understand that." 63 After further discussion and agreement on that point the conversation proceeded to the topic of an operating company. After some discussion of possibilities, Mr Lenfest said, according to Mr Hadid: "… I'd be prepared to give you all of my free carry in the … licences in exchange for benefits in the operating company and I said, Mr Lenfest, with all due respect everyone knows the operating company's where the money is, it's the gateway. I can't take that risk until we do eventually know what your investment is, and who owns the licences, because that's got to be protected. It should be … the people who finally make all the investments make that decision so it's got to be protected so that it's … owned between licence A and B." 64 Further discussion resulted in a proposal by Mr Lenfest that LCI have a contract to manage the operating company, receiving by way of remuneration 0.75 per cent of the turnover plus costs. Mr Hadid agreed to that on condition that he maintain joint control, but he would not interfere in day to day matters. There was then, according to Mr Hadid, discussion of the possible use by the satellite television operation of MDS and cable as additional delivery mechanisms (that is, the possibility that agreements might be reached with the MDS and cable licensees under which they would carry the satellite licensee's programmes), no conclusion being reached; but in the course of the discussion Mr Hadid attributed to Mr Lenfest agreement "with the figures of MDS and Cable you've put into the plan" (that is, a realisation that the document initially faxed to Mr Lenfest contemplated delivery via MDS and cable as well as delivery by satellite and an acceptance that it did so in an appropriate way). 65 Mr Hadid stressed the necessity to pay the deposits - and therefore to have the money with which to do so - by Monday in Australia (still Sunday in the United States) and it was agreed that Mr Hadid would fax to Mr Lenfest a letter setting out what had been agreed. Mr Lenfest agreed to Mr Hadid's suggestion that Mr Lenfest personally, as well as LCI, should be bound by the agreements reached. 66 Dr Gadir substantially supported many aspects of Mr Hadid's account and added some others. According to Dr Gadir, the conversation began with reciprocal congratulations and: "Mr Hadid made a point to the effect that we were very excited to work with Lenfest, a credible and professional cable company in America and that we were looking forward to working together in partnership and Mr Lenfest reciprocated on that point." 67 According to Dr Gadir, Mr Lenfest demonstrated a reasonable awareness of the "Australian environment at that point, regulatory and legal" although he referred to a need for more detailed discussions, to take place when LCI executives visited Australia. Dr Gadir also added that during a conversation: "Mr Hadid made a particular point of his interest in local film production in Australia and said words to the effects [sic] … Gerry, I've been involved for a long time and had the ambition for a long time to be involved in Australian film production; you realise that the Australian law, the Broadcasting Communication Act [sic], requires that the pay television licensees provide a certain amount of Australian content and UCOM would like to be involved in that and especially myself personally, I would like to be involved substantially in that local content element and this should become part of our agreement. To that basically Gerry responded that he had no problem with that and once you guys formulate the draft agreement that that can be put in there in some form." 68 In cross‑examination, Dr Gadir added a further element: Mr Lenfest agreed that LCI would "find the necessary partners and put together the venture." Mr Lenfest said, according to Dr Gadir: "Well basically we are going into a partnership where we will find the financing, we will find the partners, we will put together the deal." 69 Those, Dr Gadir said, were commitments assumed by Mr Lenfest during the course of the conversation. 70 Mr Lenfest gave a somewhat briefer account of the discussion. It was as follows: "I said, Albert, you had told me that it would be my selection or I asked it to be my selection, of which licence I received the carried interest in. And I said, Albert, what if you cannot achieve a 30% free carry and the negotiation was that in such event our company would get 60% of the free carry with a floor of 13.5%. I also had asked for a management contract pursuant to their expression of need for a US cable operator … their initial discussion with me was that they needed a US cable operator who had experience in pay cable television and I said, Fine, we'll be able to act in that role but we want a management fee of .75% of revenues and reimbursement of our expenses … he said, Gerry, we would agree to that. … Hadid said that he wanted to be involved in the management company to make sure it conformed with the Australian law and regulations and I said, Well, you know, you've asked us to bring our expertise, we do not want you to interfere with the pay television operations. … He agreed. … Albert said he would send me a letter confirming our discussions." 71 Mr Lenfest's account of the discussion of the management contract is undoubtedly an amalgam of the first and second conversations, but that is not a matter of any significance. Mr Lenfest denied commenting on the UCOM business plan; he denied having examined it; he denied having formed any view as to whether a 30 per cent carried interest was achievable; he denied that there was any discussion of LCI taking less than 13.5 per cent carried interest; he denied that there was any other discussion about the management agreement or benefits in the operating company; he denied that there was any discussion about the use of MDS or cable to distribute the UCOM signal; he denied that there was any conversation about him personally signing the letter. Finally, he denied particular matters attributed to him by Dr Gadir: that working together in partnership was mentioned; that he would find partners, put the venture together or find the financing; that there was any discussion about Mr Hadid's interest or involvement in film production or about Australian drama content requirements; and that anything was said about Mr Hadid being in control of a joint venture.

(vi) "Operating company" 72 This also is a concept which received a good deal of attention in the evidence. In simple terms, what was contemplated was a company, the function of which was to manage and operate the pay TV channels on behalf of the licence holders, and, particularly, to coordinate the operations (especially programming) of all the channels available under both licences. It was contemplated that the operating company would be managed by an experienced United States pay TV operator (such as LCI itself).

(vii) Agreement reduced to writing 73 Having concluded their discussion with Mr Lenfest, Mr Hadid and Dr Gadir prepared a letter which Mr Noah typed. Mr Hadid and Dr Gadir signed it and they sent it by fax to Mr Lenfest. Mr Lenfest made some handwritten alterations, signed it and faxed it back. Mr Hadid and Dr Gadir approved and initialled the changes made by Mr Lenfest. The letter is a critical document and I shall set the text of it out in full. The additions made by Mr Lenfest are indicated in bold print. "29th August, 1993 Mr Gerry Lenfest Chairman The Lenfest Group 202 Shoemaker Road Pottstown, PA 19464 Fax No: (609) 391 0438 PRIVATE & CONFIDENTIAL Dear Sir, This letter is to confirm the arrangements we have discussed for your participation in the Australian Pay TV Licences B and A. The rights to obtain these licences are currently held respectively by New World Telecommunications Pty Ltd ("New World") and Focus Telecommunications Pty Ltd ("Focus"). It is on behalf of those two companies and their shareholders that I now write. You will forward to us by no later than Sydney time 12:00 pm Monday 30th August 1993 a net amount of US$7,200,000 clear of fees to the following bank account in Sydney Australia UCOM Pty Ltd Commonwealth Bank of Australia Westgate N.S.W. Branch No: 2269 Account No: 10007959 In return for that payment you will receive the following 1. a) on capitalisation, one half of existing shareholders' free‑carried interest in the equity of New World (current holder of Licence 'B') or Focus (current holder of Licence 'A') as you select but not both. However, should the total free‑carried interest of existing shareholders in the Licence you participate in be less than 30%, then you will receive 60% of the existing shareholders' free‑carried interest, but not less than 13.5%; b) on capitalisation, you will be given 2% of the alternate Licence 2. A management contract to run the operating company to be negotiated jointly with New World, Focus, and Albert Hadid (or his nominee) and to include the following: a) 5‑year term, b) management fee of 0.75% of total subscription revenue, c) reimbursement of reasonable management expenses incurred under the management contract, and d) major management decisions to be made jointly with Albert Hadid (or his nominee), but without the right to interfere in the day‑to‑day decisions. In exercising your rights under paragraphs 1 and 2 you will do so in a manner that complies with the Australian Broadcasting Services Actand other relevant laws and regulations. The funding of approximately A$10,700,000 is the 5% deposit for licences A and B as required by the Australian Government to be paid by end of business day Monday 30th August, 1993. Your confirmation by return fax will bind both the Lenfest Group and yourself personally to the above terms. Yours sincerely, [ signature ] [ signature ] Albert Hadid Simon Gadir Confirmed [ signature ] H.F. (Gerry) Lenfest August, 1993" 74 Shortly after receiving the document with the changes initialled, Mr Lenfest telephoned Mr Hadid. Mr Hadid's account of the conversation was as follows: "… Mr Lenfest said, now we're joint venturers. I am getting very excited about this joint venture. I want you to know all these big guys now will keep away from you and we will work together. I will give you all the support and guidance that you will possibly need, Albert. Just leave that to me. He also said that we will get this thing up and the Australian market will get what it has been looking for in pay television. But can you do me a favour and I said, what's that, Mr Lenfest? He said, can you send me a letter saying you will send me my money back as we discussed two nights ago. I said, yes, Mr Lenfest, but I would do that on the changed basis that you discussed with Ms O'Connor, and that is if you recall you had a chat with [Cass] and she reported to me that you have agreed that we will … send you your money back … but at our option, not yours. So we have the option either to give you the money back or to convert that money into shares … no more onerous on you than any other investor including the UCOM shareholders. So on that basis I am happy to send you the letter because that is what you and [Cass] agreed … and … he said, yes, I am happy with that, just send it to me." 75 Mr Lenfest's account is, once again, rather more laconic: "… I called Albert and said, Albert, you've forgotten to put in the language about my deposits being returned as promised and the conversation with Cass O'Connor where they could be converted into equity. … He said, yes, he had forgotten and that he would send a second letter confirming that.' 76 He denied that there was any talk of joint ventures or of excitement about them. In any event, Mr Hadid and Dr Gadir signed, and sent to Mr Lenfest, a further letter which read: "We agree that we will return your investment of A$10,700,000 or at our option you agree to convert the investment into further equity in New World and [UCOM Australia] to a total value of A$10,700,000, this equity to be provided on reasonable terms and conditions that are no more onerous than to any other investor (including the existing shareholders but excluding their free‑carried interest)."

(viii) Payment of deposit 77 On Saturday, 28 August 1993 at about 6.30 am Eastern United States time, Mr Lenfest telephoned Mr Stephen Plant (Mr Plant). Mr Plant had until June been a Senior Vice‑President of PNC Bank, which had its head office in Philadelphia. He had been in charge of commercial lending for the media and telecommunications area of the bank and LCI was a substantial customer. Mr Lenfest asked Mr Plant for the names of officers of another bank with which he dealt (the Toronto Dominion Bank) who could make a quick decision on assisting Mr Lenfest with the financing of two licences in Australia. Mr Plant gave him names and telephone numbers. During the weekend arrangements were made to enable Mr Lenfest, personally, to remit funds to Australia to enable the deposits to be paid. They were paid during the course of Monday, 30 August.

(c) Dealings between LCI and Mr Hadid up to the first LCI visit; "solicitation agreement" 78 On 30 August in West Chester, Pennsylvania (LCI had an office there, as well as premises in Pottstown, about 20 miles away, where Mr Lenfest's office was) Mr Lenfest met Mr Heller and Mr Plant. Mr Lenfest asked Mr Heller and Mr Plant to travel to Australia for purposes which at least included fact finding and an analysis of the business opportunity for pay TV in Australia. During the course of the meeting Mr Lenfest telephoned Mr Hadid and informed him of the proposal that Mr Heller and Mr Plant come to Australia. There may also have been some discussion about a press release: certainly a press release went through a number of drafts and was finally settled and issued, in Australia and in the United States, during the period between 30 August and 1 September. 79 On 1 September Mr Hadid and Mr Lenfest spoke again. The conversation is important: it is claimed to have given rise to what is described, in the statement of claim, as the "solicitation agreement". Mr Hadid's account of it, in his evidence in chief, is as follows: "… Mr Lenfest said that 'Don and Steve will be leaving here should be arriving in two or three days … to support you and work with you on the information … we want to take the lead in structuring the information and finding the investors' … I said 'I would welcome that … but we would not relinquish control.' Mr Lenfest said 'we're not after control … we want to work together to find investors in the partners. Now this is a joint venture, we both should do our best … for our mutual benefits. Now, we should ensure that as partners we keep each other totally informed and as you know this venture will require our guidance to ensure its ultimate success … what I'd like you to do is to agree with me for you to act in this position and supporting - for us to look for the investors and take that position.' I said 'Mr Lenfest, I am happy … with that as I said providing we do not lose control. We're happy to give it to you, but we maintain control. … I look forward to receiving Don and Steve and let's make sure as far as the press is concerned we maintain limited information out to them and we should, I believe, have a press conference on - when these two gentlemen arrive.' Mr Lenfest said 'I agree with you and you'll find they are senior executives, treat them as such.' I said 'of course, they will get our best support.' He said 'Albert, … take their word as my word and I'm not saying this lightly to you, these people can commit me and my company, I'm making sure I am sending you two senior executives to ensure the process is dealt with quickly.' I said 'Gerry, I accept that and I look forward to, you know, doing everything we can for them.' He said 'make sure you make them work hard, provide them with all the information you can, you know, basically ensure they get no time off. They're there to work, make sure they work.' " 80 Under cross‑examination by senior counsel for LCI and Mr Lenfest, Mr Hadid agreed that the effect of the alleged conversation was to change the basis of the relationship: from that point on, the responsibility for finding investors and for procuring the capitalisation of the licences shifted (he claimed) from UCOM to LCI. 81 Before turning to Mr Lenfest's evidence, I should mention that Mr Hadid was uncertain as to whether that conversation occurred on 1 or 2 September. Mr Egan gave evidence that he was present at UCOM's office, in the evening a day or two after the deposits were paid, when in his presence Mr Hadid made a telephone call, "a conference call on an open line effectively", in which Mr Egan participated and during which Dr Gadir was present. Mr Egan said that his only participation in the conversation was to introduce himself to Mr Lenfest. His account was that: "Mr Lenfest said words to the effect, as our partner in this venture, joint venture, we look forward to working with you in the future; … I will be sending two of my senior executives to Australia, and he described them as Don Heller and Stephen Plant. He described Plant's skills as financial skills, as a financial background, he was a banker previously I understand, and that as they were in control of the financing they looked forward to meeting and working with the people in Australia." 82 Mr Egan identified as, in part, his handwritten note of that conversation a paper headed "UCOM" and dated 2 September 1993. In a section commencing with the words "after 6:00 pm" there are among other things the notes: " ‑ Steven Plant (Banker) ‑ Don Heller (VP) ß Saturday morning." 83 That is the only part of the note that refers to any matter recounted by Mr Egan. Mr Egan then gave evidence, which I admitted over objection by counsel for LCI and Mr Lenfest, that following the telephone conversation he said to Mr Hadid that, as LCI were essentially unknown to UCOM, it was dangerous to give them total control of the licences - to which, according to Mr Egan, Mr Hadid replied that he totally trusted the Lenfest Group and was very comfortable with their being in control of the financing. 84 There is nothing in Mr Egan's notes about that, nor did Mr Hadid give evidence about it. In fact, there was no suggestion in Mr Hadid's evidence that there was anyone else present with him during this telephone conversation. Nor did Dr Gadir, in his evidence, mention the occasion. 85 According to Mr Lenfest's account, all he said was that Mr Heller and Mr Plant were coming to Australia on a fact finding mission "to find out; we made a major deposit in money and I wanted to find out what the situation was." He denied everything else recounted by Mr Hadid. He said that he was not conscious of Mr Egan participating in the conversation and said that at the time of the conversation he had never heard of Mr Egan or spoken to him. 86 Two further conversations should be mentioned before I pass to the next series of events. On about 2 September Mr Blanks telephoned Mr Lenfest. Mr Blanks made a reasonably full contemporaneous note of the conversation. His account was that he telephoned Mr Lenfest, explained that he was a director of the UCOM group and a lawyer, largely concerned with overseeing the regulatory aspect of the bids. Mr Lenfest said that Peter Frame (who had previously worked for Mr Lenfest, was then employed by Time Warner and had been concerned in its joint tender with TCI and Comcast) had told Mr Lenfest that he (Mr Lenfest) had "made a huge mistake in making this investment" and that Mr Lenfest hoped that would prove wrong. Mr Lenfest suggested that Time Warner might be interested in participating in the bid. Mr Lenfest said that he could not himself immediately come to Australia but was sending Mr Plant and Mr Heller; Mr Plant was Mr Lenfest's "favourite banker" and that Mr Heller, while less creative, was one of his senior executives with a background in pay TV. Mr Lenfest remarked that he had had calls from two journalists and that he understood there had been a lot of "loose press." 87 Mr Lenfest recalled describing the backgrounds of Mr Heller and Mr Plant; he recalled nothing further about the conversation. 88 The second and more important conversation (at least if Mr Hadid's account of it is accepted) took place between Mr Hadid and Mr Lenfest probably on 3 September. Mr Hadid's account was that after some brief mention of press releases, the discussion proceeded as follows: "… and then he went on to say … 'thank you, partner, thank you for your support you've shown me. This venture I want you to know is in some ways more important to me than the TCI venture [apparently a reference to a pay television venture in France in which LCI and TCI were concerned] because the TCI venture is just about big business whereas the opportunities in this one [are] more interesting because it's about establishing the Australian [pay] TV industry and it's pioneering the future of [pay] television industry' and I said to Mr Lenfest … 'I appreciate the way you're looking at this, you will continue working with me and can you please support me so that we ensure we provide programming to the Australian audience … which is in fact tailored for their taste because one of the things we are concerned about is whilst we know that American movies will play a major part we want to make sure that it's tailored to suit Australian programming needs and that I would also appreciate it [if] you would support the local drama industry' and he asked me, 'how did you become involved in [pay] television, Albert?' and I said …, 'Because a long time ago I had a dream when I was at university to become a film maker, the opportunities … were not there so I always had a dream one day hopefully I'll make a big difference to the Australian film making industry and what attracted me, Mr Lenfest, is the … local content that is imposed by the Australian government in these [pay] TV licences' and he said, 'so, you're really interested in making movies basically' and I said, 'yes, you know, that's my dream but I also want to make sure that we deliver the best pay television in the world to Australia.' He said, 'Albert, I can help you deliver the best pay television in the world to Australia and I can support your film making efforts by helping you distribute your films in the United States.' I said, 'I want you to know I appreciate what's happening between us' and I said, 'I must also say I'm really thankful for the trust you put in me by putting up $11 million very quickly and by in fact showing me a trust by having only a simple agreement.' He said, 'Albert, I'm very committed to the partnership and trust goes both ways.' " 89 Mr Lenfest recalled having a conversation about press releases on about 3 September. His evidence was that Mr Hadid said he would give complete cooperation and information to Mr Heller and Mr Plant. He denied all the other aspects of the conversation recounted by Mr Hadid.

(d) 30 August to 3 September 1993: UCOM and Bain 90 On 30 August Mr Johnston found out from Ms O'Connor that Mr Lenfest had agreed to fund the deposits. He and Dr Burt decided that it would be "very useful marketing perhaps" to send a letter outlining a potential program for underwriting. They sent such a letter the same day, addressed to Ms O'Connor and signed by each of them. It took, perhaps, rather more credit than was their due for the result of the weekend's exertions: "We are pleased we could help in some way to catalyse today's events, and now look forward to a highly successful exercise in funding the new owners/operators. As soon as the deposits for the A and B licences for Pay TV are paid we can plan to raise equity for the owners/operators. The timetable will depend on the speed with which the major steps in the process can be achieved. Our initial draft of the process for proceeding to a full raising is attached. The details will be fleshed out in discussions. Based on our experience in fundraising in this area, we believe the plan can be implemented quickly provided the regulators are no less responsive than would normally be expected." A copy of the letter was faxed to Mr Hadid. 91 On 31 August Dr Burt telephoned Mr Hadid. The conversation was brief. It is common ground that Dr Burt congratulated Mr Hadid in warm terms on achieving the payment of the deposits. Dr Burt recounted, but Mr Hadid did not, some conversation about Mr Lenfest. Both accounts concluded with an arrangement to meet in the foyer of the Wentworth Hotel: Dr Burt said that the meeting was arranged for the same day, Mr Hadid said that the following day was appointed. Mr Hadid and Dr Burt agree that following that conversation they met twice: Mr Hadid says they met on 1 and 2 September, on each occasion at the Wentworth Hotel. Dr Burt, on the other hand, says that they met on 31 August at the Wentworth Hotel and on 1 September at Bain's office. 92 Dr Burt says that the earlier meeting, on 31 August, was very brief, consisting largely of a reprise of the telephone conversation. Dr Burt expressed keenness to meet the LCI representatives. 93 Dr Burt made a contemporaneous note of the second meeting. It is headed "Albert Hadid/Simon Gadir" which Dr Burt explained by saying that Dr Gadir was expected at the meeting but did not come. According to Dr Burt there was discussion of advisers and underwriters and the distinction between them; Mr Hadid said that he intended to cast around widely for underwriters, but that he had a "strong loyalty" to Nomura. Dr Burt expressed his interest in underwriting and spoke of Bain's credentials. He also spoke about what he described as the conventional and clear distinction between underwriting and advising, his interest being on the underwriting side. He continued, according to his account: "That is my focus, so, Albert, I am not able to accept any advisory role. I am happy to keep talking to you on an informal basis, give you my views on the market, but also you should be aware that I am talking to everyone else in the pay television game, or in fact anyone who comes along to Bain to talk about sensible underwriting proposals because that is my brief." 94 Dr Burt said that he recommended that UCOM: "stick with Turnbull Partners as their adviser and work together with Lenfest." The note contains these entries under the heading "New Advisers": "WB reiterated that Bain not an adviser understand don't advise at this stage recommended they stick with Turnbull and work together with L/F." 95 Mr Hadid's account is radically different. It is important, as will be seen, to his claims against Bain and Dr Burt and, though lengthy, should be quoted more or less in full: "Dr Burt said the deal with Lenfest is great news, I want to underwrite the business, Albert. I said Are you talking about underwriting it with Nomura? He said Well they'll need to rely on our local strength, and I said, Well, … if you can get their head office involved, they're a huge organisation. He said, I'm happy to do the business with them, give them a part. He said You know my interest, we've discussed it at Turnbulls. We believe your two main hurdles [were] the deposit and the foundation investors; you have now paid the deposit and we believe we can find the foundation investors and that'll encourage the rest of the capital raising here locally in Australia. I said, There is a point about that, Dr Burt, and that is, as you know from our discussions at Turnbulls that they and us have always thought to finding a key US investor who is like a programmer or a … studio or an operator such as Lenfest in order to make sure that those key investors are in fact [in] each of the licences before we go out looking for further investment which will encourage the local investment. And I said, You might find that Mr Lenfest is thinking of looking, he appears to be also thinking along the same lines of finding US key investors as well to come with him. He said, 'Albert, our opinion is that … technology programming infrastructures operating skills, all that can be bought. It's all about money and banks can find money. … It's about finding the foundation members and then the rest of the investors will come in. We can buy the technology that we need, … all the other support they expect. Now, he said, We're confident of doing that, it would take us about 50 to 60 days to be able to do the underwriting. He said, There are ingredients, important ingredients you have. I mean, Lenfest is a bonus, they will be a plus for this, but … even operating can be purchased so let's move on with … the underwriting and the financing and so on. I said, I can't do that, Wayne, because Mr Lenfest has assumed control of that process and he will be out here soon. He said, Albert, there's no time to waste, we've got to move on with this because with the regulatory process you don't want to be out of time. We can find the foundation investors and we can do the underwriting. I said, But I can't, I've got to wait. He said, Why do we have to wait? I said, 'Well, you are not the only one waiting here. I said, First of all, I'm waiting for them. I said, Turnbull and Partners, I'm very eager to have them appointed as advisers to the new joint venture. … Even they have to wait because I can't make that decision without Gerry, and Nomura obviously are keen to see what part they can play. They have to wait for … Mr Lenfest's executives as well, so you're not the only one waiting, we're all waiting. He said, 'Albert, in the meantime why can't we get on and do some due diligence on your work instead of wasting time on the UCOM [Hi Vision?] figures. I said, 'What have you got in mind?' He said, 'Basically what we can do is start doing some due diligence on the figures through Bains … because when the time comes and Lenfest are here and we all work together then at least we're ahead instead of wasting time now because I'm telling you time is going to be basically of the essence for everyone here. So if we can get together and do those due diligences on the figures we'd be ahead of where we are today because ultimately it doesn't matter what Turnbull or Lenfest or you do, it's going to be Bains' word and Bains' balance sheet that will bring in the investors and if at least we move that process further then, you know, we're not wasting time.' I said, 'Wayne, it's only a matter of a couple of days before they arrive, you know, I'm not really prepared to go into any underwriting or even any decisions that could influence the underwriting until I see what Gerry wants to do.' Now, he said, 'You should be now considering at least getting the process of getting some sort of a valuation done on the licences using a similar company if not the same company as Australis did.' He said, 'That will be very valuable, let's - why don't you get that process started.' I gave him the same answers and said 'That's all very well, we're only talking about 2 or 3 days. I understand time is of the essence and I agree with you totally but I'm not moving on anything that would influence the underwriting or the fund raising as Lenfest is in control of that.' Then Wayne said, 'You know, Albert, I want to tell you, you know, I have been most impressed with this strategy that you've placed with your bids, that it has been the most significant strategy I've seen in Australian business. It was very clever. I haven't seen anyone do anything like it. I don't think there's ever been anything like it in the country.' I said, 'Wayne, I thank you.' He said, 'It's the only way to have got around Packer.' I said, 'It wasn't designed for Packer. He's got enough to do anyway. It was designed as an opportunity … for us to take advantage of it because it was there as an opportunity and we believed in the process.' He said, 'Because no one else cares, not the government, not the opposition, it's all about Packer. You're the only one, it was the only thing that could get other people involved in pay television.' I said, 'Wayne, it is an opportunity … which you know we're very proud of and we're very lucky … for it to have succeeded.' He said, 'Its very good the way you've had the cascading bids. It was a genius touch.' I said, 'That wasn't meant to be the idea. We were meant to pay $177 million if we could have but we couldn't raise it, so the idea wasn't to cascade unless we absolutely had to and when I realised the value of the licences, Wayne, that's why I've placed 177 as the first real bid because that's what we believed the value of the licences were and we came down to a lower - as a result of the strategy, yes, in case we could still be in the running.' Anyway he said, 'Albert, look, I'm prepared to prepare contracts to work with you and Lenfest.' I said, 'There's no purpose preparing contracts … Lenfest's executives will be here soon. I'll introduce you to them.' He said, 'Make sure you do.' And I said, 'Of course I will. You know they'll be here and I will ensure that you're introduced to them.' What Dr Burt said then is 'I want to make sure I do the underwriting. I want to help you, you know, let's get together and work on at least the figures, start looking at the figures.' I said, 'I am happy to do that, you know, it's very exciting. You're really very keen to underwrite.' He said, 'We are. We've been sitting there waiting for this opportunity. We'd like to take the opportunity.' " 96 The second conversation, which Mr Hadid placed on 2 September, was rather more brief; but again it is important and I shall quote Mr Hadid's account of it substantially in full: "I said, 'Here are summaries of the business plans and the financials which I am happy to give you, but make sure no one else gets their hands on it.' Dr Burt said 'I will need all the business plans and the financials. I would like Bain's to help me to do the due diligence. I would like Bain's to start working on the due diligence.' I said, 'I am happy with that providing they sign a confidentiality and after we check it with Lenfest.' He said, 'I agree with that.' And then the conversation basically just briefly went over the summarised figures and Dr Burt said to me - we discussed my agreement with Lenfest … 'So the basis of your agreement is, you raise 30% free carry in each licence and Lenfest gets 15% in one and 2% in the other one.' And I said, 'Yes, we believe it's possible for us to achieve 30% on capitalisation. Gerry agrees with it. What do you think …? And he said 'Oh, I'll have a look at the figures, but it looks high - it's high under normal circumstances.' I said, 'You know, Cass O'Connor says that 20 percent is really what the figure is and she doesn't seem to agree with 30 per cent.' He said, 'Oh, it sounds like 30 per cent.' And I said, 'How's that?' And he said 'Oh, I'm only joking mate, but, you know, these guys have got a reputation. … you're working with them, I know that, but they have a reputation.' I said 'Wayne, … don't say that because … they have been very good to me, they've been working with me for a while. What makes you so much better?' He said 'Well, you know, I work for Bain's, I used to work for Macquarie Bank. I left Macquarie Bank to join the most reputable brokers in Australia, that's Bain's. We're fully supported by Deutsche Bank, I'm a director of Bain's and therefore I'm a director of Deutsche Bank. You ask about the reputation of Wayne Burt and Bain's. We're not just about optimising our financial gains, we service our clients.' " 97 Dr Burt denied Mr Hadid's account; he denied that any meeting took place on 2 September.

(e) First LCI visit: 4 to 8 September 1993 98 Mr Heller and Mr Plant arrived in Australia on the morning of 4 September. Dr Gadir met them at the airport and took them to the Ritz‑Carlton Hotel, where they were to stay. On that day and the following days, until their departure on Wednesday, 8 September, they had a series of meetings with members of the UCOM team and with others: it is generally, if perhaps not exclusively, true that the meetings with others were arranged by, or at the suggestion of, members of the UCOM team. Some aspects of what occurred during the visit are controversial. They include whether, during the visit, Mr Heller and Mr Plant were given a copy of a list, headed "Project Koala" (prepared by Wasserstein Perella for Hi Vision), of potential investors in the licences and whether there was any discussion of the names on that list; whether statements were made to the effect that the search for investors was now the province, or principally the province, of LCI and that the UCOM team should substantially desist from, or take a "back seat" in, that search. They include also the terms in which Mr Heller, particularly, discussed business plans with Mr Egan and other members of the UCOM team (copies of business plans and projections were given to Mr Heller and Mr Plant, and undoubtedly were discussed, during the visit); the terms in which the regulatory regime was discussed, particularly as to the date from which broadcast by MDS transmission might compete with the holders of licences A and B; and in what terms Australis was discussed. Many of the matters in controversy are not, in themselves, particularly important and their resolution is significant only to the extent that it may affect a judgment about the probabilities in relation to other, more essential matters. I shall consider them later in these reasons. 99 Certainly Mr Heller and Mr Plant were fully occupied during their visit. On 4 September, the day of their arrival, they had discussions with Mr O'Brien concerning the arrangements by which the licensees' signal would be transmitted via the satellite owned by Optus; discussions with Dr Gadir and Mr Mackay about the regulatory environment and particularly the local content requirements for drama; and with Mr Egan concerning a business plan and financial model, a discussion in which Mr Heller and Mr Plant asked to be shown financial models and Mr Heller expressed the view that the model should include, as an alternative, that the licences might be capitalised in part by debt rather than solely by way of equity. A contemporaneous memorandum written by Mr Egan to Mr Hadid suggests that there was also discussion about the capacity of the local capital markets, the possibility of an underwriting and the standing of Nomura. Neither Mr Plant nor Mr Heller recalled that part of the discussion, but I see no reason to doubt that it took place. 100 On the following day, Sunday, 5 September, there were at least two meetings. One was with Mr Blanks, who took Mr Heller and Mr Plant to lunch at Doyles, Watsons Bay. That occasion was largely social, but included discussions about the regulatory environment. There is controversy about the terms in which Mr Blanks discussed the legislative provisions as to the date on which MDS broadcasts might commence. On the same day there was a meeting at the Bligh Street office attended, at least, by Mr Hadid, Dr Gadir and Mr Egan as well as Mr Heller and Mr Plant. There was discussion, again, about the regulatory environment and potential competition from MDS and cable; there was discussion of a financial model; it may have been at this meeting that Mr Heller requested (as he undoubtedly did during the course of the visit) a summary of the assumptions behind every line in the model; certainly there was some discussion of the major assumptions in the model. Generally, Mr Hadid's witnesses assert, but Mr Plant and Mr Heller deny, that at some time during that meeting Mr Noah and Mr Wright attended and the "Project Koala" contact list was produced and discussed. 101 During the morning of 6 September, Mr Plant and Mr Heller met Mr Hadid, Dr Gadir and Mr Egan. Among the matters discussed were at least, once again, the assumptions underlying the financial model and possible adjustments: Mr Heller's evidence was that he described some of the assumptions as "aggressive." On the same day there was a meeting with Mr John Brown, Mr Brent James (Mr James) and Mr Nigel Purves (Mr Purves) who were the principals of a company called Trojan Securities Pty Ltd (Trojan). Mr Purves gave evidence - which is highly controversial - that Mr Plant, shortly after the beginning of a discussion about financing the licences, made a remark to the effect that further discussion along those lines was unnecessary: LCI itself had the means to finance them. The conversation undoubtedly included a description by the Trojan representatives of their claimed financial expertise and connections and probably turned to a proposal that an exclusive option be granted to Trojan, for a period of 30 days, to purchase licence B: Mr James and Mr Purves the following day wrote to Mr Hadid, and sent a copy of the letter to Mr Heller, referring to the conversation and enclosing a draft option agreement. 102 There was a meeting over lunch on that day with Ms Anne Keating (Ms Keating) and Mr Robbie Porter (Mr Porter) (both of whom gave evidence). Both had had an involvement in seeking investors for the Hi Vision syndicate. The conversation during lunch included a discussion of potential investors and Mr Porter described his experience and credentials as a broker for the purpose of arranging investment in the licences. It was agreed that Mr Porter would provide a written proposal; he did so shortly afterwards. 103 Then, on the evening of 6 September, Mr Heller and Mr Plant met for the first time Dr Burt and Mr Johnston and their immediate superior, Mr Ken Borda (Mr Borda). Andrew Price was there also together with at least one other Nomura representative; so was Mr Hadid. This was the only occasion during the first visit on which Mr Heller and Mr Plant met the Bain representatives and, apparently, the Nomura representatives. No participant made a note of the meeting. The Bain and Nomura representatives described their experience and capabilities as underwriters, and their interest in acting as underwriters when the point was reached of raising funds from equity investors. Beyond that there are differences between the accounts of the various participants none of which, I think, is important enough to warrant further attention. Both Bain and Nomura followed the meeting up with written presentations: Mr Johnston and Dr Burt wrote to Mr Heller and Mr Plant on 8 September 1993. The letter and its enclosure were promotional in character: "We are enthusiastic about Pay TV, and believe we can add to the project. However, it will need to be managed very carefully to ensure success in the tight time‑frame available. For this reason we appreciated even more meeting you at this early time. At our meeting we indicated we would provide a brief overview of our services. We have therefore prepared an outline of Bain's credentials, particularly in underwritings, as well as a summary of our operations. You will see that we have the financial capacity, experience and market presence necessary to assist in ensuring this transaction is a success." 104 Nomura's letter was addressed to Mr Heller and dated 7 September. It also was promotional: "As you know we have been actively involved for the past three months in trying to raise the funds required to establish a national satellite pay television service in Australia and are keen to be involved in underwriting the fund raising if possible. We have discussed this project with all the major Australian institutions and strategic corporate investors and are aware of a great deal of strong interest in investing in this project if strong experienced international Pay TV operators are involved." 105 The letter proceeded to discuss the depth of the Australian market, as illustrated by a number of recent issues, rather than Nomura's particular experience or capacity. Indeed, while the paragraphs which I have quoted were no doubt intended to inspire confidence, it is by no means clear that that would have been their likely effect. 106 There were a number of other meetings during the first visit. The evidence does not enable me to make any finding as to precisely when or in what order they happened. In addition to meeting the principals of Trojan, Mr Heller and Mr Plant also met Mr Martin Dougherty (Mr Dougherty), whose company, Pankhan Pty Ltd (Pankhan), offered to buy the shares in New World for $21,000,000 payable 30 days after exchange of contracts. At the same time, they met with representatives of BBY Corporate Services Limited (BBY), a merchant bank, half of the shares of which were owned by the Commonwealth Bank. BBY, by letter dated 10 September 1993, confirmed various points said to have been made during a meeting in relation to the raising of capital to fund the licences. Two particular matters emerge, one of them somewhat repetitively: "1. A consortium of credible overseas investors who possess a history of successful involvement in the competitive Pay TV industry, specifically in the areas of operating, marketing, sales and service must be formed. Those consortium members must make an equity investment in the operation. … 4. The Australian Capital Markets, namely, passive institutional investors and corporate investors will be seeking a 'comfort level' from the active involvement of the overseas participants. … 6. Because the Pay TV industry is new to the Australian Capital Markets the marketing of the domestic capital raising would require the active involvement of the overseas participants in conjunction with the Australian financial advisers. … 8. The capital raising for the A & B licences should be undertaken jointly to ensure that each licence holder is not competing for the same equity fund sources and to provide comfort to the equity fund providers that the two licence holders will be able to work together to ensure that the Australian Pay TV industry is profitable." 107 Towards the end of the first visit Mr Egan had a conversation with Mr Heller and Mr Plant during which there was discussion of corporations active in the Australian capital markets, particularly as advisers and underwriters. A letter written by Mr Egan to Mr Plant, dated 7 September, on that topic, "further to our recent discussion", is reflected in Mr Plant's later report to Mr Lenfest. Mr Egan's suggestions probably played some part in the arrangement of meetings with Schroders Australia Limited and Barclays de Zoete Wedd. 108 Finally, Mr Heller had discussions with representatives of Optus and with a body called EDS which had already had discussions with UCOM about the provision of various services and systems for a pay TV operation. 109 Both Mr Heller and Mr Plant wrote reports on their visit to Australia. It is unnecessary to describe them in detail. In his summary of meetings concerning capital resources, however, Mr Heller described a "consistent message" from the potential underwriters and advisers whom they had met: "The details of the message was [sic]: 1. Minority interest in both licenses by US cable interest from an investment and operating standpoint was required. 2. Public Offering (Float) as soon as possible in Australia to provide an exit strategy for the Instutional [sic] Investors. 3. Need to time offering so as to not hit the Christmas season which is mid‑Summer in Australia. 4. Cooridinated [sic] sale of capital needed for both licenses so as to not compete against each other in the capital markets." Mr Plant's report was rather more laconic. It expressed optimism about the ability of the Australian capital markets to provide the financing required. Mr Plant went on to observe that timing was critical and it was imperative that financing initiatives begin immediately. He continued: "Without exception, our sources in Australia (Schroders, Turnbull, Nomura, BZW etc). indicated that the financing of License A and B and the operating company should go in tandem. Without a coordinated approach, the potential investors would most likely play one deal against the other with an overall reduction in interest on both transactions collectively. In response to our questions about the viability of a successful underwriting of Australian Pay TV, all investment bankers suggested the following items as essential to success:

1. Selection of a reputable Australian advisor; 2. The presence in the ownership structure of each license (A & B) of strong, well financed and reputable U.S. operators and/or programmers (almost a condition precedent); 3. As indicated previously, a coordinated financing as between A and B; and, 4. The appointment of a figurehead chairman of the company owning the license. This person should be well regarded in Australian business circles, politically connected and personally reputable. It is not required that the person selected take an active role in the company or receive compensation." 110 Mr Plant proceeded to discuss potential advisers. He then suggested a "general strategy" to raise up to $A500,000,000 through a float and he suggested two "scenarios" for this. He then referred to various "action items" and "issues" and concluded with three recommendations: "A. Depending on further research, select Schroders as advisers. Definitely not Turnbull. B. Take total control of all financial negotiations. C. Have dedicated team addressing project." 111 Mr Hadid and Mr Lenfest spoke on the telephone either just before or just after Mr Heller and Mr Plant left Australia. Mr Hadid's version was that after each had expressed pleasure about what had happened during the visit, "I said, 'It's a great relief after all the negative press we've been having to see that they are so confident and so good at what they do.' Mr Lenfest said, 'Albert, stop being concerned about fundraising, capital raising is of no consequence, I have been able to raise funds even in light of industry confusion. I will send you an article which will give you the confidence to stop worrying about the money side of it.' And I said, 'Are you saying you will raise the money, Mr Lenfest?' He said, 'I will raise the money.' He also said, 'The money will be raised. I will send you this article that I am talking about … what you've got to do is keep doing what you're doing and that is support us and we'll make sure we look for the partners.' " 112 There was then, according to Mr Hadid, a discussion about TPL: Mr Hadid expressed disappointment about Mr Heller's negative attitude to them and Mr Lenfest said that he would speak to Mr Heller about it, to which Mr Hadid responded: "Please do because he was very adamant that that decision would be yours not mine and I was adamant that I have to play a part in that decision because Turnbulls have been good to us and we've got to try and ensure we keep them on unless you have a good reason. If you do, then I'd like to know what it is before I can consent at [sic] not appointing Turnbulls." 113 Mr Lenfest did in fact send to Mr Hadid, on 8 September, a copy of an article in a publication, Cable World, of 30 August 1993 headed "Lenfest's Post‑rereg Coup - MSO executes bank loans syndication despite industry wide uncertainty." The article had to do with the refinancing by LCI, through PNC Bank, of a syndicated $200,000,000 loan at an increased amount ($260,000,000) and with an extended repayment date. Mr Lenfest also sent a copy of a "tombstone" announcement, apparently to do with LCI's venture in France in association with TCI. 114 Mr Lenfest's account of the conversation was very different. According to him, it commenced with a complaint, which Mr Hadid deflected but did not answer, about the absence of the underwriting, the existence of which (according to Mr Lenfest) both Mr Hadid and Andrew Price had asserted at the end of August. According to his own account he complained also about difficulties which had arisen with the ABA. He denied Mr Hadid's account. The copy of the article sent on 8 September: "… showed the strength of our company and that we were able to borrow funds at a time when it was difficult to do so. But that was in the context of showing what our company was like, not our ability to raise funds for Australia."

(f) Bain: meeting of 10 September 1993 and beyond 115 A meeting of considerable significance took place in Bain's office on 10 September 1993. According to Mr Hadid (Dr Burt denied it) the meeting was preceded by two meetings, during the immediately preceding days, between Mr Hadid and Dr Burt. The earlier, according to Mr Hadid, took place at Bain's offices. His evidence was that the conversation proceeded as follows: "… well Dr Burt said, 'Now I want all the business plans, all the information, … so Bains can start its due diligence on the figures.' I said, 'I'd be happy to do that … but … you've got to sign a confidentiality.' He said, 'Organise the confidentiality and fax it to me and I will arrange to get it signed.' And I said, 'Okay I'll do that. Now what would you like?' And he said, 'Let's start with the business plan.' " 116 On the second occasion, on about 9 September, Mr Hadid said that he "copied the documents and gave them to Dr Burt" and said to Dr Burt: " 'Don't hand these over to anybody without my permission', and he said, 'You know I've got to get Bains to start working on them so we can meet at Bains and get this … process of … due diligence on the figures commenced.' " 117 Dr Burt denied that either of those meetings occurred and that he received documents from Mr Hadid at that time. 118 At all events, the meeting at Bain's office took place probably during the morning of 10 September. It was attended by Mr Hadid, Dr Gadir, Mr Egan, Mr Ritchie and Mr Noah, representing UCOM, and, representing Bain, Dr Burt, Mr Johnston, Mr David Grimes (Mr Grimes) and, possibly, others. Three of the participants took notes, which are in evidence, but there is nonetheless considerable dispute about what was said, and by whom. The importance of the meeting lies in whatever light it may throw on the information which Bain had received and the role which, at that time, it (and particularly Dr Burt) assumed. 119 Mr Hadid's account has Dr Burt taking the lead at the meeting: he opened it by thanking the UCOM representatives for coming and asserting that they were there "to try and support Bains because we want to get on with the due diligence on the UCOM figures and … we would appreciate your assistance as much as you can help us." Mr Hadid also has Dr Burt offering what he characterised as advice, for instance: "I advise that you guys have seven directors on the ultimate licence companies … two from UCOM, two from Lenfest, three other directors and a notable chairman' [and] '… I advise you that you should get a valuation done on the licences like Australis did'; [and] '… Albert, my advice is that you and Lenfest get on and secure the programmers.' " 120 There was discussion of a confidentiality agreement; it was arranged that one would be sent to Mr Johnston, who was to show it to Bain's lawyers and have it signed, but on an understanding that in the meantime "all the information and business plans we give you today or have given you so far … [would] be subject to confidentiality." There was then an arrangement under which Bain would return the documents which they already had and receive, in return, "the latest figures from Mr Ritchie and Mr Noah." Mr Hadid asked the members of his team to "discuss the documents and whatever we have with us for now and ensure that Bains are fully supported to commence their due diligence on the figures." 121 Dr Gadir's account was similar to Mr Hadid's so far as it dealt with a confidentiality agreement and interim arrangements as to confidentiality; and Dr Gadir said that documents were handed over at the meeting, although he was unable to be specific as to which documents they were. His account of the words with which Dr Burt opened the meeting was as follows: "… We are all here on a very exciting occasion, you guys have now got a partnership with Lenfest and we are here to underwrite, to progress the underwriting of the licences. We should start by doing due diligence. You people have to provide [us] essentially the main information that you have collected, your business plans, the logic of your spreadsheets and given that you now have a partner obviously once your partner is satisfied with your own figures it will help us finalise it. We will get their go‑ahead but in the meantime we will work on your business plan, we will put it into our business models, or into our modelling software … into the computers, and work on it to the best of our capability so that we can be ready in time when the go ahead is provided by Lenfest." 122 Mr Noah also gave an account. He gave evidence that documents were exchanged at the meeting, and that he explained some of them, including a Hi Vision business plan and financial model and the Project Koala contact list. He said that there was also a UCOM financial plan which Mr Ritchie explained. He had Dr Burt opening the meeting with the words: "We're here to do the due diligence for the business including … the two channels, licence A and licence B and the purpose [of] the meeting is for you guys to make our job easier in identifying those individuals who have specific knowledge in specific areas and to try to allocate tasks for each to gather all that information and pull it into one spot." 123 Each member of the UCOM team then introduced himself and explained his role. Dr Burt introduced the Bain team: particularly, he said that Mr Johnston was his "right arm" and that Mr Noah should deal with him in relation to the financial side of the business. Mr Noah recounted also the agreement in principle that a confidentiality agreement would be signed. 124 Mr Egan took notes of the meeting. It will be necessary to return to them in more detail, but broadly it may be said that his notes commenced with a series of items relating to various technical and regulatory issues. They then record "next steps financial structure vis a vis new partners"; there follows a reference to the need to sign a confidentiality agreement; the notes then refer to "numbers" and record "Craig to supply full set of numbers." Then various matters, some somewhat cryptic, are attributed to Bain, particularly a wish to understand key variables; and there is attributed to Bain "details of U/W background & success." There follows a series of notes: "‑ may provide Peter Cox to assist; ‑ U.S. not phased [sic] by penetration levels; ‑ Current model is 8 dimensional & to be rebuilt." 125 There are notes concerning a submission to the ABA and matters related to it; then Mr Egan writes: "Info on Lenfest: Dun & Bradstreet. ‑ Want copy of exactly what Bain & Nomura have: IM & financials." 126 There are then notes about a licence valuation, and matters apparently relating to structuring and investment in the licences, and to the structure of boards of directors for the licensee companies and, apparently, related matters. Finally, there is a series of apparently disconnected notes: "Need to identify contract between subco & licence holders. Read Act. Lenfest: want weakest possible competitor in licence sold. Review Act. What is competitive response of PMT??? Lock away top programmers." 127 In his oral evidence, Mr Egan had Dr Burt opening the meeting with a statement that a timetable for a capital raising was needed, and proceeding to expound the various technical and regulatory matters to which the notes refer. He recalled that, at the beginning of the meeting, documents were distributed, comprising a confidentiality agreement for each of Bain and Nomura and copies of the then current financial model and business plan. In addition to the matters that the notes specifically attribute to Bain, Mr Egan attributed to Dr Burt comments about a need to understand the financial structure "vis a vis the new partners, being Lenfest"; a suggestion that Bain might use the services of Peter Cox "who was a respected media analyst"; the note about Dun & Bradstreet and the material about boards of directors equally were attributed to Dr Burt as were questions about potential equity investors and the suggestion that a valuation of the licences be obtained. Mr Egan claimed that Dr Burt said that he wished to sight the contract between the proposed operating company and the licence holders and that he wished to read the "Act" (presumably the Broadcasting Services Act); Dr Burt also said, according to Mr Egan, that he wished to understand the competitive response of PMT (that is, a consortium comprising Packer and Murdoch interests and Telstra); and it was Dr Burt, according to Mr Egan, who suggested that LCI would want the weakest possible competitor in the licence sold. Equally, Dr Burt referred to a desirability to "lock away" top programmers. 128 An obvious feature of that evidence is that it attributes to Dr Burt almost everything recorded in Mr Egan's notes and virtually nothing to anyone else. Mr Egan attributed to himself the statement that LCI was not "phased" by the penetration levels utilised in the financial model, and to Mr Hadid a discussion about dealings with the ABA, a request for the return of all documents held by Bain and Nomura on the basis that fresh documents would be distributed and a statement that a confidentiality agreement should be signed. 129 On the Bain side, Dr Burt and Mr Grimes took notes; Mr Johnston did not. It is not surprising that there is considerable coincidence between the three sets of notes (Mr Egan's notes and the two sets of Bain notes) as to the topics covered though, equally unsurprisingly, where the three note takers deal with the same matter they do not all record precisely the same details. No note taker (again unremarkably) made a practice of attributing particular matters to particular participants: there are one or two exceptions, notably the matters which Mr Egan's notes specifically attribute to Bain. A matter which both Dr Burt and Mr Grimes cover in some detail, but Mr Egan not at all, is the description of the background and role of each of the various members of the UCOM team. Again, there is nothing surprising about that: that was information already well known to Mr Egan and, similarly, the Bain representatives did not note the details of Bain's underwriting background and success. Among particular matters which Mr Egan notes, but neither Dr Burt nor Mr Grimes does, are the references to Dun & Bradstreet, to a wish for copies of exactly what Bain and Nomura had by way of documents, to a licence valuation, to questions relating to investment and equity contributions, to the composition of the boards of the companies, to a need to read the Act and to LCI's wish (or likely wish) to want the weakest possible competitor in the licence sold. 130 In oral evidence, Dr Burt said that no documents were handed over at the meeting except, possibly, the confidentiality agreement. He said that the arrangement was that documents would be provided once the confidentiality agreement had been signed. He attributed to Mr Hadid the discussion concerning technical and regulatory matters. He denied substantially all the other matters attributed to him by the UCOM witnesses; according to his evidence, his only substantial contribution to the meeting was that he "essentially repeated our pitch as Bain" which he proceeded to describe. 131 Mr Johnston's account, unaided by notes, was substantially similar to Dr Burt's. He recalled particularly the introduction to the members of each team of each member of the other; he recalled an arrangement that a confidentiality agreement would be prepared, submitted, checked and signed. He recalled Mr Hadid, during the course of the meeting, saying that he wanted a 30 per cent free carried interest and that he, Mr Johnston, responded that "until we understood the financial model of the whole company to be floated … there was no point in talking about any free carried interest." Like Dr Burt he denied the other matters attributed to Dr Burt by the UCOM witnesses. 132 Mr Grimes had no recollection of what was said at the meeting apart from what he had recorded in his notes. He gave evidence of a clear recollection, however, that no documents were tabled or handed over during the meeting or immediately before or after it. 133 According to Mr Egan - no other witness gave evidence of it, and Dr Burt denied it - the meeting at Bain's offices was followed by a luncheon at an hotel on the corner of Grosvenor and George Streets, attended by Mr Hadid, Dr Gadir, Mr Noah, Mr Ritchie, Mr Egan, Dr Burt and Andrew Price. Mr Egan said that, during lunch, Dr Burt: "… said words to the effect that he wanted to complete his due diligence process as quickly as possible; that he was able through his mandate from his employer to seek underwriting approval by way of a phone call to Deutsche Bank in Germany and that that was effectively a very short process but he really required before that began to get the information that was requested in the meeting held previously." 134 On 14 September 1993 Mr Hadid left with Mr Blanks for the United States. Mr Hadid gave evidence in cross‑examination that he had a conversation with Dr Burt before he left. His evidence on this topic was given first when he was cross‑examined by senior counsel for LCI and Mr Lenfest and, secondly, when cross‑examined by senior counsel for Bain and Dr Burt. On the first occasion Mr Hadid recounted the conversation as follows: "I said to him, 'I'm going to the US' and he said 'Look, don't forget, put in a good word for us, we want to do the underwriting, we're working on your figures now.' I said '… the feeling I get is that Gerry is keen on the US key investors, he is not so much concerned with the financial matters and the underwriting at the moment and he considers a crux … to be the US key investors' and Wayne said 'we've got enough to do now so we're happy to underwrite as soon as he finds the US investors.' " 135 Mr Hadid proceeded to recount the following conversation with Dr Burt: it is not entirely clear whether it was part of the conversation just described or a separate conversation occurring some time between 10 and 13 September: "He told me they'll underwrite and they can find the foundation investors in Australia, it's about money, banks can find the money. I told him Mr Lenfest considers the crux to be the US key investors, that's the only way he wants to move forward on the underwriting and he wants to get that in place first and Dr Burt said 'Fine, as soon as he gets that in place we're happy to underwrite.' " 136 When cross‑examined by senior counsel for Bain and Dr Burt, Mr Hadid recounted the pre‑departure conversation as follows: "Dr Burt called me and he said, 'We're working on the UCOM figures, could you please put in a good word for us because we want to do the underwriting', … I said, 'Look, you'll find Gerry is more interested in the US key investors than he is in the underwriting and the finances and he has already made it clear that he considers the crux is the US key investors and he's made that clear for Turnbulls as well', and Burt said, 'Well we've got enough to do for now so we're happy to underwrite you get the US key investors or - once you find them let us know and we'll be happy to underwrite.' " 137 Dr Burt agreed that there had been discussions about United States investors being the key - for instance at the first meeting with Mr Heller and Mr Plant - but said that otherwise the conversation, or conversations, as recounted by Mr Hadid did not take place. 138 On 10 September, following the meeting, Mr Hadid sent Mr Johnston a confidentiality agreement for execution. It was returned, executed by Bain and amended in some minor respects, on 16 September. On the morning of Saturday, 18 September Mr Noah met Dr Burt, Mr Johnston, Mr Grimes and, probably, one other representative of Bain. Dr Burt said that he was there only very briefly because he was leaving that day on a visit to China: he did leave Australia that day, and he returned on 27 September. Mr Noah had his lap top computer with him and he printed out a current UCOM model. He also gave the Bain representatives computer disks on which a version, or versions, of the model were recorded. There was some discussion about the detail of the model, particularly what were described as key variables; some of the matters discussed are recorded in notes made by Mr Grimes and Mr Johnston on copies of a model bearing a print date 17 September 1993. Although, in the end, I do not think it much matters, there is some controversy between Mr Noah and the Bain witnesses as to the precise sequence of events: Mr Noah recalled a meeting with at least Mr Johnston and Mr Grimes on a Saturday preceding a weekday meeting which he had with Dr Burt alone at which, according to Mr Noah's evidence, Dr Burt displayed a good knowledge of the UCOM business plan and model. After some hesitation, Mr Noah gave evidence that there were probably two Saturday meetings, one on 11 September and the other on 18 September, the separate meeting with Dr Burt occurring during the intervening week. Dr Burt says that there was no separate meeting with Mr Noah; Mr Johnston and Mr Grimes say that there was only one Saturday meeting, on 18 September, and that that meeting was the occasion on which they first received documents from UCOM. The only real significance of the evidence about a separate meeting with Dr Burt is that Mr Noah's evidence was that Dr Burt: "… further said to me that the projections were not bullish enough and that the 30 per cent discount rate was high and he could justify - or the figures could justify - a lower discount rate than 30 per cent that was in the model and I then asked him how it would reflect on the free carried interest and would 30 per cent be reasonable and his reply was, 30 per cent is quite supported in the model and any figure is reasonable and it's only depended [sic] on how you package it to the market." 139 Apart from that matter, except so far as it may be relevant to credit, the controversy between Mr Noah's evidence and that of the Bain witnesses is not particularly significant. For reasons which will appear, however, I find that there was only one Saturday meeting, on 18 September, and that the separate meeting with Dr Burt, as recounted by Mr Noah, could not have happened and did not happen. 140 Mr Hadid gave evidence of one further, potentially significant, conversation occurring before the second visit to Sydney of the LCI representatives. He gave evidence, in cross‑examination, that between 23 and 25 September he had a discussion with Mr Johnston, to this effect: "I said, 'Are you involved with any other body regards to the pay television industry, advising them or working with them or underwriting?' He said, 'No, all other groups … have already formed their alliances. Our only hope is UCOM.' I said, 'What is with the change, the modification [sc of the confidentiality agreement]?' He said, 'We have put in that modification because we are keen to work with you, with UCOM, and we are also keen to work with Lenfest when the approval comes through, however, the change is so that when we are ready when we ultimately go out and sell the clients on behalf of UCOM that shows us your flexible commitment to Bains and we are happy to give you advice and work with you until such time as you and Lenfest have officially decided on your course and your engagements and so on.' " 141 Later in his cross‑examination, Mr Hadid referred to a discussion at about the same time (it is not clear whether Mr Hadid's account is of one conversation or two) in which: "I said to Rowan Johnston, … 'Look, Cass seems to just have this position, that 20 per cent free carry is the position that she takes, what are your thoughts on it?' He said, 'Albert …, with all respect, a gut feel has nothing to do with it. Whether it's 20 per cent or 40 per cent or 50 per cent it'll depend on the numbers and how they shape up. It's a business numbers situation, how the numbers support what you're aiming at.' " 142 Mr Johnston agreed that he had had conversations with Mr Hadid towards the end of September. His evidence was: "Albert often asked whether he could have a 30 per cent free carried interest and I said all the time that until the financial model is completed and we can work out what's in it for investors, it's pointless talking about any size of free carried interest. Hypothetically everything is possible but until we see the model we do not know what can be achieved." 143 Mr Johnston denied the other remarks attributed to him by Mr Hadid.

(g) Visit to the United States; troubles with the ABA 144 Mr Hadid and Mr Blanks left for the United States on Tuesday, 14 September 1993. Mr Hadid returned to Australia on Wednesday, 22 September, Mr Blanks some weeks later. 145 On the day before their departure, 13 September, the ABA had requested the Trade Practices Commission, under s 97 of the Broadcasting Services Act, to provide a report in relation to UCOM Australia's bid for licence A (but not New World's bid for licence B). That followed a series of letters exchanged between UCOM and the ABA, principally in relation to the possibility of a determination as to suitability under s 98 of the Act. Mr Hadid and Mr Blanks regarded the ABA's attitude as unsympathetic and it is not surprising that they formed that view: the tone of the ABA's letters and its requests for further information was certainly somewhat peremptory. Particularly, the ABA seemed to regard with some scepticism a series of protestations from UCOM that arrangements would be made to ensure that, when the licences came to be granted, there would be no breach of the cross‑ownership provisions. The ABA dismissed with some vigour an argument put forward by Mr Blanks in correspondence, to the effect that the ABA either could not or should not commence an inquiry into the question of suitability almost immediately after the deposits had been paid. Correspondence with the ABA continued both during and after Mr Hadid's and Mr Blanks' visit to the United States and it will be necessary to return to some aspects of it later in these reasons: it bears upon the nature and terms of the relationship between LCI on the one hand and UCOM and Mr Hadid on the other. 146 Apart from the ABA correspondence, three aspects of the visit to the United States are important. One is further discussion, said to have occurred, about LCI's role in funding the licences; the second is the agreement to appoint TPL as adviser to both UCOM and LCI; the third is the initiation of discussions with Time Warner about the possibility that it might invest in one of the licences. In addition, Mr Hadid gave evidence of a conversation about underwriters and underwriting; that matter is significant only in relation to findings as to the terms of the initial conversations between Mr Hadid and Lenfest and I shall return to it in that context.

(i) Funding the licences 147 The first matter arose during what appears to have been a casual conversation with Mr Heller early in the visit. Mr Heller told Mr Hadid, according to Mr Hadid's evidence, that he intended: "… to … recommend to Gerry that he finances both licences A and B, put you in one and we control one and you control the other one. This way we can in fact deal with the ABA issue as well as secure the market." 148 Mr Hadid said that he expressed the view that care would have to be taken to ensure that the authorities were fully informed and that what was done was within the law: and he asked Mr Heller whether he thought Mr Lenfest was likely to agree to finance both licences and to provide "further equity." The conversation, he said, proceeded: "… he said, 'yes, I believe so because, Albert, control is very important if we can control the market control itself is worth much more than the company is usually because that puts [us] in the prime position and this way he can cover his back and at [worst] we're friendly competitors but we can do better than that can't we.' I said, 'Yes, we can providing we are within … the spirit of the law.' He said 'Are you for real, we will show you how to get around these guys, how to deal with the authorities.' I said, 'No, Don, it's gotta be done within the law.' " 149 Mr Hadid said that he mentioned Mr Heller's suggestions to Mr Lenfest about two days later, on 17 September, while they were travelling by train to meet representatives of Time Warner. Mr Lenfest had responded that the idea sounded good and that he would look into it. 150 Mr Heller denied each element of the conversation as recounted by Mr Hadid; Mr Lenfest denied that anything was said to him about a recommendation by Mr Heller that LCI should fund both licences and that Mr Heller made any such recommendation.

(ii) TPL 151 On 16 September Ms O'Connor attended a meeting at West Chester at which she sought to persuade representatives both of UCOM (Mr Hadid and Mr Blanks) and of LCI (Mr Lenfest, Mr Heller and Mr Plant) that TPL should be engaged, by both groups, as advisers. She placed some stress on TPL's connections both with the ABA and the government. There are differences, of no particular significance, about what views were expressed by whom, after Ms O'Connor left, on the proposal that TPL be appointed. A letter of appointment, dated 17 September and signed by Mr Lenfest for the Lenfest Group and by Mr Hadid on behalf of UCOM Australia, was sent to TPL. It contemplated two things: first, that TPL would assist in meeting all requirements of Australian law and satisfying the ABA and the Trade Practices Commission that they had been met, for which TPL was to be paid $A40,000 per month for three months; secondly, TPL was to assist in arranging financing for both licences and to recommend Australian underwriters, for which TPL's compensation was to be based on its contribution, "but only as mutually agreed upon." It was made clear that TPL were to be advisers only and had no authority to commit either group; and media releases were to require the prior written approval of both groups. 152 Ms O'Connor wrote to Mr Lenfest and Mr Hadid on 23 September to the effect that the terms of the letter of appointment were acceptable, subject to certain points of "clarification": those points were, first, a suggestion that the success fee, in relation to the raising of funds, should be 1.75 per cent of the funds raised, secondly that the monthly fee should be payable in advance and thirdly that the agreement should be terminable (other than for cause) only if LCI and UCOM were unable to fund the balance of the purchase price and working capital requirements. Mr Plant, by way of agreement, signed a copy of Ms O'Connor's letter on behalf of the Lenfest Group; it was never signed on behalf of UCOM.

(iii) Time Warner 153 On 17 September Mr Hadid, Mr Blanks, Mr Lenfest, Mr Heller and Mr Plant visited the offices of Time Warner in Stamford, Connecticut. They met Mr Geoffrey Schwall (Mr Schwall) (who represented the cable television side of Time Warner's operations) and Ms Linda Sweeney (Ms Sweeney) (who represented a division of Time Warner known as Home Box Office or HBO, described in Mr Lenfest's evidence as primarily a premium movie channel.) The UCOM and LCI representatives took with them a document which Mr Heller had compiled, described as "Investor Offering", which in very broad terms solicited investment in either licence A or B, described a proposed structure involving two groups of licence owners and an operating company and set out proposals for programming using the channels available to both groups of licence holders; attached were cash flow summaries taken from a version of the UCOM financial model which had been given to Mr Heller during his visit to Sydney and portions, at least, of the UCOM information memorandum of July 1993. The proposal to Time Warner was that it should advance the funds necessary to acquire one of the licences on the basis that there would then be an underwritten fund raising, leaving Time Warner with the maximum permitted 20 per cent equity interest; LCI and UCOM would retain a 30 per cent free carry or "carried interest"; and there would be an operating company which LCI would manage on a day to day basis. Unsurprisingly, there are differences between the various accounts of what was said during the meeting, but in the light of what followed they are not of any particular significance. One matter upon which all agree is that Time Warner expressed a clear view that both because of the size of its potential investment and because it was the more substantial cable operator in the United States, Time Warner, rather than LCI, should control the management of the operating company. It was agreed that UCOM and LCI would put a written proposal to Time Warner. 154 The following day Mr Lenfest prepared a draft proposal. In essence it was that Time Warner would advance the $A111,150,000 required to complete the purchase of licence B; that Time Warner's agreement to do that would be conditional upon a similar commitment of other United States cable operators (possibly including LCI) to fund the acquisition of licence A; it was conditional also on reasonable assurance from Australian underwriters of the availability of financing, through an Australian private placement or public offering, to reimburse an appropriate portion of the funds advanced by Time Warner and to provide working capital. The draft contemplated that Time Warner would retain a 20 per cent equity share and would "program one channel with primarily first run premium movies and events." It contemplated distribution of programs ultimately through MDS and cable as well as satellite. It provided for the retention by UCOM and LCI of an aggregate 20 per cent carried interest, but one which would not entitle the holder to "share in any distributions of accumulated net income from license B until Time Warner and other investors in License B had recouped their investment with interest." Finally, the proposal contemplated an operating company for both licences, to be owned as to one third by the owners of licence A, as to one third by the owners of licence B and as to the remaining one third by LCI and to be controlled by a board of six, comprising two representatives from each of those three groups; day to day management was to reside with LCI. 155 That draft was sent to Mr Hadid who, by then, had left Pennsylvania. He and Mr Heller had a conversation, in which Mr Hadid made it clear that he regarded the late August exchange of correspondence between UCOM and LCI as binding, that the proposal should contemplate a 30 per cent carried interest and that there should be no restriction on participation in distributions of net income. (Mr Hadid's account of the conversation had Mr Heller agreeing that a free carry of 30 per cent was achievable, and attributing a similar belief to Mr Plant: it also had Mr Hadid asserting, without any demur by Mr Heller, that Mr Lenfest also thought that 30 per cent was attainable.) Mr Hadid also required that the one third share of the operating company be owned not by LCI alone, but by a combination of LCI and UCOM. Mr Heller, possibly after speaking to Mr Lenfest, agreed to those changes; a revised version was prepared and was signed by Mr Hadid; the likelihood is, though the evidence does not clearly establish it, that the revised version was transmitted to Time Warner. In any event, a few days later Mr Heller and Mr Plant had a conversation with Mr Schwall. Its substance is recorded in a memorandum from Mr Plant to Mr Lenfest dated 21 September. Three matters were raised by Mr Schwall: first, that the UCOM projections were optimistic, particularly as to revenue; secondly, that the 30 per cent carried interest was too high, that 5 per cent to 10 per cent would probably be more appropriate but that "he would have a better feel after running the numbers"; and thirdly, that Time Warner would require a significant say in the operating company, the suggestion that control should reside with LCI being a "deal breaker." Negotiations with Time Warner, to anticipate somewhat, never advanced significantly beyond that point.

(h) Second LCI visit: 28 September to 8 October 1993 156 Mr Heller and Mr Plant returned to Sydney on 28 September. The evidence does not enable me to reach detailed conclusions about all that happened during the visit or in what sequence events occurred. Some matters, however, stand out. 157 First, Dr Burt had returned from China on 27 September. On 28 September there was a meeting at Bain's offices attended by Mr Plant, Ms O'Connor, Mr Egan, Dr Gadir, Dr Burt and Mr Johnston. Dr Gadir, alone, gave evidence that Mr Hadid was there as well (Mr Hadid himself did not claim to have been there). According to Dr Gadir, Dr Burt said: "I'm advising Albert you guys want the 30 percent carriage. I believe we can achieve that, we can do the underwriting. We just have to wait for Lenfest to give us the go ahead and we can do it." 158 Dr Gadir's evidence was that Dr Burt said that Bain would need a minimum of sixty days to complete the underwriting, and Mr Plant responded to this effect: "We are talking to some key parties in the States, it is a sensitive period, it is not an easy job, just let us finish that job first … and then … we will be able to give you the go ahead on the underwriting once we are satisfied that our parties are willing to go a particular direction or another." 159 Once again, the note takers at the meeting were Mr Egan and Dr Burt. Again, there are striking similarities between the two sets of notes. Indeed, up to a point where Mr Egan attributes a number of matters to "Bain" (in his oral evidence, to Dr Burt) the two sets of notes cover much the same ground. One of the first items which each note taker records is a concept which he describes as "solidifying relationships" with advisers (or financial advisers) and underwriters. Mr Egan interpreted his note as recording a statement by Dr Burt to the effect that he wished to "solidify" the relationship between LCI and Bain in relation to both advising and underwriting. Dr Burt, on the other hand, attributed to Mr Plant a statement that he (Mr Plant) wished to solidify "the various relationships that we have with advisory groups who's advising us and in fact who's underwriting." Given that the only prior contact between LCI and Bain was the evening meeting during Mr Heller's and Mr Plant's first visit, at which the Bain representatives made a promotional "pitch" later followed up by a promotional letter, and given also later references in both sets of notes to the role of TPL as adviser, Dr Burt's version of that aspect of the discussion is in my view considerably the more plausible and I accept it. There is substantial consensus that Mr Plant proceeded to offer a brief description of preliminary contact that LCI had made, not just with Time Warner but also with other United States cable television operators seen as potential investors. There is substantial consensus between Mr Egan and Dr Burt that Mr Plant at least expressed a view that LCI ought to assert a degree of control over financial negotiations. (Mr Egan's version was that Mr Plant "said words to the effect that Lenfest was in control of the financing".) Mr Egan proceeded to attribute a number of matters to Dr Burt, relating specifically to underwriting, which find no counterpart in Dr Burt's notes. They include the proposition that at least sixty days would be needed for an effective underwriting, matters relating to the composition of a group of underwriters and sub‑underwriters, detail relating to the internal Bain approval process and some promotional matter about the size and strength of Bain. Dr Burt was prepared to accept, in his evidence, that he may have said some, but not all of that: particularly, he denied that he said that sixty days would be the period required for completing the underwriting: "it was impossible to put a time on something that we didn't know what it was." 160 Secondly, Australis entered the picture during the second visit. The prospect of contact with Australis arose during the first day or two of the visit. Mr Hadid, Dr Gadir, Mr Noah and Mr Egan all attributed to Dr Gadir the suggestion that Australis be contacted; Mr Egan's account of the suggestion was: "Dr Gadir … said words to the effect, 'Why haven't we contacted Australis yet, they are an obvious candidate for either a strategic partnership or investment.' To which Mr Hadid replied in words to the effect that he agreed that Simon had brought this up on a number of occasions in the past. … Mr Heller then said words to the effect that he had heard of Australis and he thought that that was a good idea to make contact with them … I said words to the effect that I would contact Rod Price who was the chairman of Australis. Albert then said words to the effect, 'Why don't you give him a call and set up a meeting.' … Don Heller said words to the effect 'I agree' and I then made a phone call to Australis from the board room." 161 Mr Heller, on the other hand, denied that Dr Gadir had suggested Australis and claimed tohave made the suggestion himself: "The only discussion that I had about this time about Australis was requesting that we have a meeting set up with them because a friend of mine in the United States who was in the wireless cable industry [sic] … suggested that I contact the people at Australis. I think specifically he told me to contact Cosser." 162 However the topic may have arisen, evidence given by Mr Price confirmed that Mr Egan arranged a meeting and it was held at the Ritz‑Carlton Hotel on 1 October. Mr Price and Mr Cosser attended; so did Mr Hadid, Mr Heller, Mr Plant and Ms O'Connor. The meeting was brief and not encouraging. The accounts of it vary in detail, but not in substance. Mr Heller's is typical and has the advantage of brevity: "I introduced the parties when Cosser and Price arrived. … The meeting was conducted about 4:30 in the afternoon at the … concierge lounge … the third floor of the Ritz‑Carlton Hotel. I said words to the effect that Lenfest was involved in satellite licences, we wanted to explore the possibility of working together with Australis. We understood they had MDS licences in Sydney and Melbourne and we basically received blank stares and grunts and they said they would think about it and get back to us and the meeting ended. It lasted all but about 20 minutes." 163 Though I do not think in the end any party suggested that anything turned on it, it should perhaps be recorded that Mr Hadid claimed to have arrived very late, only in the closing stages of the conversation (although his description of what he encountered when he arrived is entirely consistent with Mr Heller's description); Mr Heller claimed that Mr Hadid was there throughout. 164 Thirdly, work was done on the business plan and model. Mr Heller participated in that process with, at least, Mr Egan and Mr Noah. Undoubtedly Mr Heller requested that sensitivity analyses be done in relation to major assumptions and work of that kind was undertaken. There is some controversy, which for the present I need only mention, about the terms in which, and the extent to which, Mr Heller expressed agreement or satisfaction with the assumptions in the business plan and as to what versions of the business plan were in fact given to Mr Heller during the visit. 165 Fourthly, there was discussion about, and with, potential investors. Mr Heller's evidence was that he met Mr Wright and Mr Noah for the first time early in the second visit, that he then saw for the first time the "Project Koala" list and an additional Hi Vision contact list and took part in a discussion of names on them. (Witnesses called by Mr Hadid suggested that this happened during the first visit.) There were further negotiations and correspondence with Mr Dougherty and the offer by Pankhan was refined. There was discussion of a proposal that Dr Gadir, Mr Egan and Mr Wright visit Thailand for the purpose of putting to Shinawatra Corporation, a large regional pay TV operator, a proposal for investment in the licences. Additionally, there were discussions and correspondence with both the ABA and the Trade Practices Commission directed largely to the question of the way in which UCOM and LCI proposed to attract investment so as to comply with the legislative constraints on control of, and equity ownership in, the licences. 166 Finally (for the present), there was a discussion between Mr Hadid and Mr Heller about the terms of the arrangements between UCOM and LCI. Mr Heller's version of it was: "I said to Mr Hadid, we need to work out what our arrangement is going to be. If we accept either the Dougherty or Trojan proposal or any other proposal for that matter where funds would be coming to the parties … the agreement that we had dated 29 August didn't contemplate the sale of one of the licences. He indicated to me with words to the effect that he didn't want to change the agreement that we had dated 29 August until we had a firm dealing in place with someone. I indicated to him that I was very concerned that there was no underwriting in place. There wasn't any movement that I could see. We weren't being very successful in getting people to join in the venture. Part of that was the free carry that was being requested and that I was very concerned that our money was at risk. … I asked that we change the deal that Lenfest have some control to move forward and he said that he was not prepared to shift control from UCOM to Lenfest, …" 167 Mr Hadid's version was similar but did not mention the question of free carry and had Mr Hadid suggesting that under the existing agreement the deposits would be repaid, with interest, from the proceeds of a sale. Mr Heller and Mr Hadid agreed that at about the same time Mr Heller requested, and Mr Hadid undertook to provide, a list of the expenses which UCOM would seek to recover on sale or capitalisation of the licences. The list was provided in a letter dated 7 October addressed to Mr Plant. 168 Mr Heller left Australia on 5 October in order to attend, with Mr Lenfest, a meeting with Dr Malone for the purpose, in part at least, of soliciting (unsuccessfully, in the event) investment by TCI. Mr Plant left Sydney on 7 October: Mr Hadid's evidence, denied by Mr Plant, was that Mr Plant asked Mr Hadid to defer further contact with potential investors pending the outcome of discussions with Time Warner and TCI. Mr Plant's version was that he merely requested Mr Hadid to keep discussions with potential investors out of the press. Mr Hadid gave evidence of a similar conversation with Mr Heller before his departure: Mr Heller could not recollect having had such a conversation. However, a letter from Dr Gadir to Mr Heller dated 8 October 1993 includes the following paragraph: "Stephen [Plant] requested that we continue not to contact any new parties until we have seen the offer from T‑W/TCI. We agree not to establish contacts until next week. However, we obviously cannot keep the licence from the marketplace for much longer, as time is running out. You suggested that T‑W was talking about a low 5%‑10% free‑carry. I can tell you after discussing with my other Directors, that such an offer will not be taken by us too seriously."

(i) Further involvement of Bain during and following second LCI visit 169 There is considerable controversy over a series of conversations said to have taken place between Dr Burt and Mr Hadid and other members of the UCOM team. They relate to a number of matters, but those which are particularly significant concern two questions: whether Dr Burt offered to act as adviser or assumed that role and whether Dr Burt accepted the feasibility of a free carry of 30 per cent. It is unnecessary at this stage to work in detail through the somewhat confusing series of conversations which may have occurred. By way of example, Mr Hadid gave evidence (in cross‑examination) of a conversation which he claimed to have had with Dr Burt, on the telephone, either at the end of September or very early in October. According to his account: "Dr Burt called me towards the end of September or beginning of October and he said, 'Albert, we have done the work on the figures. We are satisfied now that that is as far as we can go. We need to now work with Lenfest. We can do the 30 per cent. We believe that is achievable but we need to sit with Lenfest.' I said, 'I am working on getting you there with Lenfest.' He said, 'Albert, in the meantime I will be happy to advise you and work with you and give you what comfort I can in the directions which you are taking.'" 170 Dr Burt's evidence was that Mr Hadid expressed disappointment that LCI and TPL took a more cautious view than he about the likely extent of available free carry and pushed Dr Burt to agree with him that 30 per cent was achievable. Dr Burt, however, said that he declined to do so on the footing that the proposal was insufficiently advanced, and the available information inadequate, to enable him to form any precise view. 171 Mr Hadid gave evidence that probably on 8 October he met Dr Burt in "our usual spot at the Wentworth Hotel." Mr Hadid's evidence about that conversation covers a number of recurring themes and is of some significance. Again, it is necessary to set out a good deal of it: "Dr Burt, said … Albert, when are we going to start talk turkey with Lenfest, the process is moving … . I said Wayne, I've numerous times taken up the issue with Lenfest on your behalf for the underwriting but they don't seem to be concerned about the financing, but they know you're interested and he said they must know I'm interested because of my discussions with them and Turnbulls. He said Albert, I'm telling you you can't trust Turnbulls, you know, you don't know what they're up to. And I said well, I know that Lenfest are very honest and they can't do anything anyway without our formal approval because I'll require that to change anything. He said Albert, you're on an extremely big thing here, our research shows that you could make four, five hundred million dollars with the free carry you could make out of those licences … don't let that control go because you don't know what Turnbulls will get up to. [There followed discussion of LCI's United States contacts and contacts of Deutsche Bank in Europe.] I said is there anything else I can do, Wayne, because at the moment really we're just waiting on them and he said no, there's nothing else you can do, we've been through the figures, we've done the work we need to on the figures … and I said well, is a 30 per cent free carry still in your opinion acceptable and achievable, Wayne, and he said in fact I can tell you I could in fact justify even a little more if I could sit with Lenfest. I said Wayne, why do Turnbulls say it's only 20 per cent and you seem to be going that high? He said because they want to keep the difference … I told you you can't trust them … . I said they can't do that because we'll control, we've got to agree with their fees, and he said it's called creative structuring. These guys cause havoc, you know, ask, they move from one deal to another … they shift loyalties within the same deal more than once or twice by misleading people and misinformation … . He said you just have to be very careful and I said Wayne, I don't want to talk about Turnbulls, can we get out of here and he said what, you don't want to talk about Turnbulls, mate, I'm trying to do this thing for you, trying to get it fixed for you, all I'm asking … is a couple of hours with your partners face to face, just me and them, without Turnbulls and you can't even arrange that. Now I'm prepared to do this thing with or without the US investors, can you get them to start talking to me directly, but I don't want Turnbulls involved in the middle, you know … and I said Wayne, now, I'll talk to Don and I'll let you know what Don says, can I tell him about the 30 percent, that you're prepared to do it, and he said yes, you can but just get them to start talking to me." 172 Dr Burt denied that that conversation took place. He said that on 8 October he met Mr Hadid at the Bligh Street office and had a brief conversation before a meeting with Dr Gadir and Mr Egan; Mr Hadid, Dr Burt said, left shortly after the meeting commenced. Dr Gadir's evidence was that Dr Burt said something to the effect that he did not particularly trust TPL; he said that he believed that 30 per cent free carry could be achieved provided that "we have the foundation investor signing off" and suggested that the two licences should be financed by one entity rather than split between different brokers and underwriters. Mr Egan took notes of the meeting. His notes of the meeting refer to TPL, but not in the way suggested by Dr Gadir or Mr Hadid; his notes do not refer to free carry and in his oral evidence about the meeting Mr Egan did not mention it; the notes attribute to Dr Burt a suggestion that a joint fund raising strategy, for both licences, should be adopted and in his oral evidence Mr Egan attributed that suggestion to Dr Burt. Mr Egan also referred to other matters which I do not need to consider now. Dr Burt recalled discussion of TPL, reflecting a degree of frustration in the UCOM camp about a lack of communication; according to him, Dr Gadir and Mr Egan suggested that perhaps the best course might be "just to cascade these bids down and start again", provoking the statement by Dr Burt that he was not advising, but that he regarded it as common sense that UCOM should continue talking to TPL and LCI. He then recounted a discussion of free carry: "I think Dr Gadir said to me we want a 30 per cent free carry and we believe it's achievable. I said, look, I've had quite extensive discussions with Albert on this matter and I'm sure he's told you but we can't really comment on free carry in the absence of a firm underwriting proposal because we don't know what we are commenting on, but it's my feeling that's excessive. You should try for as high as possibly you can get, but at the end of the day it will be determined by the market and these are not concepts that you can just pull out of the air. The market will tell you based on your structure, the investors, programming et cetera, business plan et cetera, what level of free carry is achievable, but 30 per cent sounds very high." 173 Mr Hadid gave evidence that after speaking to Dr Burt on 8 October he spoke on the telephone with Mr Heller. Mr Heller, according to Mr Hadid, said "Albert now if you don't start getting in the way we can [get] both of these licences up." Mr Hadid denied that he was trying to get in the way, but said that he wanted to know what was going on. The discussion then turned to approaches to "contacts" (that is, potential investors) on the footing that LCI was "in control" but that Mr Hadid wanted to know what was going on and was concerned about the rate of progress. Mr Hadid then, he said, mentioned that Dr Burt wished to speak seriously about underwriting and was "prepared to actually offer us 30 percent free carry and he's serious about that and you're not doing anything about it." After initially expressing some scepticism, Mr Heller agreed to arrange for Mr Plant to speak to Dr Burt. Mr Heller denied that account. He agreed that he had conversations with Mr Hadid during that period, but of a substantially different character: see par 179. 174 On 12 October, or shortly beforehand, Mr Plant spoke to Ms O'Connor. Ms O'Connor, according to Mr Plant, told him that Bain was interested in pursuing a financing; he asked her to find out, more formally, what Bain was prepared to do and on what basis. Ms O'Connor wrote to Mr Johnston and Dr Burt on 12 October, requesting, on behalf of the Lenfest Group, a non‑binding "formal expression of interest re the Pay TV proposal which Lenfest, Ucom, Turnbull & Partners Limited and Bain Corporate have discussed on a number of occasions." The proposal to which the expression of interest was to relate included the following matters: that LCI and/or UCOM would control licence A, licence B being sold to third parties; that LCI and/or UCOM might retain minority stakes in licence B; that the amounts required to fund licence A and the licence A contribution to the operating company would total about $A253,000,000 "inclusive of carried interests and transaction costs but exclusive of the deposit already paid"; and that the carried interest in licence A would be 15 per cent. Bain was asked to assume also that appropriate United States investors would be secured as cornerstone investors and that, if necessary, LCI "would provide the funds in a debt/equity mix to pay the Licence Fee for Licence A by the due date, with a view to sell down, with your assistance, at a later date." When Ms O'Connor's letter was received, Dr Burt was in New Zealand: he returned on the morning of 13 October. Mr Johnston telephoned Ms O'Connor. His evidence, the substance of which I accept, was that: "I asked what this letter was all about. We hadn't heard anything from them for quite some time and suddenly we get hit with a letter like this. I asked how many other people got the letter and what the point of it was. … She said that they were seeking some non‑binding views from us as set out, that three or four other people were being asked for their views as well and stressed that it was non‑binding advice being sought or non‑binding views being sought from us in a fairly tight time frame." 175 On 13 October Mr Johnston and Dr Burt prepared a response to the letter and sent it to both Mr Plant and Mr Hadid. The response reads as follows: "Dear Steven and Albert PAY TV You have asked for our current views on several matters relating to the Pay TV proposal which is being developed by Lenfest and UCOM and their advisors. This is set out in a letter from Turnbull & Partners dated 12 October 1993. The particular matters on which our views are sought are: (i) the amount that might be raised under the proposal outlined; (ii) the options for the timing of a public offer; and (iii) a brief note of conditions to be met as part of or before an underwriting agreement could be signed Bain's views on these matters are set out below. For certainty, we note that these views have been prepared on short notice without the benefit of discussions with the parties involved. As specified in the request they are not meant to be binding in any way. (i) Amount to be Raised The arrangements outlined in the letter do not cause us to believe that less than the full amount required could be raised as equity for an appropriately geared vehicle. This view takes into account the profit projections provided by UCOM, which have not been independently verified. (ii) Timing The fundraising will be more certain of success if investors are offered a security that is immediately listed, or that will be listed in the short to medium term (i.e. within a maximum of six to nine months). Fundraisings are not advisable during the Australian Christmas/Summer holiday period, which is mid‑December to mid/late January. They must be completed before mid‑December or begun in late January. The need for an issue document means a December completion does not appear realistic. We therefore recommend a formal fundraising programme beginning in late January. Preparation of the issue documents should begin as soon as possible in order for this to be achieved. If the initial investment is unlisted, the optimum time to convert from unlisted to listed will depend on market factors. The response to the fundraising will be seriously diminished unless there is an unequivocal commitment for the investment to become a listed investment within six to nine months. (iii) Other Conditions The major preconditions to an underwriting commitment would be: · satisfactory due diligence (which will include assessment of technology, deliverability, operating arrangements and profits); · the directors of the investment vehicle being immediately acceptable to the market; · adequacy of cornerstone investors; · attractiveness and viability of programming; and · commercial adequacy of legislative arrangements. Other matters which will be relevant to an underwriter's decision to commit are: · The identity of the owner of the other licence: even though a strong competitor's influence can be estimated through the profit projections, investors would be more confident if the other licence holder were not a strong and direct competitor, (e.g. if it were held on a regionalised basis), provided it is still viable in terms of ongoing support for the operating company; · The fundraising effort should be a single process: if more than one party is involved in raising equity all parties must all have the same risk reward motivation and act jointly; and · Arrangements with programmers and the operating company must be sufficiently certain, transparent, and commercially acceptable. Yours sincerely BAIN CAPITAL MARKETS LIMITED Rowan Johnston Wayne Burt Director Director Corporate Services Division Corporate Services Division" 176 Mr Hadid gave evidence that, some days before receiving that letter, he had a conversation with Dr Burt in which Dr Burt expressed concern that LCI was not doing enough. Mr Hadid said, however: "I have more confidence in Lenfest because I know them more than you do and I know Gerry said he'll do it. He's my partner. I have confidence in him and I believe that he will in fact do it. I wouldn't say the opportunity would be lost altogether but I'm happy to keep receiving your advice …, whatever advice you wish to give me, but, you know I've got confidence that this thing will be completed." 177 Mr Hadid claimed in evidence that, within a day of receiving the letter, he telephoned Dr Burt and complained vigorously. The gist of the compliant was that Mr Hadid was taken by surprise, because the content of the letter was in a number of respects inconsistent with what (he claimed) Dr Burt had previously said. Dr Burt's response was that he was angry, and was not prepared to offer LCI any comfort until they took him seriously. The conversation, according to Mr Hadid, concluded in this way: "He said, 'Well, you know, they've got to start taking it seriously, Albert, you know they've got to sit and talk to us before I can really be as kind to them as I am to you.' I said, 'Well, there's no distinction. You've got to be as kind to both of us.' He said, 'Well, get them to start talking to me. Turnbull still has too much control over the information memorandum. Turnbull has too much say, you know, we've got to get this business moving in the right direction.' " 178 Dr Burt's evidence was that that conversation did not take place; rather, he and Mr Hadid had a telephone conversation several days later, in which Mr Hadid informed Dr Burt that Mr Plant was shortly to arrive in Australia, expressed frustration with both TPL and LCI and suggested that, being "stalemated", Mr Hadid might go his own way: "we have GEC who will put up $20,000,000 and a Chinese guy who is going to put up $20,000,000." Dr Burt says that he counselled Mr Hadid to keep talking to LCI and TPL, because Mr Lenfest had put the deposits up, he had been the first person to do this in a very long cascading process, and Mr Hadid should "spend some energy" on communication with TPL and LCI.

(j) UCOM/LCI: period between second LCI visit and subsequent visit by Mr Plant: 8 to 20 October 1993 179 During the weekend of 9 and 10 October, various topics were discussed between Mr Heller and Mr Hadid. They included Mr Hadid's list of costs which he claimed to have incurred in relation to the bids and which he sought to recover on capitalisation or sale. They included the relationship with TPL. They included also questions about who was to pursue which contacts and what changes needed to be made, if any, to the agreements reached at the end of August. To an extent, conversation on that topic largely repeated previous discussions and to that extent there is little controversy; in any event, the state of negotiations is clearly reflected in correspondence which was exchanged during the ensuing few days. Mr Hadid claimed that Mr Heller, during a telephone conversation, introduced the topic with a remark that Mr Lenfest had taken the risk of putting up the deposit and was prepared to put up "the balance of the licence fees to ensure the success of this venture." Mr Hadid then claimed to have offered the advice that, if Mr Lenfest were prepared to do that, he should pay for one licence only "and then let the market take care of the other one." Mr Heller denied that those things were said. Mr Heller then, according to Mr Hadid, said that because LCI was prepared to put up the balance, LCI wished to come to an arrangement whereby no deal would be done with a third party without the consent of both UCOM and LCI. Mr Hadid claimed to have responded: "Don, well, it's funny you should say that because you know, we're really now out of the loop in the sense that [as] you are now controlling all of the arrangements and you know about everybody we know about and you probably know a lot more than we do, so we don't have anyone that's about to do a deal with us so I am happy to agree that no deal will be done without the agreement at consulting with Lenfest Corporation because the reality is that we just don't have those contacts." Mr Heller denied, also, that those things specifically were said. He did agree, however, that he requested of Mr Hadid an arrangement whereby no deal would be done, in relation to the licences, with any third party without the other party's agreement. 180 On 11 October Mr Lenfest wrote to Mr Hadid. The letter was expressed as a summary of understandings and an attempt to achieve a clearly understood consensus. There was some discussion of the arrangements with TPL. Mr Lenfest then set out what he understood to be agreed arrangements as to who should contact whom: particularly, LCI were to contact Cox Cable Communications (Cox) and Continental Cable Vision Inc (Continental); UCOM were to contact Prime Television in Australia and Shinawatra; and the position to be taken with either Trojan or Pankhan needed to be discussed. After some discussion of possible contact with Mr Murdoch and Mr Packer, that part of the letter concluded: "Additionally, any deal negotiated needs to have approval from both of us prior to its being finalised." 181 In the last two substantive paragraphs of the letter Mr Lenfest said this: "We also need to finalise the proposals made by Don Heller regarding distribution of any monies gained from the sale of our interest, namely that the deposits of $10.8 million be returned to us with interest and out of pocket costs. Any funds remaining can be first used to repay your out of pocket costs and the balance split. The balance of our agreement with regard to carried interest should stand as written. As we proceed, I feel that it is most important for our mutual interests that any external communications (press, interested parties, etc). be agreed to in advance by UCOM and Lenfest. This approach will best serve reinforcement of a united and considered approach by our respective groups and demonstrate our joint commitment to the project." 182 Mr Hadid responded to that letter on 12 October. After indicating general agreement with Mr Lenfest's proposals about contacting potential investors, he turned to other matters: "In relation to your comments on the division of money that may flow from a disposal of the licence, rest assured we will act [in] accordance with our agreement. This issue is best addressed when we have a definate [sic] offer in front of us. Gerry, kindly let me remind you that during our negotiations you said to me that you would take less when the time comes if we can't get high enough free carry. You reminded me that I was in control and you would accept less. We will do our best to achieve the maximum for both of us." 183 Mr Lenfest wrote to Mr Hadid again on 12 October. It is not clear that, when he did so, he had seen Mr Hadid's letter. The principal significance of Mr Lenfest's second letter is that it made a refined and expanded proposal for amendment of the August agreement: "Regarding the potential sale of one of the licenses and monies gained therefrom, we would propose our in‑place agreement be amended as follows: · At your option, you may enforce the provisions in the existing agreement (see Section 1 - Letter Agreement of 29 August 1993) or elect to enforce the splitting of the available free carried interest as between Lenfest and UCOM/New World on a 50/50 basis. The 50/50 sharing would, of course, have to comply with applicable Australian law. In return for the above modification, you would agree to the following: · Monies gained from the sale of interests would first be applied to re‑payment of the Lenfest $A10.7 million deposit plus interest. Secondly, monies would be used to repay Lenfest out‑of‑pocket expenses including, but not limited to, Turnbull, Sly, and travel expenses. Thirdly, any monies remaining may be used at your option, to repay your out‑of‑pocket costs with anything remaining being split 50/50 between Lenfest and UCOM/New World. UCOM/New World would pay its financial commitments out of its fifty percent (50%) share to the extent sufficient. All remaining unpaid would be paid out of the underwriting subject to approval of Lenfest and the underwriters on the basis of each commitment being reasonable and having brought commensurate value to the venture. · The addendum to the Agreement of 29 August 1993 becomes null and void. · The existing shareholders of UCOM/New World will have no financial interest in the operating company and will have no operational responsibility in the operating company or in the licenses. The ownership and operation of the operating company shall be as determined by Lenfest and the U.S. operators and other investors and as may be required by the underwriting. This will not affect UCOM/New World's ability to negotiate a carried interest. · With respect to Turnbull, Lenfest will retain the right to select the financial advisor and underwriter(s). We will consult with UCOM/New World in that regard but retain the right to make the final decisions which must be in accordance with commercially accepted practices in Australia." 184 Mr Hadid replied on 13 October. He wrote that he had discussed Mr Lenfest's two letters with the UCOM board and continued: "We do not wish to 'opt' for any 'modification' of the 29th August agreement, but we do accept that if there is a sale of one of the licenses, you should receive the whole of the deposit for both licenses, interest and, parri passu with us, out of pocket expenses from the proceeds of that sale. What happens to the balance of the proceeds can be discussed when we know the terms of that sale. We don't accept that the Trojan/Dougherty offers are worth pursuing at this time. Our board does not see them as genuine purchase offers." 185 The letter concluded by referring to an arrangement to discuss the matter in more detail by telephone. Mr Heller gave evidence that such a conversation took place, reflected in a handwritten note which he made, partly in preparation for the conversation and partly during it. The somewhat cryptic notes indicate that the conversation took matters little further. 186 The detail of the argument about (and with) TPL is not particularly significant. The UCOM directors did not accept that the supplement to the letter of appointment, proposed by TPL and agreed to by Mr Plant (but not Mr Hadid), was appropriate: the UCOM view was that TPL's compensation should be limited by reference to the part actually played by it in securing finance and that LCI and UCOM should have more extensive rights to terminate the retainer than TPL proposed. Agreement was not reached on those matters and in the end it seems to have been accepted, on all sides, that TPL were retained by LCI but not by UCOM. 187 On 15 October the Trade Practices Commission reported to the ABA that, in the Commission's opinion, the allocation of licence A to UCOM Australia would not contravene s 50 of the Trade Practices Act. The following Monday, 18 October, the ABA notified UCOM Australia that licence A would be allocated to it on payment of $92,150,950, the balance of the bid price. The result was that licence A would be allocated if that balance were paid within 30 days, that is, no later than 17 November. If it were not paid by that date, there would be a cascade and the deposit paid on the licence A bid would be lost. There was no similar time constraint in relation to licence B. Because it had not completed its consideration of the question of suitability, having regard to the cross‑ownership provisions, the ABA had not referred that bid to the Trade Practices Commission; only if and when it did so would time begin to run for payment of the balance of the licence B bid price. There was, of course, at least a theoretical risk that matters would not even reach that stage, and the deposit on licence B would be lost, if the ABA should come to an unfavourable conclusion on the question of suitability. 188 TPL had, at the request of Mr Plant, prepared and faxed to him, on 15 October, a draft structure, described in evidence as a CanWest structure (after a transaction in which it had earlier been used), which, it was thought, would enable LCI and other foreign parties to finance the licence A bid price, on an interim basis, without infringing the Broadcasting Services Act. The evidence of the LCI witnesses, however, was that no decision had been made, up to that time, that LCI would take its interest in licence A rather than licence B.

(i) Mr Plant's meetings; his advice to Mr Heller 189 Mr Plant thus returned to Sydney in circumstances where the bid price on licence A had to be paid (if the bid was to be preserved) by 17 November but no investors had yet been found. Responses from Time Warner and TCI had been discouraging; LCI was pursuing its approaches to other United States cable TV operators, particularly Cox and Continental; but negotiations had not advanced very far. UCOM, equally, had not attracted any commitments to invest: a proposal had been put to Prime Television, about which Mr Hadid expressed some hope; discussions with Shinawatra were continuing; Mr Hadid expressed optimism about a possibility that GEC Marconi might invest in licence B and that EDS might take up a 5 per cent to 10 per cent share of one of the licences. Other possibilities were mentioned. But matters had not proceeded beyond that point. Correspondence and discussions had continued with Pankhan, concerning successive versions of its offer; but UCOM had already informed LCI of its view that neither the Pankhan offer nor the proposal by Trojan was acceptable. 190 At about the time of Mr Plant's departure for Australia a document headed "Australian Pay TV, Action Plan, License Acquisition" was prepared within LCI. The document is dated 19 October 1993. Mr Heller did not recall who was the author of the document; Mr Plant attributed it to Mr Heller and the probabilities undoubtedly favour that attribution. The document began with a recital of the situation, under the Broadcasting Services Act, of each of the two bids. It proceeded to set out a series of steps to be taken and to allocate responsibility for each step. The first five steps were to be taken by Mr Plant. Those steps were to obtain an underwriting comfort letter, to resolve the relationship with TPL, to resolve the relationship with Sly & Weigall (which had been advising UCOM and also, to some extent, LCI), to develop a capital structure for licences A and B and to initiate an underwriting agreement. The next step was a continuation of conversations with possible investors: they were listed, as were those responsible for their pursuit. Thus, in broad terms, Mr Heller was given responsibility for potential United States investors; Mr Hadid generally had responsibility for potential Australian investors; and Dr Gadir was responsible for Shinawatra. The document concluded with what was described as an overall strategy: "A [complete the steps previously listed]. B initiate private placement to acquire Australian equity. C plan public offering to raise working capital. D designate our position in either the A or B license based upon maximising the carried interest (most likely license A at the date of this document - October 19, 1993)." 191 Mr Plant's evidence was that he saw that document on about 19 October. Its first significance lies in the last item of the overall strategy, because one of the controversial aspects of Mr Plant's visit concerns what was said about the financing of, or investment in, first, licence A and, later, licence B. The starting point is a conversation which Mr Hadid claimed to have had with Mr Plant on the day of his arrival, which is the foundation of one of the claims which Mr Hadid makes directly against LCI and derivatively against other respondents. The conversation, according to Mr Hadid, proceeded as follows: "He [sc Mr Plant] said Albert, Gerry and I have agreed to take your advice. We will finance licence A and the market will get B up. This way the market, you know, will take care of B. He said, Gerry agrees this is the best way to go, Albert, but in the meantime I want you to keep this very quiet. You are not to tell anyone. I said I can't accept that, Steve, I've got to tell my shareholders and my advisers. And he said okay. I said does this mean Steve that you guys are going to stay in A and … we'll go over to B. And he said well no Gerry hasn't made that decision yet. We might go into A or B together, but we haven't made that decision as yet … in fact we might leave you in A and we might go into B … but … Gerry is yet to make that decision. I said why would you finance licence A … if you're going to go in B. He said … it's like we discussed in New York … it's better to have friendly competitors because Gerry's interest is in the operating company. He would like to have control in the operating company. That's where he sees his investment and his long term opportunities are best protected. And I said are you sure you're going to finance licence A and he said yeah the decision is definitely made. We've spoken to the banks, the money is already approved, we'll be able to get the money back from the private placement … we're planning … the operating company will be owned half by licence A and half by licence B, 50 per cent each. I said … that's very good. In fact seeing we are where we are, that would be the best advice I can give you as well and he said Albert look what might end up happening is that we both may end up in licence A … the market will subscribe to A and B and we can, in fact, control who goes into B. I said how do you propose we do that, Steve? And he said … let's talk about that, wait until Gerry comes back to us, he'll be back to us next week as to which licence he is going to park Lenfest in A or B. I said well, that's okay, I said now that you've decided to finance licence A Steve you've got to talk to Wayne Burt. Wayne is very keen. He … can underwrite licences … and … we can pay you back from the private placement as you just said. He said, yeah, okay I'll talk to him is it convenient now and I said, yes it is and I said look, he wants to speak to you alone. He doesn't want [Cass] there, he doesn't want anybody from Turnbull's, he wants to have a private discussion with you … and go into depth and detail because he's been waiting for this opportunity. And … I said, Wayne is still prepared to do 30 per cent [free] carry on the licences and given the opportunity and talk to him, but remember he wants you to be there [alone]. I said, will you do it and he said yes. I said look, I'll even volunteer to stay out of the meeting because Wayne wants to be alone and I thought I'll give you guys the opportunity to be alone … please see him. And he said, yes, I said, no say I promise Steve and he said I promise." 192 Mr Plant's evidence was that he did not, at any time during the visit, say that a decision had been made to finance licence A, merely that LCI was leaning towards licence A, but that no decision had been made. In fact, LCI had not then made arrangements to obtain finance to acquire either licence. No decision had been made. Mr Lenfest's evidence was that he had not told Mr Plant that he was prepared to fund licence A. 193 There was a meeting on 22 October between Mr Plant, Dr Burt, Mr Johnston and Ms O'Connor. Mr Johnston remembered nothing of the discussion other than a comment by Mr Plant that LCI were having difficulty in coming to an agreement with Mr Hadid and mention of some discussion about underwriting: Mr Plant asked whether Bain might be interested in working on a fund raising with LCI, to which Mr Johnston replied that Bain "would have to do some reviewing but we had no reason to think we wouldn't." Bain again expressed "interest in acting as an underwriter for funding whichever vehicle became the listed vehicle." 194 Dr Burt made notes, and gave considerably more detailed evidence. His account was that after mentioning that LCI expected to hear shortly from Cox and Continental, and that TCI and Time Warner were unlikely to invest, Mr Plant proceeded to say that LCI had the resources and facilities available to finance either of the licences, but not both: it might be that LCI would take an interest in one licence, the fate of the other being uncertain. There was then discussion about documents which might be available to demonstrate the financial strength of the Lenfest Group. That was followed by discussion about Mr Hadid: Mr Plant said that it had become apparent that Mr Hadid could not have a prominent role because no major United States corporation would participate if he had one, or had any influence or control over what happened. 195 Mr Plant's recollection was considerably less complete. He gave evidence that, though he could not recall saying so, it was becoming obvious at about the time of the meeting that LCI might have to finance one of the licences; he did not, however, say that LCI would do so because it did not have the cash or facilities available for the purpose. 196 It will be necessary to return to LCI's discussions with its bankers, but the evidence is that at the time of the meeting LCI did not have committed facilities sufficient to finance either licence; and Dr Burt's notes are, at best, cryptic. They certainly suggest that there was some discussion about the availability of cash and facilities, but it cannot be said that they take matters further than that. Although the topic was not mentioned directly in Mr Plant's evidence (he said that the purpose of the meeting was "pursuit of financing"), references in Dr Burt's notes and evidence to matters going to the financial strength of LCI support Mr Johnston's recollection about discussion of the possibility that Bain, subject to appropriate review, might work on a fund raising with LCI. 197 Mr Hadid gave evidence of a conversation with Dr Burt shortly before the meeting between Dr Burt, Mr Johnston, Ms O'Connor and Mr Plant. He claimed to have told Dr Burt of Mr Plant's statement that LCI had agreed to finance licence A and of his promise to talk to Dr Burt alone, without TPL, about underwriting. Dr Burt did not recall Mr Hadid telling him of a statement by Mr Plant that LCI would finance licence A. 198 Both Mr Hadid and Dr Burt gave evidence of a conversation between them shortly after the meeting. Mr Hadid attributed to Dr Burt disappointment and frustration because Mr Plant had "brought Cass with him"; Dr Burt, according Mr Hadid, said that there had been a discussion but "we couldn't pin matters down." Dr Burt proceeded, once again, to say that he was worried about TPL. After Mr Hadid responded that, in any event, LCI would tell him if they had anything in mind, Dr Burt proceeded: "Albert, seeing Lenfest have now decided to finance licence A, I suggest we get on with it and do the job quickly so that we can move this thing because as Steve knows once licence A's financed, … the market would move and take licence B … Albert, they're suggesting that Bains underwrite - they're suggesting that … free carry … should be between 10 and 15 per cent. I said, 'Whose suggestion?' And [he] said, 'Cass and Steven.' And I said, 'What … are your thoughts on that?' He said, 'Look, the underwriting doesn't matter. What's important here is that you and your partners, Lenfest, come to us agreeing … on a figure … and try and support it with your business plan figures.' I said, 'Wayne, now, are you moving from the 30 per cent?' He said, 'The free carry is not an issue, Albert. … It will not prevent the deal from happening. Just unite your views with Lenfest and come to us.' " 199 According to Dr Burt, he did indeed express surprise at Ms O'Connor's presence, but said that the meeting went well. Mr Hadid complained once again that his communication with (presumably) both TPL and LCI had broken down and that he was inclined to "go his own way." Dr Burt said that that seemed a little extreme, given that LCI had said that they had facilities available to fund one of the licences and they appeared to have an inclination to do so: "They've indicated an ability to finance and, as is normal in this business, we have to follow the money and we will be continuing to talk to them. He said, that's fine. I said I recommend that you do the same, that you should talk to them." 200 Dr Burt, in substance, denied the additional matters of which Mr Hadid gave evidence. 201 There followed an interlude involving Mr Egan. Mr Egan and Mr Plant met one evening at the Ritz‑Carlton Hotel and had a conversation over drinks in the bar. According to Mr Egan, Mr Plant made somewhat expansive remarks about LCI's ability to finance the licences if required; it had raised large sums of money in the past. After referring to his own banking career, Mr Plant said: "Don't be surprised that we are only interested in licence B and not licence A." Mr Egan, according to him, then said: "I'm surprised to hear that, Steve, because you've only ever discussed licence A as the financing opportunity." Mr Plant responded simply that that was the way it was. 202 Mr Hadid gave evidence of a conversation with Mr Plant on the subject: "I said, 'Steve, James tells me that you were out drinking together and you told him that you had no intention of financing licence A, that you were interested in licence B, is that a fact, what's going on' and he said, 'No Albert, we've both been drinking so much I don't think James can remember what we said … I told him we're financing A but we could be interested in licence B' and I said, 'Well that's what you've told me, [he] must have misunderstood what you said' and he said, 'Well I wouldn't be surprised when you consider we both had so much to drink.' " 203 Mr Plant denied making the remarks attributed to him by Mr Egan and gave evidence that he did not recall a conversation with Mr Hadid in which the topic of Mr Plant and Mr Egan drinking together was mentioned. 204 Mr Plant had discussions with Nomura as well: on 22 October he met Andrew Price and his colleague, Mr Johns. Mr Johns prepared a memorandum in which he sought to summarize what had been said, including: "Steve Plant reveals to us that they will put up the balance of the funds (approximately US$60m) for the full payment of licence B … they believe that Lenfest is capable of going it alone and then attract investors once the licence has been fully paid … Lenfest are only interested in one licence and will try to sell the other licence … the other interesting point is that they want UCOM not to participate in the deal and want to remove them from all involvement." 205 Mr Plant denied that he had "revealed" that LCI would put up the balance payable for licence B; and the amount mentioned by Mr Johns is not that balance. 206 On 25 October Mr Plant had a further meeting with Dr Burt and Ms O'Connor. Dr Burt described the meeting as a somewhat rambling one, which covered a number of topics: LCI's financial strength, the importance of Mr Hadid not being in control, pros and cons as to investment in one licence or the other, financing structures, programming and equipment requirements. Mr Plant met Mr Turnbull and Ms O'Connor the following day; I shall return to that meeting, and its outcome, in the next section of this narrative. 207 It is plain that by 25 October Mr Plant had formed some quite firm views. On that day he sent a fax to Mr Heller. The fax included a copy of the action plan of 19 October incorporating some handwritten amendments and additions made by Mr Plant. The important addition was a paragraph immediately following the "overall strategy." "8. Most critical in terms of overall success is to negotiate a position with Albert et. al. wherein we control the entire process. Otherwise we will be stymied in all efforts and end up losing our deposits. I can't emphasize this enough." 208 The handwritten note which accompanied the amended action plan is, I think, a more reliable indication of some of the things that were said and views which Mr Plant had formed than recollections of conversations which took place five years ago. The purpose of the note was, as it recorded, to set out some of Mr Plant's thoughts about the project as well as "concerns which have surfaced on this trip." Mr Plant suggested that Mr Heller might wish to "share the relevant parts with Gerry." He made the following points: "Bain & Co are confident about financing up to 65% - 80% of the B license and its operating costs. I have had two meetings with them relating to the above. At present, they are working through the system, including Deutsche Bank, to secure levels of confidence. They would not be interested if we were not in the B license because of potential competition. Free carry would not be practical above the 10% level. UCOM must have no controlling interest or management influence. · Albert seems to take the position that unless he secures a free carry in excess of 20‑25% he will let the process cascade down and secure another party to finance the down payment (highly unlikely but felt by him to be achievable). This would create a forfeit of Gerry's deposit. · I believe the business is very viable and therefore worth pursuing especially given Bain's position. Recognise however that there is a real risk of forfeiting the A license deposit unless Cox and/or Continental come in. · Marty Dougherty's proposal seems to have some credibility. I will expand on this later but my conclusion is based on BB & Y's apparent heavy backing. This may be a fall back position at some time. · In negotiating with Albert we may need another law firm. Sly is potentially conflicted. They would like to stay with us but are understandably sensitive to canons of ethics. · Turnbull continues to support us but seem always to be at odds with Albert. I will try to resolve but getting his group together is extremely difficult. I am meeting with them at 1:45 today and will be nice but firm about certain issues. · I cannot overemphasize the need to take control of the process so that we can salvage a desperate situation. Will need Gerry's strong involvement with Albert." 209 It is worth mentioning one other fax communication for the light it throws on the evidence about some of the conversations. On 25 October Mr Johnston sent a note to an associate in the United States. Mr Johnston began by saying that Bain had been approached by representatives of LCI and asked to assist LCI in raising equity funds in Australia. After briefly describing what was happening, Mr Johnston wrote this: "Lenfest operates cable TV systems in PA and California. We have no reason to doubt its technical capacity and thus its potential to add value to the Australian licences. However, could you please provide an indication of Lenfest's standing in the investment community so that we can better assess the request. In particular, please indicate whether there are any non‑technical reasons to believe Lenfest would not be a suitable investor for such a project."

(ii) Further dealings between Mr Hadid and Dr Burt 210 Mr Hadid gave evidence that during Mr Plant's visit he had two other conversations with Dr Burt. The first, he said, occurred at a meeting at Bain's offices; in addition to Mr Hadid and Dr Burt, Mr Johnston was present and also either Mr Noah or Dr Gadir. Mr Hadid attributed to Dr Burt a suggestion that, since LCI had decided to finance licence A, the two licences might be brought together or merged "into a major entity" so that LCI and UCOM could control the market and avoid competition. Mr Hadid, according to his account, refused to entertain that suggestion on the footing that it was wrong from a commercial point of view and was contrary to the "process" under the Broadcasting Services Act. Dr Burt denied that that conversation occurred; so did Mr Johnston; no one else gave evidence of it. 211 The second conversation to which Mr Hadid deposed took place, he said, on the telephone, and related to free carry. It was as follows: "I said, Wayne, I'm going to be speaking to Don and to Steve, … I'd like to know from you your position on the free carry and he said Albert, off the record we're not against 30 per cent but you and Lenfest have to come to us in agreement and I said Wayne, no, I want a percentage from you, what is the percentage. He said look, Albert, we're happy with over 15 per cent. Steve is asking for 10 to 15 but we're comfortable with over 15 per cent, it's our balance sheet so obviously if you guys want it lower we're happy with that but … you'd obviously prefer it to be more and we're not against that as long as you two can come to us … in agreement … . In other words, you and Lenfest …" 212 Again, while Dr Burt accepted that during that period Mr Hadid asked about free carry, he denied that a conversation in those terms took place. 213 There was a meeting between Mr Hadid and Dr Burt, during part at least of which Mr Johnston was present and at which, on some accounts, Mr Noah was present. It was a meeting at some time in the course of which Mr Hadid presented Dr Burt with a bottle of champagne. It may have occurred - though Mr Hadid puts it later - on 26 October, Dr Burt's birthday. The evidence about it is, to say the least of it, confused. Apart from one matter, the discussion covered once again topics already discussed on a number of occasions. The exception, on Dr Burt's account - denied by Mr Hadid - is that Mr Hadid invited Dr Burt (and Dr Burt refused) to join Mr Hadid's team. Further discussion of this meeting may safely be deferred.

(iii) First suggestion of Project Midsummer 214 Dr Burt, as I have mentioned, had, in an earlier employment, worked on a fund raising for the original shareholders of Australis. He and Mr Cosser were friends: Dr Burt's evidence was, and his diary confirms, that during the months preceding November 1993 they met from time to time. Dr Burt said that during the weekend of 23 and 24 October 1993 he gave some thought to the circumstance that little progress was being made by UCOM or LCI towards raising large amounts of money likely to be required within a very short time. It occurred to him that, given the large number of MDS licences which Australis had, covering both the Sydney and Melbourne metropolitan areas, an association between Australis and LCI might give rise to benefits for both parties. He decided to raise the matter with Mr Plant. 215 In broad terms, Dr Burt's idea, developed in discussions with Mr Johnston over the ensuing few days and subsequently called "Project Midsummer", was that LCI would acquire from Mr Hadid and the other shareholders the shares in New World (the successful tenderer for licence B); LCI would fund the balance of the price bid for licence B and would transfer the shares in New World to Australis; the consideration for that transfer would be an allotment to LCI of shares or other securities in Australis. Australis thus would acquire, without having to raise funds itself, the satellite licence to complement the MDS licences which it held; LCI, having funded the acquisition of the licence, would have a very substantial stake in the holder (already a listed public company) of the licence and of MDS licences covering the two major metropolitan areas. The further funds required - particularly, to fund operating costs during the initial period of pay TV operations - would then be raised, by Australis, through an underwritten placement or public offer. The proposal would have the added advantage, for both LCI and Australis, that established Australian media proprietors could not acquire control of a satellite pay TV licence: that was because of the statutory restrictions applicable to the only licence that would remain available, licence A. 216 Dr Burt said that on 25 October he arranged with Mr Plant that they would meet the following day. He said that he and Mr Johnston met Mr Plant during the afternoon of Tuesday, 26 October. They described the proposal and the advantages they saw in it. They made it clear that, if a transaction resulted, Bain would expect to be engaged as exclusive adviser and would expect a success fee. Mr Plant, according Dr Burt, expressed interest in the idea: he said he would speak to Mr Lenfest and other LCI executives overnight and would telephone Dr Burt the next day. He did so, to report that he had spoken to Mr Lenfest and others and that Mr Lenfest, though being far from committed, was interested enough to take the matter a stage further. Dr Burt suggested a meeting between himself, Mr Plant and Mr Cosser. Such a meeting took place on the morning of that day, 27 October. Once again Dr Burt explained his proposal; both parties expressed some interest; Mr Cosser said, however, that Australis was committed to MDS technology and, in any event, had no funds to contribute to the acquisition of a satellite licence. Mr Cosser also mentioned that he was shortly to stand down as chief executive of Australis. It was agreed that the matter would be discussed within both Australis and LCI. In the meantime, the proposal was to remain confidential. 217 Mr Plant's account of the conversations was considerably less detailed. There are two significant differences between his evidence and that of Dr Burt. Mr Plant said that the proposal was described to him only at the meeting with Mr Cosser on the morning of 27 October (the day of his departure from Sydney); on the previous day Dr Burt had simply telephoned him and asked that he attend a meeting with Mr Cosser the following morning. The second difference, thus, is that he did not say that he would discuss the matter with Mr Lenfest, or other LCI executives, overnight, and did not do so. Mr Lenfest and Mr Heller also gave evidence that they first heard of the proposal when they met Mr Plant at Pottstown on the morning of 28 October, Eastern United States time, immediately following his return. If, of course, Mr Plant had spoken to Mr Lenfest or Mr Heller overnight, they would have learned of the proposal, at least in outline on 26 October: there was a suggestion - I shall return to this - that the timing might have some significance in relation to the correspondence during that period between LCI and Mr Hadid.

(l) LCI and UCOM: events surrounding and following disclosure of Project Midsummer proposal to Mr Plant

(i) The TPL suggestion 218 Mr Plant met Mr Turnbull and Ms O'Connor on 26 October. Mr Plant's evidence was that the meeting commenced at about 10.00 am and that its duration was between an hour and an hour and a half. Among the matters discussed were the contractual rights and obligations between LCI and Mr Hadid arising out of the August correspondence; also discussed, but in the context of the contractual relationship, was the topic of renegotiating arrangements with Mr Hadid so as, at least, to be able to deal with the licences without interference by him. A note of the conclusions of the meeting was faxed to Mr Lenfest by Mr Turnbull, Ms O'Connor and Mr Plant shortly before noon on 26 October. The fax incorporated views (presumably those of Mr Turnbull) as to LCI's contractual rights and a draft letter to Mr Hadid. The views expressed were these: "The contractual documentation between yourself and UCOM is far from comprehensive and there may well be elements in the agreement between yourself and UCOM which are oral and therefore not recorded in the correspondence. Issues you might consider raising with Albert include the fact that he apparently (unbeknownst to us) advised you and Don Heller that MMDS would not be able to deliver pay television services until July 1997. That, as you now know, is wrong and Albert would have known it was wrong also as the MMDS arrangements are dealt with in the legislation. That would constitute a very material misrepresentation. Further there is a letter of 29 August … which would appear to require Albert to return all of the funds or issue equity to you in that amount in both companies. Given that he cannot return the funds this could be said to give you the right to be issued with millions of shares in New World and UCOM Australia which would have the effect of your owning almost all of the equity in those companies and being able to dispose of Albert without any compensation. Needless to say the task of enforcing this letter agreement would not be a straightforward one if Albert chose to fight as he no doubt would." 219 The draft letter was as follows: "1. UCOM transfers all of the shares in New World … and UCOM Australia … to Lenfest or its nominees on the basis that each of the companies transferred are free of all liabilities other than the obligation to pay the balance of the purchase price of the licences. 2. In consideration of (1) above, UCOM or its nominees will be allotted special A class shares in New World and UCOM Australia which will represent 5% of the issued paid up ordinary share capital of each company, provided that the A class shares will not be entitled to any rights to vote or receive dividends or a distribution on winding up until such time as the holders of the ordinary share capital of each company have received by way of dividends a sum equal to the amounts of paid up capital in respect of the ordinary shares plus an amount equal to compound interest at 15% p.a. on that original paid up capital. 3. UCOM will not be entitled to any board representation nor will it be entitled to any share in the operating company if and when it is established. 4. This offer must be accepted within 48 hours failing which Lenfest will take such action (including legal action) as it sees fit."

(ii) Proposal and counter‑proposal 220 Whether or not Dr Burt revealed the Project Midsummer proposal to Mr Plant on 26 October, the meeting with TPL took place, and the draft letter was sent to Mr Lenfest, before that happened. Indeed, what emerged from the meeting with TPL was consistent with the views expressed by Mr Plant in his handwritten note of the previous day. Mr Lenfest and Mr Hadid had a telephone conversation; Mr Lenfest gave evidence that it took place on about 25 October (Eastern United States time), Mr Hadid that it occurred late at night on 26 October (Sydney time) or early the following morning. There are differences about the detail of what was said which do not, I think, greatly matter. What is clear is that Mr Lenfest put to Mr Hadid a proposal substantially reflecting the TPL draft, though without the threat of legal action. Mr Hadid sent a fax to Mr Lenfest setting out his understanding of the proposal and recording that Mr Lenfest had sought an answer from the UCOM board "by tomorrow morning your time" (presumably 27 October). 221 Mr Lenfest responded by fax dated 26 October in which he set out the proposal in detail and sought formal acceptance of it: "Dear Albert, It is extremely important that we come to agreement immediately on the subjects covered in this letter in order to enable us to attempt to secure the required financing. I therefore propose the following: 1. Upon our obtaining the financial commitments to purchase each license all of the shares of New World Telecommunications Pty. Ltd. and of UCOM Australia Pty. Ltd., as appropriate, will be transferred to Lenfest or its nominees with the understanding that the shares will be transferred free of all claims or liabilities other than the obligation to pay the balance of the purchase price of each license. 2. UCOM and Lenfest or their respective nominees will each be allotted special Class A shares in New World and UCOM Australia which will represent 5% of the issued paid up ordinary share capital of each company. The Class A shares will not be entitled to voting rights or dividends or other distributions until the holders of the Class B shares of the company have received, by way of dividends or other distributions, a sum equal to the amounts of paid up capital and an amount equal to compound interest at the floating prime rate of Toronto Dominion Bank plus 2%. This will not prevent New World or UCOM shareholders from selling their shares in the public offering or private placement if arrangements are made with the appropriate financial institutions handling the placement. 3. UCOM and Lenfest will each be entitled to recover their actual expenses incurred on the project out of funds raised upon completion of the financing. In addition UCOM may include payment of previous written commitments made to non‑shareholders of UCOM that contributed to the project so long as the total reimbursed expenses and payment of commitments does not exceed $1 million. 4. The operating company will be owned and operated by United States cable television companies or others who have the necessary experience to successfully distribute and market the programming carried on the channels of the licenses. Neither UCOM nor New World Telecommunications or its shareholders will have any interest in the operating company. I believe the above is fair and the best that we can do based on our discussions with the United States cable television companies and the Australian financial institutions. Your lack of approval will, in fact, prevent us from securing the financing needed and cause forfeiture of one or both deposits. I therefore ask that you and your confreres give this your immediate attention. If the above has your approval kindly acknowledge your acceptance by signing and returning the enclosed copy of this letter. Sincerely, [signature] H.F. (Gerry) Lenfest" 222 Mr Hadid responded the following day that his board required more time to consider the offer; on 28 October Mr Hadid sent a handwritten fax to Mr Heller: "Kindly advise of any developments. The UCOM board is considering Gerry's offer, is it based on any offers and from whom, if so can we kindly be faxed copies as they are received. If not are you suggesting that you will pay for both licences. Please copy this fax to Gerry. …" 223 Mr Heller sent a copy of that note to Mr Lenfest with a suggestion that they discuss it. Mr Heller was cross‑examined at some length as to whether they did discuss it and with what result, but nothing of particular significance emerged, I think, from that cross‑examination. Mr Heller's evidence in chief, supported by handwritten notes, was that he had a conversation with Mr Hadid on 27 October in which there was substantial discussion of LCI's offer. In addition, Mr Heller gave evidence that he responded to Mr Hadid's handwritten note by saying, among other things, that LCI had no further definitive offers and that LCI did not plan to fund both licences but "we were still hoping to bring parties to the table." Certainly Mr Heller said nothing about Australis. It may not greatly matter, but in my view it must be accepted that Mr Heller and Mr Hadid had a conversation of the general nature described by Mr Heller on 27 October, Eastern United States time; that is, before Mr Lenfest and Mr Heller met Mr Plant on his return from Sydney but, if Mr Plant sought Mr Lenfest's or Mr Heller's views on a proposal put to him by Dr Burt on 26 October, after that happened. 224 Mr Hadid responded to LCI's offer, on behalf of the UCOM board, by a fax dated 28 October. He began by summarising the August agreement. The only aspect of the summary requiring mention now is its reference to the arrangement that LCI would receive a free carried interest of not less than 13.5 per cent: there, Mr Hadid added: "(However you agreed that Lenfest will receive less than the above interest if the market cannot support the amount initially envisaged)." 225 Mr Hadid then made a counter‑proposal. It was that LCI and UCOM should share equally in licence A, on the footing of a 5 per cent interest each as a minimum: "We would require to be in control of these negotiations with underwriters (as our agreement envisages) and to decide on the valuer used." Mr Hadid was not prepared to accept a proposal for different classes of shares or a "secondary position for UCOM's interest." Further, the sum proposed by LCI, to pay expenses and meet commitments, was inadequate: UCOM's minimum requirement was $A2,400,000, and "At the underwriting stage, we believe a payment of $A5.0M would be appropriate to compensate part of our entrepreneurial risk and effort to date." The UCOM counter‑proposal assumed that New World would remain in control of licence B and be responsible for funding it: LCI would receive a 2 per cent free carried interest if that licence were successfully funded. Mr Hadid then made it clear that he wished to have further discussion about issues concerning the operating company. He by no means conceded that UCOM would have no involvement in it: one of the specific matters suggested by Mr Hadid was "an involvement for our companies in the Australian content of programming the Pay channels." Finally, Mr Hadid offered this: "Gerry, if these arrangements do not fit your deal with Cox and Continental, we will agree to quit the A licence altogether for a free carried interest of 10%, the cash payments and the Australian content contribution referred to above. The B licence will (other than Lenfest's 2%) then be our responsibility free of all obligations to you." 226 That letter provoked a response from Mr Heller, dated 29 October. Mr Heller expressed deep concern "about the direction our agreements are headed." He offered some flexibility on the amount of expenses to be reimbursed; suggested that the parties needed to work together with the underwriters "as it is our operating experience and reputation which will give comfort to the underwriters"; but otherwise maintained LCI's previous position. Mr Heller concluded by asking Mr Hadid to visit the United States the following week for the purpose of resolving the outstanding issues. 227 Mr Hadid's rejoinder of 1 November 1993 was equally uncompromising. There were three matters on which UCOM was "not negotiable": it would not accept "second class shares"; it wished to be "actively involved in all levels of the negotiations concerning the funding of the licences and to have control of the underwriting here in Australia … for the purpose of ensuring that the free carry is as substantial as possible and is not traded off for some other benefit which does not flow to UCOM/New World"; and the "cash component" had to be at least $2,400,000. Additionally: "We are still of the opinion that Steve's stated position, on his most recent visit to Australia to finance A and maximise our mutual benefits by forcing all the other parties' hands is still the best solution. This position serves our common objectives best, why has Lenfest shifted from this position?" and: "Your suggestion that a situation would arise where Lenfest receive all of the free carry and we got nothing is, quite frankly, not something which could arise because the whole deal requires our consent which clearly would not be forthcoming for any such arrangement. Not to overlook the basis of our agreement which is to achieve an equitable result for both parties in the licence of your choice." 228 Mr Hadid, finally, said that he was unable to visit the United States and suggested that either Mr Heller or Mr Plant visit Sydney. 229 Mr Hadid, Mr Lenfest and Mr Heller gave evidence of several conversations concerning the subject matter of those negotiations. During one of those conversations Mr Hadid claimed to have told Mr Lenfest that Bain was still prepared to underwrite on the footing of 30 per cent free carry; Mr Lenfest denied that that was said. Beyond that, it is unnecessary now to go to the detailed evidence about the various conversations.

(iii) Banking arrangements: negotiation of facility 230 During October, LCI had initiated discussions with a group of banks led by the Toronto‑Dominion Bank in order to obtain a facility of $US85,000,000 for the purposes of financing the purchase of an Australian pay TV licence, repaying the deposits funded by Mr Lenfest and providing for fees and expenses. Negotiations on a terms sheet for that facility, and for consequential amendments of an existing facility provided by the same group of banks, had reached an advanced stage by Thursday, 28 October. Detailed discussions with the banks took place during the weekend of 30 and 31 October, as a result of which agreement was reached on the terms and conditions of the facility. Thus, subject at least to final approvals and execution of formal documents, LCI was by early November in a position, if it chose to do so, to fund the acquisition of one of the two licences.

(iv) Dr Burt and Mr Hadid: TPL's role 231 By way of postscript, I should mention two conversations which Mr Hadid claimed to have had with Dr Burt (the terms of each of which Dr Burt denied) during the course of the exchange of correspondence between UCOM and LCI. Their possible significance is to the advisory role attributed by Mr Hadid to Dr Burt. In one of the conversations Mr Hadid claimed to have complained about TPL: Mr Turnbull, Mr Hadid said, seemed to be taking sides with LCI and the UCOM board had decided to cease employing TPL, leaving TPL to advise LCI exclusively. The conversation proceeded, Mr Hadid said: "… he said, 'I suggest that you terminate him altogether', I said, 'No, I'm not prepared to do that, the directors already wished me to do that and I have refused to terminate Turnbulls because I have got to be just here … seeing he's doing well by Lenfest and they're happy with him. I've had a chat to Mr Plant and they will keep him but I'm not terminating Turnbulls.' He said, 'Well, you know, just … be on your guard be careful with Mr Turnbull', And I said, 'I will.' " 232 During the other conversation Mr Hadid said that he showed Dr Burt copies of his recent correspondence with LCI and remarked upon what he described as a surprising change of position by LCI, after it had previously agreed (as Mr Hadid claimed) to finance licence A: "Dr Burt said, 'Well be careful, just be friendly and seek information from Lenfest, what's your attitude?' I said, 'My attitude is I am committed, I am friendly, although I am obviously surprised and very … confused.' He said, 'Look, seek the information, talk to them, stay on side and see what's happening because it could be Turnbulls and you know Don and Steve are very lazy, they haven't done their work, just work with Lenfest to try and work out the problem ….' "

(m) Project Midsummer: the St Louis meetings 233 On Thursday, 28 October Mr Plant met Mr Lenfest and Mr Heller in the Pottstown office. The Project Midsummer proposal, as Dr Burt had suggested it to Mr Plant and Mr Cosser, was discussed: as I have mentioned, Mr Plant's evidence is that he had not previously mentioned it (indeed had not had the opportunity to mention it) to Mr Lenfest or Mr Heller, and Mr Lenfest and Mr Heller each gave evidence that they first heard of the proposal on 28 October at Pottstown. During the weekend of 30 and 31 October, Dr Burt telephoned Mr Plant and suggested a meeting in St Louis the following week: Mr Price had other business in St Louis, Missouri that week and could attend a meeting there; it was proposed that Mr Cosser and Dr Burt would come as well. 234 Mr Price, Mr Cosser and Dr Burt met at St Louis on 1 November; the following morning, Dr Burt met Mr Lenfest, Mr Heller and Mr Plant. Later on that same day all six met; and there was a further meeting the following day, 3 November, between the representatives of Australis and LCI, during part of which Dr Burt also was present. It is unnecessary to go through the detailed evidence about what happened at each meeting. Dr Burt had with him, and received from Mr Johnston during the course of the two days, various documents dealing with aspects of Project Midsummer (and using code names for the parties: "Autumn" for Australis, "Lent" for LCI and "Symphony" for New World). One of those documents was a letter from Dr Burt to Mr Plant dated 1 November 1993. That letter was given to Mr Plant and was seen at least by the LCI representatives. It outlined the proposal, expressed Bain's confidence that it would be able to underwrite equity of $250,000,000 "to fund the start up cost of Pay TV by satellite and MDS", set out a timetable and proposed a basis on which Bain would be remunerated by way of a transaction success fee and underwriting fees. The other documents, mostly at least, were used by Dr Burt for his own information, and prompting, during the course of the discussions. It is not profitable, I think, to pursue the question whether any, and if so which, of Dr Burt's other documents were seen by any of the other participants. The question of fees was, over the two days, discussed and agreement was reached, at least in principle, that if a transaction based on the proposal proceeded to fruition, Bain would be entitled to a success fee of $1,500,000 of which LCI and Australis would each pay one half. There was no commitment in relation to an underwriting fee, merely agreement that if Bain bid competitively for the underwriting it was likely to be appointed to underwrite at a fee to be agreed. 235 Dr Burt explained Project Midsummer to Mr Price and Mr Cosser on 1 November and to the LCI representatives on 2 November. At the meeting of all six participants on 2 November there was substantial discussion of the essential elements of a transaction which would implement Dr Burt's proposal: sufficient to enable Mr Heller to prepare overnight a reasonably detailed document in the form of a letter addressed by Mr Price and Mr Cosser to Mr Lenfest. The letter is important and, although it is lengthy, it is desirable to set it out in full. "November 3, 1993 Mr. H.F. Gerry Lenfest The Lenfest Group 202 Shoemaker Road Pottstown, Pa 19464 Dear Gerry, This letter is to confirm the agreement reached between Australis Media Limited (Australis) and the Lenfest Group (Lenfest). Lenfest agrees to sell its interest in New World Telecommunications Pty. Ltd. (New World) to Australis under the following terms and conditions: 1. Lenfest will obtain ownership and/or control of at least 90% of the shares held by at least 75% of the shareholders of New World. 2. New World must acquire the Australian Pay Television Satellite Licence B which it has bid on and was awarded. 3. Lenfest and New World must terminate and be released from its current business relationship and agreements with Turnbull & Partners. 4. Australis will issue new shares of Australis stock to Lenfest. The shares will be valued at $A.80. Lenfest will surrender its shares of New World which will be valued at $A130 Million. The number of shares to be issued will be 162,500,000 and the number of Australis shares/share equivalents issued prior to this transaction will be 180,000,000. 5. Australis will enter into a ten year Technical services agreement with Lenfest. Lenfest will provide services, as will be detailed in the formal agreement, including but not limited to developing an operating structure, subscriber management system, marketing and pricing policy and management team. All personnel will be trained by Lenfest. Lenfest will also be responsible for the selection, acquisition and packaging of program offerings and have responsibility and authority to negotiate appropriate programming contracts. Lenfest will be reimbursed its out of pocket expenses incurred during the first two years of the agreement. These expenses will be budgeted and/or approved by the Australis board of Directors. Lenfest will also be paid a fee caculated [sic] as a percentage of all revenue as scheduled below. The fee regardless of the caculation [sic] will not be greater than $A5 million in any one year. Technical service fee: Year Percent of Revenue 1 5% 2 4% 3 3% 4 2% 5 1% 6 1% 7 1% 8 1% 9 1% 10 1% 6. Lenfest will be represented on the Australis Board of Directors with a minimum representation equal to its percentage share holdings. 7. A public offering of Australis stock will be undertaken to raise additional capital for the operation of the company. The principals of the company (Rodney Price and Steven Cosser) will not offer any of their holdings as part of the offering. 8. Lenfest will have the right to participate in any future public offerings to prevent its percentage ownership from being diluted. 9. All appropriate Australian laws and regulations with respect to ownership and structure will be strictly adhered to in the completion of this transaction. The Agreement and negotiations on which it is based will be subject to the laws of New South Wales and exclusive jurisdiction of the courts of New South Wales. 10. The parties agree Bain & Company will be engaged under the terms detailed on the attached Exhibit A. 11. A formal agreement will be prepared incorporating the points agreed in this letter along with other appropriate provisions. This agreement is subject to Australis board approval and formal documentation along with Lenfest board approval. 12. No communication or announcement of this agreement is to be made without the prior written consent and agreement of both parties except to those needed to complete the transaction. Those persons will also be bound by this restriction. If the above has your approval, kindly acknowledge your acceptance by signing and returning the enclosed copy of this letter. Sincerely, Rodney Price Steven Cosser Chairman Agreed to this 3rd day of November 1993 The Lenfest Group By H.F. Gerry Lenfest" 236 A number of aspects of that document are notable. First, its explicit purpose is to confirm an agreement reached and it is couched in the terms of agreement, to the extent of including the selection of a proper law and a submission to exclusive jurisdiction (nevertheless, a later formal agreement is contemplated). Secondly, there is the curious provision purporting to require LCI to obtain ownership and/or control of at least 90 per cent of the shares held by at least 75 per cent of the shareholders of New World. That provision was explained by Mr Price (the explanation is plausible and I accept it) as resulting from a suggestion by him that if that level of ownership or control were acquired the balance might be acquired compulsorily under the provisions of the Corporations Law (though it does not particularly matter, that was a misapprehension). Thirdly, TPL were to go: that was explained, in the evidence of the participants, as a requirement of Mr Price, based on a perception that TPL was close to the Packer organisation, regarded by Mr Price as the "enemy." Fourthly, LCI, having acquired the shares in New World, was to "surrender" them to Australis for a value of $A130,000,000 in exchange for an issue of Australis "stock", "shares" or "shares/share equivalents", each valued at $A0.80. The $A130,000,000 was arrived at by adding together the two deposits already paid, the price payable on allocation of licence B and an estimate of the amount to be paid by LCI for the New World shares; the figure of $A0.80 was selected as representing a premium of 5 cents above the highest price paid by any existing Australis shareholder for its shares. Fifthly, there was to be a technical services agreement for ten years, the terms of which - including the fees to be payable to LCI - were spelt out in some detail. Sixthly, there was provision for a public offering "to raise additional capital for the operation of the company"; there was a separate provision agreeing to the appointment of Bain (without specifying a particular role) under the terms detailed "on the attached Exhibit A." The document, as tendered, did not include an exhibit "A" and the participants rejected suggestions made in cross‑examination to the effect that Dr Burt's letter of 1 November to Mr Plant might have been Exhibit A; the evidence was, consistently, that there was no such exhibit, no agreement having been reached, except on the success fee. 237 Finally, there was a provision forbidding communication or announcement of the "agreement" without the consent of all parties "except to those needed to complete the transaction", those persons also to be bound by the prohibition. Mr Price's evidence was that his concern - which he stated - was principally that no transaction had then, or could then be, finally agreed upon; no transaction might eventuate; and public disclosure could result in considerable harm to Australis: its stated intention was to rely on MDS technology, not satellite, and it had gone to some trouble in its prospectus to justify that course of action by reference to what it perceived to be the advantages of MDS. Mr Lenfest had other concerns. He gave the following evidence in chief: "Did you tell Mr Hadid of the discussions that took place in St Louis on 2 and 3 November 1993? - No. Why not? - Number one, we had agreed to keep this entirely confidential and if it was disclosed to Hadid and he disclosed it it would have killed the deal. Number two, based on past experience with Hadid my feeling was his approval would be unreasonable and that he would hang up the deal because of unreasonable demands. When you say, hang up the deal, what do you mean? - I mean in order to transfer the New World shares to us would be on a basis that was not acceptable. Not acceptable to whom? - To us. He had previously asked for such free carry of high per cents and management and all the other things, my feeling was that if we disclosed this to him that his demands would be such that we could not do the deal with Australis. With what consequence? - We would not be able to combine the B licence into Australis and combine the MDS and the satellite licences together. With what consequence so far as your deposits were concerned? - Our deposits would be lost. Any other reasons for not disclosing this to Mr Hadid? - Yes. At that point we weren't even - or I wasn't certain that we could do the deal because we didn't know whether we could raise the $85,000,000 needed to … pay the rest of the licence after we obtained control of New World and we didn't know whether we could obtain control of New World." 238 To anticipate somewhat, ultimately the shares in New World were acquired, licence B was paid for and allocated and the New World shares were transferred to Australis in exchange for Australis securities issued to LCI. Mr Hadid was not informed of any discussions or arrangements between LCI and Australis until formal agreements had been entered into and an announcement made by Australis to the Stock Exchange. 239 Associated with the issue of confidentiality is the question of the status of Mr Heller's document. The evidence was that it was tabled by Mr Heller, in a number of copies, on 3 November. Mr Price read it and made two changes: he inserted the word "subscriber" before the word "revenue" in the penultimate sentence preceding the table in clause 5 and in the heading of the second column of the table. Having made those changes he signed a copy of it and handed the copy to Mr Lenfest. It was not signed either by Mr Lenfest or by Mr Cosser. The effect of Mr Price's evidence was that he signed the document as an indication that it reflected the effect of the previous day's discussions: Mr Lenfest asked for a clear assurance that Australis was interested "because [Mr Lenfest] had to go to a lot of expense and effort in order to progress the matter" and he was prepared to give such an assurance. Mr Price was not, however, in a position, and stated that he was not in a position, to bind Australis at that point: that would require approval by the board of Australis and probably, because of the number of securities which might be issued, of a general meeting as well; and any agreement would require notification to the Stock Exchange. Mr Lenfest, for his part, gave evidence that he was not in a position to commit LCI: he needed board approval both of the transaction itself and of the borrowing needed to put it into effect; and the matter could not proceed unless LCI was able to reach an acceptable arrangement with Mr Hadid and his fellow shareholders. To anticipate again, there is support in the evidence for the proposition that the approvals which Mr Lenfest needed were not a mere formality. They were ultimately obtained. As late as 11 November 1993, however, Dr Malone, whose consent was required (he was a director of LCI and represented the owner of 50 per cent of LCI's shares), wrote to Mr Lenfest: "I have received your Action By Unanimous Consent in Writing Of The Board Of Directors of Lenfest Communications, Inc. I, in good conscience, cannot agree to authorize the $85 million Australia Credit Agreement when I have not been totally convinced that it makes sense financially for Lenfest to get so deeply involved. Please give me a call at your earliest convenience so that we may discuss this further." 240 In summary, in my view, the evidence - both evidence to which I have already referred and some to which I shall come later - requires the conclusion that the meetings at St Louis did not result, then and there, in a binding agreement; they did result, however, in a proposition which both sides accepted as feasible and possibly advantageous, should certain conditions be met. Apart from the necessary approvals, the principal condition was that LCI acquire the shares in New World on terms at least broadly consistent with the transaction outlined in Mr Heller's draft letter.

(n) "Action Plan" of 4 November 1993 241 Mr Heller, the evidence amply establishes, had a propensity to prepare lists of matters requiring attention, whether by himself or by others. On 4 November an "Action Plan" was prepared which assumed some importance in the case. Mr Heller's recollection was that he and Mr Plant prepared it; Mr Plant's recollection was that he played no part in its preparation but first saw it shortly after 4 November. It does not matter whether Mr Heller prepared it alone or it was a joint effort and it is unnecessary to make a formal finding about it: but I think the likelihood is that Mr Plant's recollection is accurate, that the document was prepared by Mr Heller and was seen by Mr Plant shortly afterwards. It was faxed to Mr Lenfest on 8 November. Mr Price gave evidence that he did not see the document in November 1993; Dr Burt gave evidence that he did not see it until after the commencement of this proceeding. (Mr John Elliott, a partner of Clayton Utz who acted, from 10 November, for Bain and, commencing a few days later, for LCI, gave evidence that he had seen the document during this proceeding, but could not recall whether he had seen it previously.) 242 Because of the significance assumed by the document it is necessary, once again, despite its length, to set it out. I shall not, however, set out the document also dated 4 November attached to it in similar form headed "Australian Pay TV: Steps to secure B license and launch", for the simple reason that it was not the subject of significant attention during the trial, particularly in submissions, and so far as I can see casts no particular light on any matter which I have to decide. The Action Plan is as follows: "AUSTRALIAN PAY TV ACTION PLAN TASK TO BE COMPLETED RESPONSIBILITY TIMING STATUS

1. Resolve Hadid deal GL/DLH ASAP Letter sent on 11/4 re: Designation of B Follow up letters sent on 11/5 DLH to visit Australia 11/10
2. Resolve Turnbull relationship SP ASAP Letter sent on 11/4. Telephone conversation on 11/4 and return letter said they still represent us. Letter prepared on 11/5 to respond and clarify. 11/8 Received letter canceling [sic] agreement
3. Prepare Press Release DLH After items 1 & 2 Regarding Pass on are resolved License A Resolve to obtain License B
4. Determine closing date on bank closing SP
5. Financial Projections to be revised DLH DLH spoke to Wayne Burt on 11/4. He will make arraignments [sic] for Autumn representative to visit to West Chester. Determine contact Plan working session
6. Interface with Bain on: SP/SM Structure (see SP/DLH/SM Turnbull ideas) SP/Wayne Burt/SM (CanWest deal) SP/Wayne Burt/SM Prospectus Shareholders Underwriting agreement
7. Prepare programming model DLH
8. Initiate programming contract discussions DLH
9. Bain to call Margaret Combs GL/DLH/Wayne Burt ASAP DLH spoke to WB on 11/4. He will speak to GL on 11/5 and call Margaret 11/5
10. Margaret Combs to call Albert DLH ASAP Call will be made after W.B. speaks to Margaret
11. Put Dougherty on ice. SP/DHL ASAP Spoke to Dougherty on 11/4 and told him we can't commit while the situation is in flex [sic]. Thanked him for his patience and told him we would advise him when the situation becomes more suitable. Still open, we can't commit. He can sit in the wings.
12. Engage Legal Counsel RP 11/5
13. Determine total cash needs DLH 11/5 See Schedule
14. Structure Funding SP 11/9
15. Call EDS DLH 11/10 See Schedule
16. Detail steps to be taken to secure B licence DLH 11/5
17. Resolve Sly & Weigall Relationship DLH 11/8
18. Determine century interest SP/DLH 11/9"

243 The precise status of that document, as between the participants in the St Louis meetings, was the subject of much attention in cross‑examination of the respondents' witnesses. It was put to Mr Plant that the action plan set out the agreed outcome of the St Louis meetings, and to Dr Burt that in general terms what was in the document reflected the proposal "which you advanced on the 2nd, and to a lesser extent the 3rd of November." Mr Plant's answer was, "I believe that to be the case, yes. I did not prepare this document"; Dr Burt said, "There's matters on it that I certainly wasn't involved in discussion with. So to that extent, no." It is plain from the evidence which I have already discussed that in a number of respects the action plan reflects matters discussed at St Louis: the first two items are obvious examples. The connection between some of the other matters in the plan and matters which, on the evidence of any of the participants, were discussed at St Louis is considerably less obvious. An example of matters in that category is the last on the list, "determine century interest." A good deal of attention was given to that item: Century Communications Corporation (Century) was another substantial United States pay TV operator, which, according to the evidence of the LCI witnesses, had been approached as a possible investor and was, they considered, still a possible investor in licence B (might, in other words, take a share of the investment which might otherwise be made by LCI solely); as will appear, Century ultimately invested in licence A. The issue to which cross‑examination was directed appeared to be, at least in part, whether Century's ultimate participation in licence A was part of a total strategy devised during the St Louis meetings. The evidence of the participants was that it was not. 244 I shall have to return to controversial matters such as that. Two broad observations may, however, be made now. One is that all the participants who gave evidence (that is, each of them except Mr Cosser) accepted that a number of things contemplated by the action plan in fact happened, but said that some did not. The other is that I have no difficulty in accepting the proposition that a member of the LCI team, who set out to list the matters requiring attention in the light of what had been discussed in St Louis and of other circumstances then known to LCI, might well produce that action plan.

(o) Activity preceding the third visit by Mr Heller

(i) Ms Combs' intervention 245 Ms Combs was (according to Mr Hadid's evidence) "a Dr Gadir contact." She had, to some extent at least, been kept informed of developments. Dr Gadir wrote to her on 2 November 1993 commenting on the current situation, suggesting that, "as you are involved by Lenfest in the current negotiations", it might be helpful if she were to visit Australia with LCI representatives to assist in reaching a concluded agreement. Dr Gadir enclosed with his letter copies of correspondence passing between Mr Hadid and LCI between 26 October and 1 November. Mr Lenfest, to some extent, had also given information to Ms Combs. 246 The 4 November action plan included, as two steps to be taken, "Bain to call Margaret Combs" (with a note suggesting that Mr Heller spoke to Dr Burt on 4 November and that Dr Burt would speak to Mr Lenfest on 5 November and to Ms Combs on the same day) and "Margaret Combs to call Albert" (with the note "call will be made after WB speaks to Margaret.") Dr Burt did telephone Ms Combs, probably on 4 November, from Los Angeles: he had travelled there from St Louis. At the top of his note of the conversation both Ms Combs' and Mr Lenfest's telephone numbers are written: Dr Burt said, however, that he did not speak to Mr Lenfest and Mr Lenfest's evidence was that he had no recollection of speaking to Dr Burt or of hearing that Dr Burt had called Ms Combs. Dr Burt's account (Ms Combs did not give evidence) was that he informed Ms Combs that he had been asked, as a potential underwriter of the licences in Australia, to call Ms Combs to get her view of the situation. According to his account, Ms Combs then proceeded to tell him that LCI had been unable to bring in United States investors "because of the cloud that hangs over the whole process in terms of UCOM and Mr Hadid and their involvement in a reasonably prominent way"; she went on to inform him that LCI had been unable to agree with Mr Hadid and that a number of US companies, which she listed, had been "scared away." There followed further discussion during which Dr Burt offered the views that a placement could happen only if United States investors were involved and that a 10 per cent free carry might be possible but one could not really know until the transaction was better defined. There was then some discussion about possible forfeiture of the licence A deposit, in the course of which Ms Combs remarked: "it may well be forfeited because of time, because Albert and his group are stirring for the last pound of flesh." She then made some comments indicating a reasonably up‑to‑date knowledge of the state of the negotiations between the two parties. 247 Not unnaturally Dr Burt's account of that conversation attracted a good deal of attention in cross‑examination. The suggestion was that Dr Burt was calling Ms Combs for the purpose of arming her (without telling her about the Australis discussions: there is no doubt that she was not told about them) with information which she could use to put pressure on Mr Hadid. Certainly Dr Burt's note can be read as consistent with his account of the conversation; it is also possible to read it, however, at least in part, as a note made (possibly during a conversation with Mr Heller) of matters which he was to mention to Ms Combs. Once again, I shall return to that controversy later in these reasons. 248 Ms Combs, in any case, wrote to Mr Hadid on 7 November. She suggested that he telephone her; she mentioned that she had had a conversation with Mr Lenfest. The effect of her brief message was to encourage Mr Hadid to reach agreement with LCI. She concluded: "Please let's talk. It would terrible to have done all you have done and loose [sic] it all. It would be equally terrible for Jerry to loose [sic] everything as well." 249 Mr Hadid gave evidence that, after receiving that note, he had a conversation with Ms Combs in which she made remarks consistent with, but adding little of substance to, the note.

(ii) TPL retainer terminated 250 On 4 November Mr Plant wrote to Mr Turnbull proposing that, upon payment of a further instalment of their fee, TPL's retainer should cease. The reason given was this: "We have become increasingly disheartened with the situation in Australia, particularly with reference to our negotiations with the UCOM group. At present, our primary focus is to resolve all issues with Albert Hadid and UCOM in a manner which is satisfactory to the Lenfest Group. We feel that the principals of Lenfest are best suited to obtain that satisfactory resolution. … Until we resolve the UCOM/Lenfest relationship, we feel that there is no longer an immediate need or economic benefit to continue to retain Turnbull in any capacity." 251 Following an exchange of correspondence, in which TPL suggested that there might be some merit in retaining their services for a time, TPL accepted Mr Plant's proposal on 8 November.

(iii) UCOM/LCI negotiations 252 On 4 November Mr Heller wrote to Mr Hadid complaining about certain Australian press publicity and confirming the LCI position that any sale of either licence, or of the licence‑owning company, required LCI's approval. Mr Heller then wrote: "Additionally, we have evaluated the appropriate license for Lenfest to receive its ownership. We are choosing License B to receive the minimum 13˝ percent carried interest in accordance with the terms of our agreement dated August 29, 1993, Paragraph 1a. We would also receive the 2 percent carried interest in License A if applicable." On the same day Mr Heller sent Mr Lenfest copies of the earlier correspondence and, in his covering note, added: "I believe we need to go to your proposal of a straight cash buy. Give him a bone re film content mentioned in 28th letter but only verbal on that point. The cleaner the better." 253 Mr Hadid replied on 5 November. The publicity, he said, did not emanate from any revelation by UCOM of confidential material. Nor did he accept that LCI's approval was required for a sale of either of the licences or companies: "… but of course, in the spirit of our agreement we would not be doing any of the things you refer to without your knowledge. We would always treat Lenfest with the utmost respect and consideration." 254 Mr Hadid made two comments in relation to the selection of licence B: "1. This seems to represent a deliberate abandonment of Licence A or at least a withdrawal by you from the process of funding Licence A. Is this correct? 2. It also appears to represent an abandonment of the principles of consultation and equality which we agreed up until now underlay our relationship in favour of a literal interpretation of the 29 August agreement." 255 Both Mr Heller and Mr Lenfest wrote to Mr Hadid on 5 November. After a reference to the controversy about press publicity, Mr Heller wrote: "As you are aware we have been diligently attempting to obtain US cable companies to assist in the funding of the A and B Licenses. You are aware of all of the parties we have approached. There have been two stumbling blocks to all of the discussion with the U.S. cable companies. The problems we have encountered are their objection to the free carried interest requested and the lack of control we (Lenfest) can exercise in concluding an arrangement. When I was in Australia in early October, I attempted to resolve these issues and we (both of us) have attempted to resolve them over the past month. However, the UCOM Board seems to be unwavering on these issues and as a result have killed any chance of our being successful. There is no deliberate abandonment of either License, but we cannot fund them ourselves without help and we need the control in order to get the help. Unless we can, in short order, we won't be able to secure partners for the A or B License." 256 Mr Lenfest's letter reinforced the sense of urgency and added a fresh proposal: "The situation has become critical as you have been advised by Don Heller. All of the U.S. Cable Interests have objected to the terms of the free carry and it's definition as an up‑front gift versus the meaning of a carried interest in the States. Consequently, we cannot obtain funding for either License and are now in the situation where we most likely will forfeit the A License and lose our deposit. At this point, it appears the only remaining chance we have of salvaging anything is to put us in control of UCOM Australia and New World. If you don't assist us in this, we no doubt, will lose our deposits and position in the licenses. In this regard, I would make the following proposal which needs to be agreed to and the transaction consummated immediately and well before November 17, 1993, the date we would have to forfeit the A License. We will need to be in a position to salvage a deal with the B License given the market conditions and political pressures that will heighten after the probable forfeiture of the A License. We propose: 1. Current shareholders of UCOM Australia and New World will transfer immediately to the Australian nominees of Lenfest all the shares of both companies free of all claims or liabilities. 2. In consideration, Lenfest will remit upon delivery of the stock A$2 Million to be distributed among the shareholders of UCOM Australia and New World. 3. If Lenfest is successful in having the remainder of the purchase price for either License A or License B paid, the following considerations will be implemented: a. If there is provided a carried or free interest, then fifty percent (50%) of same will be provided to the former shareholders of UCOM Australia and New World. b. If the License is sold, fifty percent (50%) of the Profit on the sale will be provided to the former shareholders proportionate to their stock ownership with the payment being a minimum of A$3 Million. Profit would be the cash received less the Lenfest A$10.7 deposits on the Licenses, legal and travel expenses and other expenses including fees paid to Turnbull plus interest at seven percent (7%). Our control, in consideration of the above commitment, will give us the opportunity we need. We must move on this quickly and I ask for your immediate response. The alternatives are not pleasant." 257 The following Monday, 8 November, Mr Hadid wrote to Mr Heller acknowledging receipt both of the two LCI letters of 5 November and of the letter of Ms Combs. He said that he was "getting mixed signals" about LCI's position concerning licence A and suggested that a call should be made to the ABA to let them know, before the eleventh hour, what was going on. Mr Heller sent copies of that note to Mr Lenfest and Mr Plant with a message that he had not responded to it. On 8 November Mr Heller left for Sydney; he arrived on 10 November. 258 Both Mr Hadid and Mr Heller gave evidence of one conversation between them during this period. It adds little to the correspondence and there are only two controversial aspects of it, both forming part of Mr Hadid's account and both denied by Mr Heller: speaking of the complaints about press publicity, Mr Hadid claimed to have said: "… I'm most distressed that you would accuse us of leaking information to the press and I thought … our partnership means to you a lot more than that." 259 Then, also referring to the 4 November letter from Mr Heller, Mr Hadid claimed to have said: "Don the other matters in your letter as well, first of all the 13˝ per cent the way you suggest you want it is not the spirit of our agreement and it's not even the content of our agreement because you know Mr Lenfest said he'll accept less and you know Mr Lenfest in fact said, when the time comes, we'll negotiate according to what's available in the market and we'll … do a deal together."

(iv) UCOM and Bain 260 Dr Burt returned to Sydney on Monday, 8 November. On that day he met Mr Hadid, who was accompanied by Ms Wendy Scott (Ms Scott), then a manager, as Mr Hadid described her role, of one of his software companies. According to Dr Burt, the meeting was preceded by a telephone conversation between Mr Hadid and Dr Burt in which Mr Hadid sought a meeting. Dr Burt's evidence was that he said to Mr Hadid: "Albert, as you know I don't want to be involved advising you. I've told you about separate discussions I've had with Lenfest and now I'm retained, Bain are retained by Lenfest on some aspects of capitalising the bid and I don't want to get into a situation where I'm caught between the two of you involved in your discussions." 261 According to Dr Burt, Mr Hadid replied that he understood but wished to talk about one particular idea that he had. Dr Burt then agreed to see him. 262 Mr Hadid could not specifically recall that conversation, but conceded that he may have telephoned Dr Burt at about that time and requested a meeting with him. During Mr Hadid's cross‑examination by senior counsel for Bain and Dr Burt, the following exchange occurred: "Did [Dr Burt] say anything like this: Lenfest have now formally retained Bains on aspects relating to the capitalisation and funding of some of the structures they have explored? - No, Mr Hughes. Nothing like that said? - Never, ever. Never, categorically, Mr Hughes. The contrary, he was pretending he was on my side and he cannot get through to them either." 263 Two matters certainly were discussed during the meeting between Dr Burt, Mr Hadid and Ms Scott. One, of which Dr Burt and Ms Scott both gave evidence (it is also reflected in Dr Burt's notes of the meeting), was what Ms Scott described as an overseas loan proposal: apparently a proposition which had been put to Mr Hadid that funds could be borrowed overseas, to pay the amounts payable on allocation of the licences, on the security of an insurance policy. Dr Burt's evidence was that he suggested that Mr Hadid should not treat this as a serious proposition. The other matter which is common ground is that Dr Burt said to Mr Hadid that he should devote his energies to reaching agreement with LCI. 264 Two substantial matters are not common ground. Both Mr Hadid and Ms Scott gave evidence that Mr Hadid asked Dr Burt whether he was still of the view that Bain could do an underwriting on the footing of a 30 per cent free carry (Ms Scott in her evidence in chief, corrected during cross‑examination, put the figure at 35 per cent), to which Dr Burt responded, according to Mr Hadid: "Albert you know it is getting so close now to the deadline. If Lenfest pays for it and if [you] and them come back [with] an agreement [to] me I'll do the 30% but sit with Lenfest and work something out." 265 Ms Scott's version was: "And Wayne said that he did not have a problem with the free carry, with 35 per cent … and it does not matter what the free carry is, … he said that, 'I think the market will take it.' " 266 Dr Burt denied the substance of both versions, and such a conversation is not reflected in his notes. The other matter in controversy is that according to Mr Hadid he, and according to Ms Scott she, asked Dr Burt whether he would be prepared to participate in meetings between LCI and UCOM and that Dr Burt agreed that he would. Again, Dr Burt denied that. 267 Mr Hadid and Dr Burt met again the following day, Tuesday, 9 November. It is common ground that Mr Hadid announced Mr Heller's impending arrival and said that he had a positive attitude towards the forthcoming discussions. Dr Burt gave evidence of a more detailed conversation (again, reflected in a note he made of the meeting) covering reimbursement of costs incurred by UCOM, the amount of those costs and various plans suggested by Mr Hadid as to possible investors in the owner of each licence, how the corporate owners might be structured and certain operational matters.

(p) Mr Heller's third visit: 10 November 1993 to final negotiation

(i) UCOM and LCI 268 Mr Heller arrived in Sydney on Wednesday, 10 November. He and Mr Hadid met that day. According to Mr Heller, there was one meeting only, at the Ritz‑Carlton Hotel. Mr Hadid said that there were three meetings, all at the offices of Sly & Weigall, the first a brief preliminary meeting between Mr Heller and Mr Hadid, the second, also between Mr Heller and Mr Hadid only, involving more substantive discussions and the third (a substantial meeting also) involving Dr Gadir and Mr Martin Cooper (Mr Cooper). Mr Cooper, who played a significant role in subsequent events, was a solicitor in sole practice who had long experience in media and communications law and, more generally, in the media and communications industry. He had been engaged to advise UCOM in mid‑October. Neither Dr Gadir nor Mr Cooper gave evidence of a meeting with Mr Heller on 10 November (Dr Gadir gave evidence of one meeting only during this period, "probably" on 11 November; Mr Cooper's fee statement, addressed to UCOM, included in its narrative "on 10th November 1993 attending Mr Hadid and perusing 'scenarios' after meeting with Mr Heller", but that reads naturally as a reference to a meeting which Mr Hadid had had with Mr Heller, not one attended by Mr Cooper.) Mr Hadid's account does not include any contribution by either of them, except, on Dr Gadir's part, concerning Australis: I shall discuss that matter later. Ms Scott gave evidence that she drove Mr Heller from the airport to the hotel, and then saw him later in the same day at Sly & Weigall's offices. Ms Scott said no more than that. She did not suggest - nor did any one else - that she took part in any discussions, nor did she give evidence of any conversation she heard. The appropriate finding (if it matters) is, I think, that on 10 November Mr Heller met Mr Hadid only, not Dr Gadir or Mr Cooper. Though it does not matter, I think the probabilities are that there was one meeting only, rather than a series; whether it occurred at the Ritz‑Carlton Hotel or the offices of Sly & Weigall is of no importance. 269 There is some common ground between Mr Heller and Mr Hadid. Mr Hadid pressed Mr Heller to finance licence A, and Mr Heller said that LCI wished to proceed with licence B on the footing that they (LCI and UCOM) could not afford to risk licence B going to the Packer organisation; there was also some discussion of options proposed by Mr Hadid, which he agreed to reduce to writing for further discussion. Beyond that, the evidence of the two participants differs markedly. Mr Hadid kept no notes. Mr Heller prepared a note of the discussion for the purpose of a conversation he had early the following morning with Mr Lenfest: the authenticity of Mr Heller's note as a contemporary record made for that purpose was not challenged and I can see no reason to doubt it. It incorporates no mention of a number of matters which Mr Hadid claimed to have said and which Mr Heller denied. Particularly, Mr Hadid claimed to have said "you understand that I want the commissioning agency which we've talked about and you've agreed to"; that statement, he said, was followed by a rather rapid negotiation in the course of which Mr Heller offered what was described as a right of first refusal on a commissioning agency, which Mr Hadid refused "because you know that's the reason I started this whole thing, the pay TV"; Mr Heller, according to Mr Hadid, then said, "Well we can't do it," to which Mr Hadid replied, "You know you've always agreed, I'm not budging on this," followed by an immediate capitulation on the part of Mr Heller: "Okay, look, we can agree to that." Secondly, according to Mr Hadid, there was discussion about franchising and equipment leasing rights as to which Mr Heller agreed that Mr Hadid would have a right of first refusal, but that it would not be put in writing. Thirdly, Mr Hadid said that he told Mr Heller that Dr Burt was still prepared to underwrite on the basis of a 30 per cent free carry "providing you play ball." There were also some matters asserted by Mr Hadid, and denied by Mr Heller, which perhaps it is somewhat less surprising (assuming that they were said) not to find recorded in Mr Heller's note: for example, a statement attributed to Mr Heller: "We've done our best, we can't find anyone interested. The studios and cable companies are saying they don't want to work with UCOM, … there's no one interested anyway so we have to go this alone and unless … we do something we will all lose everything." And the following statement and question, which Mr Hadid attributes to himself: "… the clock hasn't even started ticking on licence B. … We have a responsibility for the process on licence A, and … Steve Plant came here and said he is going to finance A, now we can always deal with B later and agree how to deal with it, but why not finance licence A?" 270 Mr Heller's account includes a reference by Mr Hadid to the insurance company loan proposal (see par 263) and a statement by him to the effect that Dr Gadir and Mr Blanks "wanted to cascade and drop us out. They have five bids on each licence." 271 Mr Hadid the next day sent Mr Heller a document headed "draft for discussion only" which incorporated a number of options. The document opened with a series of points on which all discussions were to be based. They included the propositions that 65 per cent of ownership of each licence should be Australian and 35 per cent foreign, a private placement would take place "soon" and each licensee would be floated as a public company within 12 months; the operating company, which would not accumulate profit, would be owned equally by the two licensees and managed by LCI; UCOM Australia and New World would have the right to appoint a director of each licensee and of the operating company; free carried shares were to be ordinary participating voting shares, protected against dilution; and there were to be "Australian content rights." It is, I think, unnecessary to describe the options in detail. The first was one under which LCI would finance the purchase of both licences, the funds advanced to be in part repaid and in part converted into equity upon underwriting; the second involved LCI financing the acquisition of licence A and proposed two alternative ways in which licence B might be dealt with; the third option involved a cash payment by LCI to UCOM of $US25,000,000 and UCOM owning one channel, to be operated by LCI for UCOM. 272 There was a meeting during the afternoon of 11 November which assumed some importance in the case. It was attended by Mr Heller, Mr Hadid, Dr Gadir, Mr Blanks and Mr Cooper. Two matters at least are clear: there was discussion of the options in the UCOM paper and of a fourth option which involved allowing the licence A bid to cascade and payment of the amount due on issue of licence B in a way which would give UCOM the means to fund the deposit on its next licence A tender. Additionally, Mr Heller once again made plain that LCI wished to finance licence B and not licence A. The significant aspect of the meeting, however, is one of acute controversy. Dr Gadir gave evidence that the following exchange occurred: "[Mr Heller] said in so many words, look Lenfest has got to do the financing of this licence by itself. There is really no party in America from all the people we have spoken to or otherwise that really wants to come into the deal. We have got no choice. We have got to do it. We have to allow the A licence to drop and finance the B licence because we cannot take the risk of the media, the major media in Australia such as Kerry Packer taking over the B licence. So we have got to move on this by ourselves and we are prepared to lose our deposit on licence A because we have got no choice in the matter. I said surely we must have some parties that would be serious contenders to come in with us such as Australis, that we have talked about before, and Mr Heller said words to the effect, well I have spoken to them more than once and they have said they are not interested. They are just not interested to come in. I said words to the effect, but what is the rationale for that. I mean it makes no sense. I mean it is natural for them to come in. Mr Heller said that may well be so but they are just not geared for that, they are not interested." 273 Dr Gadir added that at the end of the meeting, when people were milling around, he had a separate conversation with Mr Heller, as follows: "I said, 'There is absolutely a logic in Australis coming into a deal of this nature because what can they do with the microwave licences. Surely, we must be able to put a proposal to them which would be acceptable which would … at least make them interested' and Mr Heller … said … 'I think there's not much we can do at this stage. It's just too late in the piece. There's really nobody who is interested to come in.' " 274 Mr Blanks gave evidence substantially to the same effect: "What was said by Mr Heller, what was said by you, or others in the course of this conversation? - I think Mr Heller was saying that there was no one who was interested in joining as investors in the licence. And Dr Gadir said, 'What about Australis?' And Mr Heller said, 'No, we've spoken to them and they're not interested.' Did he say anything concerning what Lenfest proposed to do? - No, well, I don't recall that he did. Was there anything said by anyone else as part of this conversation, do you recall? - I think I recall that Mr Heller might have said that Lenfest might have to fund the licence itself." 275 Mr Hadid gave similar evidence: "[Dr Gadir] said, 'Don, Australis has to be the obvious party. We should bring them to the table, talk to them.' And Don said, 'That won't achieve anything.' And he said, 'They can't do without a satellite licence.' And Don said, 'They've made that clear. They're not interested.' " 276 Mr Cooper also gave evidence that Dr Gadir questioned whether all possibilities - including possible interest on the part of Australis - had been sufficiently explored. He did not, however support the other witnesses' attribution to Mr Heller of a specific representation that Australis was not interested: "Dr Gadir said, I am very concerned that we have not explored all of the opportunities available to us for funding both the licences and said, for example, I don't believe that we have explored all of the possibilities available with Australis or with my contacts in Thailand and I believe there are numerous other parties who would be interested in partnering with us in some form in one or other of the licences. … Mr Heller said, well, that's all very well, but we've got to deal with the immediate problem which is funding a licence within five days and we don't have time for any more of this fruitless search for investor partners." 277 Mr Hadid gave evidence that a conversation took place between Mr Heller and Dr Gadir the previous day, 10 November, in similar terms to that which, he said, occurred on 11 November; but, as I have mentioned, no other witness supports the proposition that the matter was similarly discussed twice on successive days, or that Dr Gadir or Mr Cooper met Mr Heller on 10 November. 278 The conversation about Australis and the lack of investor interest in the licences, to which all those witnesses deposed, lies at the heart of one of Mr Hadid's claims against LCI and, derivatively, against other respondents. I shall consider it in detail later. It need only be added now that Mr Heller denied that there was any mention of Australis on either 10 or 11 November. He accepted that he said that LCI were unable to find anyone willing to invest, "meaning put up money into the licences." He also conceded later in cross‑examination that he said words to the effect that LCI "couldn't find anyone interested in funding the licences." 279 Two additional comments may be made about the meeting on 11 November and its outcome. First, whatever the precise terms of the discussion, it was agreed that a meeting with Dr Burt would be useful, among other things for the purpose of attempting to resolve the "free carry" issue. It was arranged, following the meeting, that Mr Heller, Mr Hadid and Mr Cooper would dine with Dr Burt that evening. Secondly, Mr Heller's notes of the meeting suggested a degree of cautious optimism: "The option sheet raised a number of issues which may be resolved after the rewrite and problem areas will be identified after the rewrite." The "rewrite" referred to was a revision, following the meeting, of the draft document given to Mr Heller that morning. 280 It would be tedious, and fortunately is unnecessary, to describe in detail the various, and diverse, accounts of what was said during the dinner which followed, at the Treasury Restaurant (a restaurant in the Intercontinental Hotel), attended by Mr Hadid, Mr Cooper, Mr Heller and Dr Burt. A number of things are clear. There was discussion about the possible level of free carry. Dr Burt expressed the view that free carry of 30 per cent was unattainable. Mr Cooper suggested that it might be obtainable (according to both Mr Hadid and Mr Cooper, Mr Hadid protested that what Dr Burt was now saying was inconsistent with what he had said previously); there was discussion about whether the funding of the two licences might be underwritten by the same underwriter, or at the same time; an arrangement was made that Mr Heller would draft, overnight, a proposal to put to Mr Hadid. It is not necessary at this stage to investigate aspects of the conversation, striking as some of them are, as to which there was disagreement. There is one particular matter, however, recounted by Dr Burt, which should be mentioned. It is that he claimed to have made it clear at the meeting that he was not offering advice but was merely giving general information or views about the market. His notes, which he said were written when he returned home following the dinner (he was one of two note takers, Mr Heller being the other), record "made all disclaimers that not advising or liable." 281 Mr Heller prepared overnight a document in which he set out a "strategy" and a "deal." The "strategy" was as follows: "1. Let A cascade. 2. Meet with Biddle/Johns prior to Wednesday and inform re: (a) A to cascade (b) prepared to fund B today 3. No press discussions whatsoever by any of us 4. Meet W/loan insurance people ASAP to secure financing for A if it cascades to related company. 5. Initiate B underwriting on best commercial terms to be negotiated with Bain & Co." 282 The proposed "deal" was: "1. Lenfest funds NW via debt/equity to purchase Licence B. 2. Lenfest W/advice from partners seeks underwriting via Bain on best terms negotiated. 3. Free carry at 50/50 but Lenfest guarantee min 5% ownership of recapitalised NW even if out of our cash. 4. 95% of stock transferred to Lenfest Nominee. 5. Lenfest pay to ? $1,000,000 to cover out of pockets. 6. Underwriting reimbursed 1st Lenfest its costs (Sly Turnbull travel interest orig fee deposits debt) 2nd 'success fees' as agreed. 7. Both share in A if successful at 50/50 of a carry if no carry and ins co provides 100% 50/50. 8. Mgmt Fee of ops Co as we discussed ownership of the Co 3 way between A/B/Lenfest." 283 Mr Heller presented those documents to Mr Hadid on 12 November. Mr Hadid recollected only one meeting that day between himself and Mr Heller; Mr Heller recollected three, to one of which Mr Egan was a party. It does not greatly matter, but it is clear that there were at least two meetings, in the later of which Mr Egan was involved. Mr Egan took notes, and gave evidence about it. The upshot, according to Mr Heller, was that his proposals were rejected. Among other matters which may have been discussed, it is necessary to mention only the question of a drama commissioning agency. This was undoubtedly the cryptically described commissioning agency referred to over the preceding few days and involved a proposition that Mr Hadid, or possibly some UCOM entity, would be appointed agent to acquire and provide to the licensees (or one of them) the "Australian content" drama required by the Broadcasting Services Act. Mr Heller agreed that the issue was discussed but said that what Mr Hadid proposed "didn't make commercial sense." Mr Egan said it was discussed in these terms: "Don Heller then said words to the effect that whilst he agreed with Albert at the beginning of his visits to Australia that he would have the exclusive rights to the Australian drama production or sourcing for the licences, that he believed that there would be a better program acquisition strategy if Albert wasn't in control of those rights particularly in relation to two US programmers, one I remember to be HBO, the other I don't recall. He then went on to say words to the effect that he thought it was unlikely that HBO and the other programmer would deal direct with Albert anyway." 284 Mr Egan's note, which prompted that recollection, reads: "Local content ‑ Don says HBO can do better deals than AH on Australian content. ‑ AH deal on Aust content may exclude Turner, HBO etc from doing a deal." 285 Early in the afternoon of the following day, Saturday 13 November, Mr Hadid and Mr Cooper met Mr Heller at the Ritz‑Carlton Hotel. It was not a happy meeting. Mr Hadid handed to Mr Heller two documents, one headed "draft for discussion only" the other headed "backgrounder for discussion only." The former set out what were described as "absolute minimum conditions" acceptable to the UCOM shareholders. There were six points, as follows: "1. Five percent (5%) of all shares, including options, as free carry in each of the fully capitalised Licence B company and the operating company at point of float. Minimum capitalisation of the Licence B company shall be two hundred and fifty million dollars ($250 million). 2. Two million dollars ($2 million) payment now and five million five hundred thousand dollars ($5.5 million) on completion of underwriting or float. 3. Albert Hadid will be the commissioning agent for acquiring to fulfil the ten percent (10%) local content required of the drama programming. 4. The right to appointment [sic] one director to each of License B and the operating company. 5. At UCOM's option, Lenfest will fund the deposit on UCOM's successful bid for Licence A. If it pays the deposit, Lenfest receives thirty percent (30%) of free carry in the fully capitalised Licence A company and the right to operate as per original agreement. 6. If Lenfest puts up the deposit and assists UCOM in successfully raising the loan funds so that there are no other equity partners in Licence A, then Lenfest receives twenty percent (20%) of shares in new company plus operating rights as per existing agreement." 286 There was a final rider: "Should the above be unacceptable, then we are reluctantly prepared to accept a walk‑away payment of not less than (U.S). twenty five million dollars (US$25 million) payable on transfer of shares and within 30 days." 287 The "backgrounder" was principally a rehearsal of a number of matters previously discussed and argument in favour of the proposed conditions. It included this paragraph: "In regard to local content, we are prepared to give you the right to appoint a director to my company which will commission the work on the local content. I am confident I can and will achieve a good working relationship with any programmer you appoint and still deliver quality Australian product at commercially favourable rates to your satisfaction. The appropriate safeguards can be built in. You are aware that without this involvement I would not have achieved any of my personal objectives and the result would be a very empty achievement which I dread to think about." 288 All participants agree that there was an angry scene: Mr Hadid and Mr Cooper said that it arose from a disagreement between Mr Heller and Mr Cooper about whether United States programmers would be prepared to deal with Mr Hadid as drama commissioning agent; Mr Cooper abruptly left the meeting. Mr Heller's evidence was that he said he would consider the first three of Mr Hadid's conditions but "was not necessarily of a mind" to deal with the others. According to Mr Heller, Mr Hadid left, agreeing to consider the matter further in the light of the conversation and, at a luncheon meeting at a restaurant at the Sydney Opera House the next day, Mr Hadid rejected any deal based upon the previous day's discussions. Mr Hadid gave evidence that he did not "recall having too much conversation with Mr Heller about business that particular lunch at the Opera House." 289 Before passing to other matters, I should record some evidence given by Mr Noah to the effect that, during Mr Heller's visit, a conversation took place between Mr Heller and Dr Gadir about Australis, substantially in the terms recounted by the other witnesses, who put the conversation in the context of a meeting at Sly & Weigall. Mr Noah said that the conversation which he heard took place not at Sly & Weigall's offices but at UCOM's premises at Stanmore, in the presence of Mr Hadid and possibly Mr Egan. Mr Heller denied it; he denied also that he ever visited Stanmore. No one else suggested that he ever did so.

(ii) The Meridian interlude 290 Meridian Communications Pty Limited (Meridian) had tendered for licence B. Its bid price was about $104,000,000 and it was next in line after New World so that, if the New World bid failed, a provisional allocation would be made to Meridian. Mr Hadid knew, or at least strongly believed, that that was so. 291 Meridian was controlled by Mr Neil Brown QC of Melbourne (I shall refer to him as Mr Neil Brown so as to distinguish him from Mr John Brown, a principal of Trojan). There had already been some contact between UCOM and Mr Neil Brown but nothing had come of it. On 11 November Mr Hadid sent a fax to Mr Neil Brown: "Neil, Like to see you tomorrow night in Sydney (or Saturday night) for dinner. To discuss possible agreements/arrangements with UCOM/Lenfest. Please call Robert Lynch and organise a suitable time." 292 In fact, Mr Hadid had lunch with Mr Neil Brown on Saturday, 13 November, immediately before he and Mr Cooper met Mr Heller. Mr Hadid's conversation with Mr Neil Brown, as he recounted it, was: "I said to him that we would like to look at the possibility of buying or doing a deal with him to do an option … on his bid. He said, At the moment he is contemplating working with someone else and I said, That's all right, I thought I'd give it a go because our B bid hasn't started, the time hasn't started ticking as you know but we thought maybe to be safe in business for Lenfest and us we might look at this as a possible way forward but only as a fallback." 293 Mr Hadid said that he told Mr Heller about that meeting later the same day; Mr Heller denied that Mr Hadid did so. 294 At about the same time, Dr Burt and Mr Price took an interest in the Meridian bid. Each gave evidence that he had been telephoned on Saturday morning, 13 November, by Mr Cosser: Dr Burt said that Mr Cosser told him of rumours that Mr Neil Brown's company held the next bid for licence B. Dr Burt then contacted Mr Neil Brown and arranged to meet him. Later in the afternoon of that day (the evidence about the timing is clear and I see no reason not to accept it), Mr Neil Brown met Mr Price and Dr Burt: the discussion moved some distance towards, but not to the point of, agreement. Late in the evening the meeting resumed, and other Australis representatives joined it, including a solicitor, Mr Robert Mangioni (Mr Mangioni), then a partner in the firm of Tress Cocks & Maddox. Early the following morning an agreement between Becbran Pty Limited (Becbran) (a private company owned by Mr Price), Meridian and Mr Neil Brown had been negotiated and signed. The agreement was somewhat complex, no doubt because of a perceived need to avoid stumbling into statutory pitfalls. But its substantial effect was that in consideration of $50,000 paid by Becbran to Mr Neil Brown, Becbran was given an option to acquire the issued shares of Meridian by paying both the deposit and the final amount payable upon allocation of licence B in accordance with Meridian's tender. If Becbran exercised the option, Mr Neil Brown was to be entitled to payment of $5,000,000 or the equivalent in securities or other property. The agreement provided that Becbran might assign the benefit of it to any person. 295 A fax sent by Mr Heller to Mr Lenfest at about 7.30 pm on 13 November shows that, by that time, Mr Heller had become aware of the discussions and their likely outcome. How he found out does not particularly matter, though the likelihood I think is that Mr Heller's evidence that Dr Burt told him is correct (though Dr Burt did not recollect doing so on 13 November but thought he had informed Mr Heller the following day). 296 Mr Heller's fax described in some detail the position as he then saw it. He sent Mr Lenfest a copy of Mr Hadid's six points in his document of 13 November. He reported that he had not "counter[ed]" it other than to ask Mr Hadid if he would consider only the first four points but had indicated also that LCI could not commit to points 3 or 4 as it might not control the licence‑owning company. Mr Heller then referred to a "leak from the Government" to the effect that if the licence A bid were allowed to cascade to a further bid by UCOM the rules would be changed and the licence not awarded. That, Mr Heller surmised, explained Mr Hadid's persistence in pressing LCI to fund licence A. Mr Heller then turned to the Meridian discussions. He wrote: "Wayne Burt has introduced a new and positive element. He met with Neil Brown a QC and respected former government official who has the 'B' licence bid at @ $104 million which is widely believed to be next after our $117. Rod [Price] has put up the $50K to secure an option on the bid and with the payment of 5 million its ours. Interesting [sic] enough Albert is also talking to him I believe. The agreement should be signed before we speak. This being the case we may want to ultimate [sic] pass on both the existing bids and take the $104 (see financial considerations)." 297 Mr Heller appended to his note a series of options, including reaching a deal incorporating a version of Mr Hadid's points 1, 2 and 3 but not 4, 5 or 6; taking the Becbran (Meridian) option and risking a cascade; and "force capitalisation of New World and take by force from Albert" (Mr Heller indicated that legal advice was expected on this possibility). Mr Heller commented that funding A was not an option and that the Becbran option gave LCI "a clean break with some risk." 298 Mr Heller appended also two tables. One of them was a comparison of the last two offers: in effect, a table indicating the distance (which was considerable) separating the positions taken by LCI and UCOM. The other was described as a table of "financial considerations", a comparison between the respective costs of the "proposed deal with Albert" and of exercising the Becbran option. Mr Heller made the following recommendations: "• Take option ASAP • Look to Take B By Force • Try to string out B negotiation as we let A pass" 299 Mr Hadid did not know of the Becbran option; nor, it may safely be inferred, did anyone else in the UCOM camp.

(iii) Bain's activities: 10 to 14 November 300 By (probably on) 10 November Bain gave instructions to Clayton Utz. On that day Dr Burt and Mr Johnston met Mr Elliott, a partner of that firm (although Dr Burt could not recall being present, Mr Johnston recalled, and Mr Elliott's file note indicated, that he was). It is, I think, fair to describe the meeting, relying particularly on Mr Elliott's notes as elucidated by him in cross‑examination, as a preliminary one in which Dr Burt and Mr Johnston described what was going on (though without, apparently, any reference to Australis) and discussed some of the matters sought to be achieved: particularly, an acquisition of New World from the existing shareholders (through a structure designed to meet legislative requirements, but substantially an acquisition by LCI) and the funding of the acquisition of licence B; there was discussion of a possible underwriting by Bain and legal issues which might be thrown up. 301 Later (apparently) that day Dr Burt, according to his evidence, had a telephone conversation with Mr Heller - about which Mr Heller did not give evidence - in which Mr Heller described his initial encounter with Mr Hadid and mentioned that the UCOM people were more "stubborn" than Mr Heller had expected and that Dr Gadir and Mr Blanks were suggesting that "they cascade the licences down to the next bid." 302 The following day, Mr Johnston and Dr Burt met Mr Elliott again; this time Mr Rod Halstead (Mr Halstead), another partner of Clayton Utz and apparently Bain's principal point of contact with the firm, attended as well. Two quite distinct matters were discussed. The first was a proposal, which Clayton Utz was instructed to document, that Dr Burt would act as a mediator between UCOM and LCI. There was discussion as to what should go into the document to be prepared, including, particularly, disclaimers and releases. The second matter discussed was, once again but in more detail, a possible transaction by which LCI would pay the balance required to acquire licence B and would acquire the shares in New World, but on the basis that Mr Hadid would receive some percentage of the ordinary capital on capitalisation. 303 Following that meeting, and on the same day, Mr Elliott sent Mr Johnston two documents: one was a paper on the structure which had been discussed; the other was a draft mediation agreement. I shall describe its terms when dealing with the events of 15 and 16 November. 304 Sly & Weigall had informed Mr Heller that they were not free to advise LCI contrary to the interests of UCOM. By 13 November, Dr Burt had put Mr Heller in touch with Mr Halstead. Then, or shortly afterwards, LCI became the client of Clayton Utz: a file which had been opened under the name of Bain was transferred to LCI. On 13 November Mr Heller sent to Mr Halstead copies of the letters of 29 August, undoubtedly for the purpose of obtaining the advice referred to in Mr Heller's fax to Mr Lenfest. 305 I have not recounted, because I see no need to do so, other conversations which took place during this period between Dr Burt and Mr Heller (one, on Saturday, 13 November, according to Dr Burt's evidence involving Mr Halstead); Dr Burt's evidence was that he raised the topic of mediation with Mr Heller during the weekend; Mr Heller gave evidence that it was first suggested to him on Monday, 15 November. 306 During this period there were, as well, according to Mr Hadid, conversations between Dr Burt and Mr Hadid. 307 It will be recalled that during the Treasury dinner on 11 November Dr Burt had expressed the view that a 30 per cent free carry was not feasible and that, according to Mr Hadid and Mr Cooper, Mr Hadid had protested that that was contrary to what Dr Burt had previously said. Mr Hadid gave evidence that this was followed up in a conversation which he had with Dr Burt the following day: "I said, 'What was all that about, Wayne?' And he said, 'I was just trying to say that there was … another way they can actually do it and I would like to do the underwriting.' I said, 'Well, … that's fine but it's not basically what you've been saying to me.' And he said, 'Albert, it's just another way … I can line up the ducks that way and they can … make their 10 per cent … if they don't want to be on their own …' I said, 'If it's a matter of lining up the ducks, Wayne, why would you line them up that way if it is the difference between 10 and 30 per cent. Can you explain that to me?' And he said, 'It's only because it's a suggestion that's been made and it can be done that way.' And I said, 'Did they give you any names? Did they tell you who they're thinking of? … Who are they talking to?' He said, 'No, no, no names, just it's a scenario. They're under pressure. They're concerned. They're just thinking of ideas. I don't think you will find that they will go that way.' I said, 'Wayne, could we keep a straight conversation from here on when you're with me and there's representations to be made can you please make sure that you stick to the same story, you don't … confuse me and confuse the meeting.' And he said, 'I'll do that but get these guys to stick to a clear direction.' " 308 Mr Hadid gave evidence of a further conversation on 13 or 14 November: after some discussion of TPL, the conversation proceeded: "I then said, 'Listen, Wayne, you know that idea about where you'd like to have the two licences together, where you have a superior team in one and an inferior team in the other one and both cooperating, … do you think if we can discuss that with Lenfest could they be interested, maybe we could take it to the government and do something if you guys feel there could be a solution around that?' and he said, 'No, I've given that idea up, I don't think it'll work.' I said, 'I think that's good, but … I'm looking for solutions.' " Dr Burt denied both conversations.

(q) 15 and 16 November 1993: Regent Hotel negotiation 309 Monday, 15 November began with a visit by Mr Heller and Dr Burt to Clayton Utz. They saw Mr Halstead, Mr Elliott and a third partner of the firm, Mr Dean Jordan (Mr Jordan), who was experienced in litigation. The purpose of the meeting was to receive advice in response to the questions put to Mr Halstead the previous day. A draft letter to Mr Hadid had been prepared and was discussed: its purpose was, in substance, to demand performance of what were perceived to be UCOM's obligations under the 29 August agreement. There was discussion also of an approach to the Court for relief of some kind, the nature of which the evidence does not make precisely clear. Nor does it matter, because the letter was not sent and the Court was not approached. Mr Elliott was prepared to accept that what was contemplated would have involved the exertion of some pressure on Mr Hadid, and no doubt that is so; but the pressure was not exerted. 310 The next event of a busy day was a trip made by Mr Heller and Dr Burt to Canberra to meet departmental officers. Mr Heller spoke at the meeting from a prepared script. The script outlined, from LCI's viewpoint, the history of the matter and the current state of negotiations. It asserted that LCI had in place funds amounting to $US85,000,000, emphasised that LCI would not provide additional funds for either licence without "a reasonable commercial structure" and asserted that LCI was pursuing both negotiations and legal remedies for the purpose of establishing such a structure. A section of the script is interesting for the light it throws on Mr Heller's understanding, by then, of Mr Hadid's views about his involvement in drama: "All of our efforts have been without success due to The MMDS Issue The commercial terms requested and the non professionalism of the group or more appropriately their inexperience along with a desire to fulfil personal agendas rather than providing pay television ie Albert on film and being a director of pay TV." 311 Mr Heller's evidence was that while he and Dr Burt were in a taxi from Sydney airport to town after the Canberra meeting, Dr Burt spoke to Mr Hadid by phone; Dr Burt then suggested to Mr Heller that he (Dr Burt) might act as mediator between Mr Hadid and Mr Heller to "help keep us focused on getting some type of a deal done between the two of us." Mr Heller agreed to that proposal. Dr Burt's evidence was that the process was rather less sudden: he had put the suggestion to Mr Heller during the weekend and to Mr Hadid on the morning of Monday, 15 November, before leaving for Canberra. Dr Burt, who took no note of the conversation with Mr Hadid, gave evidence of a lengthy discussion which concluded, however, with Mr Hadid's agreement to the proposal. 312 Mr Hadid's version was quite different. To the extent that it differed from Dr Burt's version, Dr Burt denied it. It is important, however, for the light it throws on Mr Hadid's account of Dr Burt's, and Bain's, role in relation to Mr Hadid and UCOM. Dr Burt, according to Mr Hadid, telephoned him at about midday on 15 November. The conversation went this way: "He said, 'Albert, I just got a call from Don Heller' and I said, 'Oh well, that's good, they're talking to you sort of twice in such a short time, they should have been sitting with you at the table a couple of months ago … maybe he liked the way you've been supporting him', he said, 'Albert, he's cool, you've done a good job of selling me as your trusted friend and expert banker … Don Heller wants me to be an intermediary between you and he to see if you could come to a solution' and I said, 'Wayne, are you interested in … that proposition?' he said, 'Well, yes, … as I have already said to you I'd be interested, it would be a good way of helping you both find a solution' and I said, 'Well, you know, I see great advantage in this because I am pretty confused lately and it would help me solve some of the fuzzy areas which I'm beginning to feel is part of this transaction and because I trust you, rely on you, nothing will stop you, even though you're acting as an intermediary nothing will stop you from giving me your honest advice' and he said, 'No, nothing will stop me from giving you my honest opinion and I will be able to help both of you solve … your differences' and I said, 'Well, that's good Wayne, where's Don?', he said, 'Well, Don you know has been depressed, he called me over the weekend, he had no‑one else to turn to, he turned to me because he knows that I could talk to - and you would listen to me because of our relationship' and I said, 'Well if he really has done all that, then maybe he means well, Wayne, maybe these guys really want to be reasonable and you know, it gives us the opportunity to see where this is all going … let's do it' … he said 'Let's get on with it' … . I said, 'Alright Wayne, but you know … all the information … seen the correspondence, the information, you know the problems, you know the issues, I want a good reason and I want you to assist me with that so that I don't relinquish control without a good reason' and he said, 'Okay' and I think we agreed to meet at the Regent Hotel that night." 313 Mr Hadid, Mr Heller and Dr Burt all took rooms at the Regent Hotel on 15 November. During that evening, and into the early morning of 16 November, a process of negotiation occurred, during which Dr Burt acted as "mediator": the process was that Dr Burt saw Mr Hadid and Mr Heller separately, ascertained and discussed the position of each and then communicated it to, and discussed it with, the other. Mr Lenfest was telephoned for instructions at critical stages. The evidence clearly establishes the commencing point and the conclusion; it is far less clear as to the detail of the intervening negotiation. The commencing point was that the parties signed the mediation agreement which had been prepared by Clayton Utz several days earlier. It recited, among other things, that Dr Burt and Bain had previously advised both UCOM and LCI in relation to the licences. The effect of the agreement was that New World, its shareholders and LCI appointed Dr Burt, as Bain's agent, to mediate between them; it then proceeded to exclude, in wide terms, any obligation of Dr Burt or Bain to disclose information to either party and any duty of care on the part of Dr Burt or Bain. It incorporated a wide release of Dr Burt and Bain (except in the case of fraud) for anything done or omitted by them. The agreement was signed by Dr Burt for himself and for Bain; it was signed by Mr Hadid for New World and by Mr Heller for LCI. There was provision for signature by the shareholders, but it was not separately signed by them or on their behalf: Dr Burt gave evidence of a discussion between himself and Mr Hadid about the necessity, or otherwise, of two signatures by Mr Hadid, one for New World and a second, separately, for the shareholders. If that argument occurred, Mr Hadid won it. 314 The end of the negotiating process, at about 4.00 am on 16 November, was agreement that the New World shareholders would sell their shares for $13,000,000, payable on allocation of the licence; Mr Hadid would be appointed drama commissioning agent on terms an outline of which had been prepared; the UCOM group was to be entitled, free of any claim by LCI, to the current bid (about to expire) for licence A and any "cascaded" bid made by any of the UCOM companies. Mr Elliott, who had been "on stand‑by" and had, shortly after midnight, prepared a draft agreement for the sale of the New World shares at a price of $15,000,000, was to prepare further drafts of documents reflecting the agreement, which were to be settled in further negotiations later on 16 November. 315 The three accounts of the negotiation differ markedly in a number of respects. Dr Burt's is considerably the most detailed, and describes a process commencing with Mr Hadid's six points and laboriously reaching the maximum which LCI, by reference to those points, was prepared to give and the minimum which Mr Hadid was prepared to accept. A particular sticking point, according to Dr Burt's account, was the drama commissioning agency: this, throughout, was of great importance to Mr Hadid but was a matter which, until late in the negotiation, LCI was not prepared to concede. In that respect there is no significant difference between the accounts of Dr Burt and Mr Heller. The drama commissioning agency is one of the most obscure aspects of the whole process. Mr Heller's evidence was that late in the evening he thought it would be useful to discover what exactly a drama commissioning agency might be; he telephoned Mr Cosser who was in Paris; Mr Cosser explained to him what the terms of such an arrangement might be and Mr Heller wrote them out. Certainly, the outline drama commissioning agency agreement which was given to Mr Hadid and attached, in typed form, to the agreement prepared by Mr Elliott was a transcription of one written out in hand by Mr Heller. Dr Burt's evidence, however, was that he rang Mr Cosser to seek assistance on the appropriate content of a drama commissioning agency agreement; Mr Cosser agreed to put on paper his thoughts on that subject and he faxed them to Dr Burt; Dr Burt then gave Mr Cosser's version to Mr Heller who proceeded to write it out again, with some omissions and some changes. Mr Cosser did, indeed, fax an outline to Dr Burt; but a further complicating factor is that Mr Cosser's fax to Dr Burt, attaching the outline of draft terms, is time stamped early in the evening: well before any progress with the negotiations. Another difficulty is the length and timing, recorded by various hotel bills, of conversations which apparently took place between Mr Heller and Mr Cosser. It will be necessary to return to these matters; for the present it is sufficient to record that the precise provenance, and time of arrival, of the outline drama commissioning agency agreement is one of the more considerable mysteries of this case. 316 One or two particular differences between the accounts of Mr Hadid and Dr Burt should be mentioned. Dr Burt said that he began by explaining to Mr Hadid that he had been advising LCI on some aspects of capitalising one of the licences and that, though he did not know about everything LCI was doing, he knew about some things. Additionally, when Mr Hadid signed the mediation agreement, Dr Burt informed him that he was to receive success fees on capitalisation of the licence and hoped to get the underwriting; and there was then some mirth about his statement that if no deal was reached that evening the dollar paid by way of consideration for the mediation agreement would be the only dollar which he would make out of pay TV. Dr Burt said also that Mr Hadid explained at length that it was not his custom to sign documents containing releases, that if he signed this one it would be a first and that he had a particular approach to litigation: "I take a personal interest and devote myself around the clock to fighting any suits I'm in and I take a room, I assemble all the documents, I get some private investigators and people to help me and I pour [sic] over the documents and assemble my case and I use lawyers just to file, the lawyers are not much use to me in these matters and I've made a major strategy and success of this and I tell you, Wayne, this is a first if I sign this." 317 According to Mr Hadid, the indemnity agreement was not a particular hurdle. His account of the initial conversation with Dr Burt was very different from Dr Burt's. Mr Hadid said to Dr Burt that he was expecting Dr Burt to give him his honest opinion "because this is a very difficult time for me, I've got to make sure we make the right decisions and I want your honest opinion, can I rely on that?", to which Dr Burt had replied "Yes, but you know I have to be honest both ways." Mr Hadid also attributed to Dr Burt unconditional and enthusiastic agreement to underwrite licence A once the deal was done and, at various stages of the evening, but particularly towards the end, pressing advice to conclude the deal: "I said, You know with A are you sure we're going to be doing A and will be able to get our 30 per cent in terms of 30 per cent free carry and he said, 'Yes.' I said, 'the deposit.' He said, 'Albert look we will be able to once we underwrite. We will be able to find the deposit for 1 or 2 per cent from the free carry. Just do the deal I can't advise you stronger as a friend as an adviser as a person who's stood here for two months frustrated with you to do this deal. This is your last chance. Do not … let this opportunity go. Do the deal Albert … you know, I've got your $13 million. You're going to look pretty good. Let's do the deal.' I said, 'are you sure we're doing licence A Wayne.' He said, 'yes.' I said, 'alright, the deal is done.' " 318 Although the ultimate outcome of the negotiations is not in doubt (as will be seen, it was recorded in agreements signed two days later) it will be necessary to return to the different accounts in relation to three specific topics and one more general matter. Specifically, it may be relevant to know whether Dr Burt disclosed to Mr Hadid the existence of arrangements under which he might receive benefits dependent upon (among other things) agreement being reached between Mr Hadid and LCI and, if he did so, the terms of the disclosure; the evidence about Mr Cosser's assistance as to the terms of a drama commissioning agency and the manner in which the terms agreed upon were composed may be relevant to a submission made by senior counsel for Mr Hadid to the effect that, in relation at least to the drama commissioning agency, the negotiations were, on the parts of LCI and Dr Burt, a charade; and the circumstances in which Mr Elliott prepared a first draft, providing for a sale price of $15,000,000, may be relevant to the "charade" argument and to damages. The general matter, of course, is the credit of those who gave evidence about the negotiations.

(r) 16 and 17 November 1993: negotiating the terms of the agreement 319 One thing at least is clear about the events of 16 November 1993: during the afternoon, and possibly into the evening, of that day, the terms of documents drawn by Mr Elliott to give effect to what had been agreed between Mr Hadid and LCI were negotiated and substantially settled. Mr Elliott and Mr Cooper, particularly, gave evidence of that process. Two agreements emerged from it, which were executed the following day. One dealt with the purchase of the shares in New World. The purchasers were LCI and Dr Burt. The agreement provided for an immediate transfer of the shares in New World in return for which the transferring shareholders were to be paid, on transfer, a total amount of $100. A further sum of $A13,000,000 was to be paid to the shareholders within one business day after the issue of licence B to New World. The purchasers were to procure New World to pay for the licence no later than fourteen days after the ABA offered to grant it and were "forthwith and on‑going" to do their best to obtain the necessary regulatory approvals for the offer of licence B to New World. It is unnecessary to describe the whole agreement in detail but some aspects of it should be mentioned. There was a strict confidentiality clause which provided for a joint press release but otherwise required the parties to keep arrangements and discussions between them confidential and required the transferring shareholders to refrain from comment on matters relating to licence B. There was an "entire understanding" clause which, in conventional terms, provided that the agreement contained the entire agreement and understanding between the parties as to its subject matter and superseded prior arrangements, understandings or agreements. There were then releases in very broad terms, to which it will be necessary to return. Broadly, each party released "the other" from claims of any kind arising before the signing of the agreement and the transferring shareholders released the purchasers from claims arising at any time in respect of anything done in relation to licence B. Finally, the agreement required LCI, should licence B be issued to New World, to procure the appointment of Mr Hadid as exclusive drama commissioning agent on terms substantially set out in an annexure to the agreement, to be negotiated in detail "as soon as possible after the issue of the Licence B." 320 The second agreement (between the same parties) related to UCOM Australia. It incorporated broad indemnities and releases: particularly, releases by each party of claims arising under the letters of 29 August and by the shareholders, in favour of the purchasers, of claims arising in respect of acts done in relation to licence A up to the signing of the agreement. There was also an "entire understanding" clause. 321 Apart from particular matters about which there are conflicts in the evidence, the course of the negotiations appears from the evidence of Mr Elliott based on notes which he made, at the time, on successive drafts of the agreements. It is clear that the solicitors went through the documents in detail, discussed a number of their aspects and (no doubt in a number of cases after obtaining instructions) agreed on a significant number of amendments. It is evident that a good deal of the discussion centred on two matters of concern to Mr Hadid and those whom he represented. One was that Mr Hadid and his fellow shareholders should have some assurance that they would indeed receive the sum of $A13,000,000: that was ultimately reflected in the provisions requiring the purchasers to procure New World to pay for licence B within a limited time after it was offered and (in terms drawn by Mr Cooper) requiring the purchasers to do their best to obtain the necessary approvals. The releases also, clearly, were the subject of considerable discussion: on that point Mr Hadid's success was more limited, the changes being mainly by way of refinement and clarification. There was also a good deal of discussion and rewriting of the provisions dealing with Mr Hadid's appointment as drama commissioning agent. On those matters, and others of rather less significance, what happened was by no means unusual: a deal having been negotiated in principle, issues emerging from first draft documents intended to reflect the deal were identified, discussed in detail and agreed. After what was undoubtedly a reasonably lengthy negotiating process, Mr Elliott prepared a redraft from the notes which he had made; the redrafted document appears to have been faxed from his office shortly before 8.00 pm; some further negotiation, of a fairly limited kind, seems to have followed, leading to a relatively small number of further changes. 322 That description, while I think it fairly reflects the evidence given by Mr Elliott (and, at least in part, what actually happened), by no means captures the drama of the occasion as it emerged from other accounts. It is convenient to begin with Mr Cooper's evidence. He recalled that he had arrived at the Regent Hotel at about 2.30 pm. Mr Hadid was there; so were Dr Burt and Mr Elliott. Mr Heller made two or three brief appearances. There was detailed discussion of Mr Elliott's draft document. In addition, however, Mr Cooper gave evidence of particular discussions which he claimed to have had with Mr Elliott and of a conversation between Mr Hadid and Mr Heller. Mr Cooper had made, on a copy of a draft agreement sent to him (the first draft, which incorporated the substance of both agreements entered into on 17 November) a note, "No restriction on sale? Lenfest hold for one year." Mr Cooper explained that he was concerned that LCI might have some arrangement whereby they would immediately "flick" New World (or licence B) to some other party. Though he did not remember a particular discussion with Mr Hadid about it, he was sure that he would have sought instructions on that point. Similarly, in that context, he was concerned about the terms of the releases. He gave the following evidence in chief: "Well, I perused the first draft of the document and said to Mr Elliott, 'These are extraordinarily wide warranties and releases in this document. Why is that so?' He said, 'Because my client wants to have absolute unfettered control of the applicant company so that it can deal without concern with the various authorities, the Australian Broadcasting Authority … the Australian Securities Commission and with potential underwriters and so on.' I said to Mr Hadid, 'While I accept what Mr Elliott says I still believe these warranties and releases are far wider than they need to be and they at least should apply two ways, - that is, be releases and warranties by the purchasers as well as by the vendors to the extent of course that such warranties could be given by the purchaser. ['] Mr Elliott said, 'My client's very insistent upon this point and any way Martin, your client will have the protection of the Trade Practices Act in relation to those matters which go beyond what can be released and warranted.' I said, 'Well, that's a very broad and general protection to have and I would much prefer that we simply reduced the breadth of these clauses' … he said, 'Well, on my client's insistence.' I said, 'Well, can't we go through the words and find some ways to cut them down?', he said, 'No, they have absolutely got to be as broad as that.' I said, 'Well, let's have a look at some of them and look particularly at this clause' and I showed him one which said that the vendor must release the purchaser from all matters and all things of any kind or nature which had arisen between them prior to this time, or words to that effect. I said, 'This goes way beyond this transaction, it could apply to matters they are discussing in other areas.' And he said, 'I recognise that but my client is insistent that those clauses remain as they are.' I then said to him, 'John, there isn't a deal to sell this licence on, is there?' And he said, 'Not so far as I'm aware.' I said, 'You're not getting these warranties and releases so that you can just on‑sell the company?' And he said, 'Not as far as I am aware.' " 323 Mr Cooper said that, during the course of negotiations, he put that question to Mr Elliott, in substantially the same terms, two or three times, and each time received the same answer. 324 The conversation between Mr Hadid and Mr Heller, of which Mr Cooper gave evidence, was this: "Hadid said, 'There's some problem with this document, Don, we're not trying to be difficult but Martin says I really shouldn't be accepting some of these provisions.' Heller said, 'Well, my advice is that's the position, we cannot shift from that drafting.' Albert Hadid said, 'Well, I don't think these provisions are unfair, Martin thinks you're trying to sell the company on.' Heller laughed and said, 'No, it's not for that reason Albert, it's because you're a difficult fellow and we really want to be protected and you've got that bunch of shareholders behind you and we don't know who they are and we don't know anything about them and we want no further troubles with them and that's why I've been advised to get the broadest possible releases and warranties so that we never have to deal with any of those people in the future.' " 325 After further conversations between Mr Cooper, Mr Hadid and Dr Burt, Mr Cooper said that he had a confidential conversation with Mr Hadid: "I said, 'Albert, this looks like this might be a sticking point. What's your feeling?' He said, 'Well, this is really the sort of matter that I have to rely on you on.' I said, 'Well, they really are most unusual releases.' He said, 'What do you think's going on?' I said, 'Well, you know I don't trust Heller and I think these blokes are up to something.' He said, 'Like what?' I said, 'Well, they're going to on‑sell this company and that's why they want complete protection against you.' He said, 'Well, ask them.' I then disengaged in that conversation, walked back across the room and had the conversation with Elliott that I previously referred to. I said, 'John, is there any proposal to on‑sell this company?' And he replied, 'Not so far as I'm aware.' " 326 Mr Hadid's evidence about the occasion was substantially similar to Mr Cooper's, particularly as to the conversation between Mr Cooper and Mr Elliott. Mr Hadid said that Mr Cooper, rather than he, was Mr Heller's interlocutor: "Mr Cooper said to Mr Heller, … 'You have no interested parties that's doing this deal with you?' Mr Heller said 'We're doing this on our own, we have no interested parties, we won't be selling the licence.' " 327 Mr Hadid also gave evidence of a representation by Dr Burt: "Mr Cooper said to Dr Burt, … 'Does Lenfest have anyone interested, you know, we're concerned in case they're selling off their interest, is there anyone interested in the licences to your knowledge, Wayne?' Wayne said, 'Look, I've been working with these guys for two days, I'm certain, absolutely certain that they have no other interest, they are concerned that they haven't found any interest, they're concerned that they're going to start from a clean slate and take the risks on their own.' " (Mr Cooper's evidence was that he did not recall such a conversation.) 328 Mr Heller's account was radically different. He denied the statements attributed to him by Mr Cooper and Mr Hadid; he recalled no discussion about the width of the releases. His evidence was that a meeting commenced between Mr Hadid, Mr Cooper, Mr Elliott, Dr Burt and himself at 6.00 pm in Dr Burt's suite at the Regent Hotel. Mr Cooper began the meeting by asking for "a few changes" which, in Mr Heller's view, amounted to renegotiating aspects of "the fundamental deal" which he was not prepared to change. He suggested that Mr Cooper and Mr Elliott deal with matters of drafting, leaving the fundamental business deal intact. Mr Heller then left. At about 4.00 am on 17 November, Dr Burt telephoned Mr Heller and informed him that Mr Hadid "had agreed to leave the business deals in place as we had agreed the previous morning." 329 Following the conversation with Mr Cooper, Mr Heller said that he instructed Mr Elliott "to take steps to inform Hadid and Gadir that we were going to take steps to force the capitalisation of the company"; he gave evidence also of an early morning conversation with Mr Lenfest, during which Mr Lenfest instructed Mr Heller that, in the absence of a resolution, he should "come home." Mr Lenfest gave evidence to similar effect. 330 Dr Burt's account was different again. According to him, he met Mr Hadid, Mr Cooper, Mr Heller and Mr Elliott at 2.30 pm. The meeting began, on Dr Burt's account, with a summary by him of the deal reached the previous night, principally for the benefit of Mr Cooper so that he might understand the essential terms of the arrangement before he looked at the document prepared by Mr Elliott. According to Dr Burt, his summary concluded with the following exchange between him and Mr Cooper: "I said, 'That seems a pretty good deal to me', and he said, 'It does', he said, 'It's a good deal.' " 331 Everyone was then invited to sit at the table. Mr Elliott took them through the document; there was a general discussion about it; and it was agreed that: "… the UCOM people should take it away, look at it, talk to their shareholders about it and reconvene for a signing of the document that evening, again in my room. A time was fixed, again for, I think, around 6.30." Dr Burt recalled also "quite a deal of discussion … between Mr Elliott and Mr Cooper about the drafting and the mechanics of the agreement." 332 At the appointed time Mr Hadid and Mr Cooper arrived. There was, however, no signing. Dr Burt described the ensuing scene as follows: "Mr Hadid and Mr Cooper arrived at my room. Mr Hadid was extremely agitated and abusive. He burst in and said, 'This is a disgrace. This document doesn't represent what we agreed. Everything is off. There is no deal. I am sick of the lot of you. I am going to bring you all down. Lenfest is finished in Australia', and I said, 'Hang on, calm down, what's going on', and he continued for a while and he said, 'Look, I'm not agreeing to this deal. It's a joke,' and he then stormed out of the room." 333 Dr Burt and Mr Cooper were left together. In response to some expostulation from Dr Burt, Mr Cooper responded that there was not really a problem, Mr Hadid was simply emotional about the deal that had been done, that he knew it was a good deal and would eventually cool down. Mr Cooper also thought it was a good deal. Mr Cooper then mentioned that he wished to clarify one particular matter: "He said, 'I realise that this licence, the B licence, may be recapitalised or flicked on immediately or that it may be restructured and I don't care about that, Albert doesn't care about that whatever happens, however, we don't want it to go to PMT, we don't want there to be any arrangement like the Packer/Murdoch/Telecom syndicate. Can I get your assurance that that's not the case?' I said, 'Look, I don't know all of the plans for the licence, I know some of them, possibilities but … to my knowledge no plans for any recapitalisation on‑sale or whatever involve PMT in any way shape or form and I would be very surprised if the Lenfest Group involved them. So you have my assurance. As far as I am aware there's no PMT involvement but you should be aware that the licence will be recapitalised. I am not sure what form but obviously money has to be brought in.['] He said, 'Yes we're aware of that but if I've got your assurance on PMT.' And I said, 'You have my assurance, PMT … as far as my knowledge.' He said, 'Fine, that's good.' I said, 'What are we going to do about Albert?' He said, 'Don't worry about Albert, I'll go and find him and I'll bring him back when he's cooled down.' " 334 Eventually Mr Hadid returned with Mr Cooper and announced that he proposed to sign the document but would like to discuss a few points. There were a number of them, but the principal ones were that UCOM sought protection in the document against the possibility that LCI, for whatever reason, chose not to fund licence B; the other was that Mr Hadid sought to have LCI, by some means, finance the deposit on the next cascade of licence A. After lengthy discussion of the various points Dr Burt said: "Albert, at the moment we don't have an agreement and then I'm going to have to go to the Lenfest people. Look, just hang around here in my room for a while. I'll go and see Mr Heller who I know is in the hotel." 335 Dr Burt saw Mr Heller who reacted angrily to the suggestion that Mr Hadid wished to negotiate further. Ultimately, however, Mr Heller agreed to the first of the two major points but not to any of the others. Dr Burt relayed that to Mr Hadid who, after further discussion, agreed to drop the points which Mr Heller had not accepted: "After a long long time he said: 'Look, fine.' He said: 'I'll sign the deal. I'll commit to the original deal.' One again I articulated what it was he was committing to in the way I have done previously and got him to shake hands with me and the deal was done." 336 It is sufficient to say summarily that both Mr Hadid and Mr Cooper denied that there were scenes of the kind described by Dr Burt; and Mr Cooper denied the approving comments about the deal which Dr Burt attributed to him. Once again I shall defer any attempt to resolve the conflicts. In most respects it does not ultimately matter exactly what occurred or in what order and (though some of the differences are remarkable) it is not surprising that recollections differ. Again, however, some aspects of the meeting are important: especially important are the representations attributed to Mr Elliott, Mr Heller and Dr Burt about the absence of any proposals to on‑sell the company or an interest in it and, in that context, the conversation about PMT recounted by Dr Burt. It will be necessary to make findings at least about those particular matters; and that necessarily involves a consideration of the credit of the various witnesses.

(s) The signing and its aftermath: shouting and slamming of doors? 337 On 17 November 1993 the parties to the agreements prepared by Mr Elliott met at the offices of Clayton Utz and signed them. Evidence was given, however, of incidents during the course of the meeting, or immediately afterwards, which should be mentioned briefly. 338 It will be recalled that the purchasers of the shares in New World, under the agreements, were LCI and Dr Burt. Dr Burt was to purchase 86 per cent of the shares and LCI 14 per cent. That, no doubt, was intended as a "stop gap" regime which would avoid difficulties with the statutory limitations on foreign ownership. Dr Burt's precise role was not the subject of any detailed explanation or examination in the evidence, nor was the exact nature of the interest he was to acquire under the agreement; and neither greatly matters. The circumstance that Dr Burt was a purchaser gave rise, however, to the incidents recounted by Mr Hadid. 339 One of them was a conversation in which, to summarise, Dr Burt expressed some agitation about the role he was taking and a fear that it might be misunderstood, eliciting words of encouragement and understanding from Mr Hadid. Later, when Mr Hadid was standing with Mr Johnston "having a chat", he heard (as he said) doors slamming, loud voices and shouting. His own reaction, as he described it, was forceful: "… I screamed outside the door and I said, 'Come here Wayne', I said, 'I want to know what's going on, what's happening here, you know, I'm really distressed about all this, I mean I'm just confused, what is going on.' " 340 Having received a non‑committal response ("nothing is going on"), Mr Hadid said that he would go and tell the ABA "the whole story." He was dissuaded from that course and shortly afterwards received an explanation from Mr Heller: "Heller said, 'Albert, look it's simple, it's … not a problem, you know, if anything goes wrong … I'm really pissed off with Clayton Utz, if anything goes wrong I'm going to sue the hell out of them, they can't do anything right' and I said, 'What's the problem Don' and he said, 'Wayne Burt is a New Zealand citizen …' and I said, 'Oh no, if I had have known that I would have … told you that he can't hold on to the shares.' " 341 There was then discussion about the consequences of the breach of the Broadcasting Services Act and means by which it might be rectified. The means in fact chosen were that Mr Johnston (who was an Australian citizen) was substituted for Dr Burt as purchaser of a sufficient number of shares to ensure that the Australian ownership requirements were satisfied. Once that had been done - and there was no controversy about this - the ABA was informed, by telephone, of the agreements which had been signed. 342 In cross‑examination, Mr Hadid gave evidence of a conversation with Mr Johnston in the foyer outside Clayton Utz's offices, after the signing of the agreements but before the shouting and slamming of doors. Probing of the evidence elicited relatively slight variations, but the substance of the conversation recounted by Mr Hadid appears in the following exchange: "Now you assert, do you, that Johnston told you after the 17 November agreement had been signed, that a 30 per cent free carry was achievable, is that what you say? - I said Dr Burt said he will be underwriting licence A for me with a 30 per cent free carry and he said 'Yes, we will be doing that.' " 343 No one disputed that the realisation that Dr Burt was a New Zealand citizen gave rise to some consternation and to an immediate need to alter the agreement so as to avoid the problem. Nor is it controversial that Mr Heller expressed at least frustration (Dr Burt) or anger (Mr Elliott): Mr Elliott's recollection was that Mr Heller's anger was directed at him. All the participants, other than Mr Hadid, maintained, however, that there was no shouting, no slamming of doors and no threat to sue Clayton Utz. Each of the other participants denied hearing the initial agitated reaction to the episode which Mr Hadid attributed to himself. 344 Mr Johnston agreed that he had a conversation with Mr Hadid in the lobby shortly after the agreements were signed. He denied, however, that anything was said about underwriting licence A or a 30 per cent free carry. Mr Johnston's evidence was that he remarked to Mr Hadid that he must be happy that he had now signed an agreement, following which: "He said it was good that something was being done but the most important part of it was the programming, the Australian content. I asked him what he thought Lenfest would now do and he said effectively he didn't care as long as they didn't sell to Packer or PMT."

(t) Mr Price's activities subsequent to St Louis meetings; final negotiation of agreement between LCI and Australis; agreement reached and announced 345 It will be recalled that Mr Price and Mr Cosser met Dr Burt in St Louis on 1 November. At that meeting Dr Burt explained his "Project Midsummer" proposal: that proposal was negotiated and elaborated between the Australis and LCI representatives during the following two days. By 2 November, in Sydney, Norton Smith & Co had been instructed by Australis in relation to the proposal and had given some advice in conference. The evidence about their involvement is somewhat sparse. Mr Price was unable to throw any light upon who gave Norton Smith & Co instructions on behalf of Australis, what those instructions were or what advice was given or legal work undertaken. However, a letter from Norton Smith & Co to Australis of 3 May 1994 suggests that they were asked to advise: "…as a matter of urgency in the period up to 17 November 1993 in relation to requirements relevant to an acquisition by an American company or its subsidiary of shares or an interest in shares in your company …" Particularly, apparently, they were asked to advise in relation to the requirements of the Corporations Law, the requirements of the Australian Stock Exchange and the law regulating foreign acquisitions and takeovers. 346 Mr Price returned to Australia in time for an Australis board meeting on 5 November. His evidence was that, although the subject was not part of the formal business of the meeting and was not recorded in the minutes, he informed those present of the St Louis discussions. On 12 November Mr Price and Dr Burt dined together. It is, I think, a fair summary of the evidence of both to say that the conversation dwelt (on Dr Burt's side) on the merits and keenness of Bain and covered, but not in detail, the state of negotiations between LCI and Mr Hadid. Mr Price, it will be recalled, was a principal participant in the discussion with Mr Neil Brown on 13 and 14 November. Immediately after those discussions he travelled to New Zealand on other business. 347 As well as Norton Smith & Co, Tress Cocks & Maddox were instructed by Australis, apparently on 12 November. It will be recalled that Mr Mangioni, a partner of that firm, was involved in the discussions resulting in the Becbran option agreement. He, evidently, had the principal carriage on behalf of Australis of the legal aspects of its negotiations with LCI. By 16 November he had prepared both a draft document described as "Autumn‑Lent Transaction Overview" and a draft of an agreement between LCI and Australis and a subsidiary of each. The earliest drafts of those documents in evidence (dated 16 November) were fairly rudimentary; during the ensuing days, however, they underwent considerable and rapid refinement resulting, in part at least, from discussions between Mr Mangioni and, for LCI, Mr Halstead and Mr Elliott. 348 In the meantime, as a consequence of a request from Mr Lenfest, conveyed through Mr John Crase (Mr Crase) (an adviser to Mr Price as Chairman of Australis), Mr Price travelled from New Zealand to West Chester where he arrived late in the evening on 16 November. On the morning of 17 November he went to LCI's offices. He understood, by then, from conversations with Mr Plant, that terms had been agreed upon between LCI and Mr Hadid, though he did not (he said) know what those terms were. During the morning he observed various aspects of LCI's operations, was given access to certain of its accounting records and received presentations as to aspects of its operations. Mr Price described these activities as a form of "due diligence" on LCI by which he satisfied himself that LCI was, indeed, a substantial organisation. 349 Later in the day Mr Price met Mr Lenfest. They negotiated three aspects of the arrangements outlined in the letter tabled by Mr Heller in St Louis on 3 November and signed by Mr Price. First, those arrangements contemplated the issue of a number of Australis securities to LCI calculated on the basis of an issue price of 80 cents per security. According to Mr Price, Mr Lenfest told him that Dr Malone took the view that, given LCI's size and significance, the Australis securities should be issued at a discount, not at a premium, and suggested 50 cents rather than 80 cents. Ultimately an issue price of 75 cents was agreed upon. Secondly, Mr Lenfest sought Mr Price's agreement to increase the fees payable to LCI under the proposed technical services agreement; once again, after discussion, a compromise was reached. Thirdly, the letter of 3 November contemplated that the New World shares would be valued at $A130,000,000. Mr Price was told that, because the agreement negotiated with Mr Hadid required a payment to him and the other shareholders greater than had been contemplated on 3 November, the New World shares were now to be valued at $A138,000,000. Though Mr Price, according to his evidence, regarded the amount paid to Mr Hadid as excessive, it was agreed that the parties would proceed on the footing of a valuation of $A138,000,000. Mr Price's evidence was that he was not told about the agreement to appoint Mr Hadid as drama commissioning agent and did not find out about it until considerably later. 350 The terms on which agreement had been reached in West Chester were communicated to Sydney by telephone; in Sydney, according to Mr Price, lengthy negotiations were in progress about the terms of the agreements to be entered into. Ultimately, on 18 November in Sydney, agreement was reached. The detailed terms do not particularly matter. It is sufficient, for the present, to quote from the announcement made by Australis to the Stock Exchange on 18 November: "Australis Media Limited announced today that it has entered into an agreement which will result in Australis acquiring the issued capital of Lenfest Holdings Pty Limited. Lenfest Holdings Pty Limited recently acquired 100% of the issued capital of New World Telecommunications Pty Limited, the successful tenderer for the B satellite television licence. Australis will purchase Lenfest Holdings Pty Limited by the issue of securities equivalent to $138 million of value at the issue price of $0.75 cents. Completion is conditional upon the allocation of the B satellite television licence to New World Telecommunications Pty Limited. Australis intends to raise substantial further public equity to fund the development of national broadcast pay television. … Australis will benefit from technical and administrative support and programming relationships provided by the Lenfest Group and a major Lenfest shareholder, Liberty Media, which recently announced its merger with Tele‑Communications Inc (TCI), the largest US pay television operator." 351 The Stock Exchange release concluded: "Lenfest was advised in this transaction by Dr Wayne Burt a director of Bain & Company, who are retained to underwrite the public equity issue proposed for early 1994." 352 The substance of the matter was very much as contemplated by the 3 November letter. LCI was to fund the acquisition of licence B; Australis was to acquire the company which was to hold licence B; Australis' securities were to be issued to LCI; funds were to be raised publicly to fund the initial operation of the satellite service. It was all to be done in ways and by means of structures which ensured compliance with the various Australian legislative and regulatory requirements.

(u) Mr Hadid's reaction to the announcement: correspondence and conversations on and after 18 November 1993 353 Shortly before 7.00 pm on 18 November Mr Elliott had a telephone conversation with Mr Hadid and Mr Cooper. Mr Michael Parshall, a solicitor employed by Clayton Utz, was in Mr Elliott's office during the conversation, heard what Mr Elliott said and took notes. Both Mr Elliott and Mr Cooper dictated file notes of the conversation, purporting to record in detail what was said. Each gave evidence that he dictated his note immediately after the conversation came to an end. Mr Parshall gave evidence that he was present when Mr Elliott dictated his note and that Mr Elliott discussed its contents with him. Mr Parshall's time sheet for 18 November records "conversation with Hadid/JFE & JFE's file note." 354 Some aspects of the conversation are uncontroversial. Mr Cooper or Mr Hadid asked Mr Elliott whether he was aware of the Australis press release; Mr Elliott replied that he was aware that an announcement was to be made and that if he was now being told that an announcement had in fact been made, that did not surprise him. Mr Elliott was asked also whether he was aware, the previous evening (when the agreements were signed at Clayton Utz' offices), of the transaction reflected in the announcement, and, at least when first asked that question, Mr Elliott responded that Mr Hadid should speak to Mr Heller or Dr Burt. (Mr Elliott conceded that in fact he knew, in the late afternoon of 17 November, of the proposed transaction between LCI and Australis.) There is agreement also that the question about Mr Elliott's awareness of the Australis transaction related only to the time when the agreements were signed, not to any earlier time (for example, 16 November when, according to Mr Hadid and Mr Cooper, Mr Elliott said that he was not aware of any proposal to on‑sell the New World shares). 355 In order to indicate where the controversies lie, the appropriate starting point is Mr Cooper's file note. It reads as follows: "UCOM Conversation with John Elliott of Clayton Utz at 6.50 p.m. 18 November, 1993. Albert Hadid was telephoned by John Elliott and said to him 'I have Martin Cooper on the line and I would like to join him in our conversation.' John Elliott replied 'I have no objection to that.' Martin Cooper then said: 'Good evening John' and Elliott replied 'Hello Martin.' Martin Cooper then said: 'Are you aware of the announcement which has just been made by Australis Media to the Australian Stock Exchange?' Elliott replied: 'I am not aware that the announcement has been made but I have been expecting it to be made.' Albert Hadid then said: 'You mean your firm knew last night that ...'. Martin Cooper interrupted and said 'Albert it is not appropriate for you to make accusations, we should simply ask John whether between 6 and 7 p.m. last night was he aware that the subject matter of the announcement which has been made by Australis existed?' Elliott said: 'I think you should be speaking to Wayne Burt or Don Heller about this.' Martin Cooper replied: 'They wont [sic] talk to us.' John Elliott replied: 'Yes I was aware of the substance of those matters at that time.' Albert Hadid then said: 'Well you better understand that I am going to sue your …' when Martin Cooper interrupted and said: 'Albert, it is not appropriate to be making any accusations at this time' and John Elliott said: 'I do not think it is appropriate for me to say any more at this time but in any event I want to get another solicitor from our firm to listen into this conversation.' Martin Cooper replied: 'That wont [sic] be necessary, I don't think we can take this any further at this time.' MARTIN COOPER 18th November 1993 (Dictated immediately after the conclusion of the conversation)." 356 The principal difference between the accounts (and the file notes) is that according to Mr Cooper, Mr Elliott, when pressed, conceded that he was aware, when the agreements were signed, of the substance of the arrangements with Australis. Mr Elliott's note indicates that he conceded only that he was expecting an announcement and that Mr Hadid should pursue any question of awareness, when the agreements were signed, with the "principals". In oral evidence Mr Elliott denied that he had made the concession recorded by Mr Cooper. 357 Mr Elliott's note adds some other matters not referred to by Mr Cooper. For example, his note, confirmed by his oral evidence, recorded that the call made to Mr Hadid was made in response to a message from Mr Hadid handed to Mr Elliott, to the effect that it was imperative that Mr Hadid speak to Mr Heller, Dr Burt, Mr Halstead or Mr Elliott; he was unable to make contact with any of the other three; having discussed the matter with Mr Johnston, he decided to ring Mr Hadid. Mr Elliott recorded also that when he telephoned, Mr Cooper asked why Mr Elliott was calling Mr Hadid and Mr Elliott told him of the message he had received. Mr Elliott recorded a comment by Mr Cooper: "Martin said that he was instructed to say that his client takes the very bravest [sic] view of what has happened. He said that while he makes no comment on who has been involved in what has happened, his client may take a view, and he may take a view in relation to the agreement signed last night. I said I would pass on that message." Finally, Mr Elliott's note recorded that he, rather than Mr Cooper, had suggested that the call be terminated. 358 Mr Hadid's evidence of the conversation, given only in cross‑examination, was substantially in the same terms as Mr Cooper's file note; particularly, Mr Hadid said that he received a call in his office at Stanmore and "patched in" Mr Cooper. He said that, where the three dots appear in the second last paragraph, he had used the word "butt." He said that he had taken no part in the preparation of Mr Cooper's note. 359 Mr Cooper's evidence also substantially followed what appears in his note. Curiously enough, however, given the form of the note, he said in his evidence in chief, and maintained in cross‑examination, that he and Mr Hadid spoke to Mr Elliott from Mr Cooper's office in Potts Point and that Mr Hadid was present when he dictated the file note and made some suggestions as to its content. He said also that Mr Hadid had not uttered the word "butt", having been cut short by Mr Cooper's interruption. 360 In contrast to Mr Cooper, who claimed to have a reasonably clear present recollection of the occasion, Mr Elliott's recollection, without the aid of his file note, was extremely limited. He gave evidence, however, that his file note was a note of the conversation prepared in collaboration with Mr Parshall following the conversation. His note that it was he who rang Mr Hadid is corroborated by telephone records of Clayton Utz indicating a call placed to the Stanmore office. On the basis of the content of the note, he confidently denied that he had conceded having been aware of the Australis transaction at the time when the agreements were signed; and he denied that Mr Hadid had threatened to sue. 361 There followed what may be described as a series of letters of complaint. The first in the series is a letter dated 18 November addressed to Mr Lenfest and signed by Mr Lynch. It is clear on the evidence that Mr Cooper played a substantial part in its composition; Mr Hadid approved the letter; Dr Gadir may well have been consulted about it. A fax confirmation slip indicates that it was despatched to Mr Lenfest at 1.23 am on 19 November; immediately afterwards a copy was sent to Dr Burt. The letter is of considerable significance and must be set out in full: "Dear Mr Lenfest, It is 6pm (Sydney time) and information has just been received that Australis Media Limited has announced to the Australian Stock Exchanges that it has acquired the right to Licence B and is proposing a rights issue of $138 million to pay for it. The only reason the shareholder's [sic], represented by Mr Hadid closed the deal last night was out of trust and courtesy to you against the advice of advisers to insist upon a deposit and guarantees. During the protracted and difficult conversations leading up to the signing last night, both Mr Hadid and Mr Martin Cooper were personally assured on a number of occasions by Don Heller, Wayne Burt and indirectly by you that Lenfest had no current plans to on‑pass its interest in Licence B to any third party, other than by way of a public float of New World Telecommunications or a holding company of New World Telecommunications. We have now been informed by Mr John Elliot [sic], your Sydney solicitor that 'at 6pm‑7pm last night we had in contemplation the matters which have given rise to the Australis announcement to the Stock Exchange today.' We interpret this to mean that contrary to the clear assurances Mr Hadid and Mr Cooper had been given, a deal was in place with Australis prior to the shareholders' signing the agreement last night. If our understanding of the situation is correct it would appear that we and those government authorities with whom Don Heller and Albert Hadid spoke in good faith last night, have been most seriously misled. It remains Albert's and the shareholder's devout hope that there is an explanation for these events which does not involve the conclusion to which we are now being inevitably drawn. If our conclusions are correct, we would expect that the A$13 million 'purchase price' would be paid to the following account by Telegraphic Transfer by 5.00pm (AEST) Friday November 19, 1993:‑ Account: UCOM Pty Limited COMMONWEALTH BANK OF AUSTRALIA WESTGATE N.S.W. AUSTRALIA Branch: 2269 Account No: 10007959 Failing which we will feel at liberty to accept the advice being currently received that the agreements executed last night are void and/or that we have a right to damages for deceit and/or misleading and deceptive conduct pursuant to the provisions of the Trade Practices Act. We can only reiterate that the deal with the shareholders would not have been concluded if Mr Hadid had not persuaded those who put their faith in him that you could be absolutely trusted. I hope that you have not put him in the position of betraying their trust. If the payment referred to has not been made by the appointed hour then it is proposed without further notice, the following steps are taken at a time to be determined:‑ a) The repudiation of the purported agreement of last evening. b) The commencement of appropriate proceedings in the Federal Court of Australia. c) statements to the relative [sic] ministers, The Australian Broadcasting Authority and The Trade Practices Commission. d) The calling of media conference to expose all aspects of the relationship and transactions which have passed between the corporations involved. Yours faithfully [signed by Robert Lynch] UCOM c.c. Wayne Burt" 362 Mr Heller responded by a letter on paper headed "The Lenfest Group" dated 19 November. The response was drafted by Clayton Utz following discussion with Mr Heller. It read: "Dear Mr Albert, I have received Robert Lynch's letter of 18 November 1993 addressed to Mr Lenfest. Let me remind you of the events leading up to the signing of our Agreement with the Shareholders of New World on 17 November 1993. 1. Were it not for Lenfest's funding of the requisite 5% deposits for Licences A and B, UCOM and New World would not have been in a position to take up their respective rights to those licences by paying the deposits on 30 August 1993. 2. Since 30 August 1993 neither UCOM nor New World has been able to find anybody who was prepared to finance the payment of the balances due for those licences. In fact, as a result of that inability, UCOM's rights in respect of Licence A lapsed on 17 November 1993 and, as a direct consequence, Lenfest lost approximately $4.85 [sic]. 3. Further, as a result of UCOM's rights to the A Licence lapsing on 17 November 1993, there was a very real and serious prospect that New World's rights in respect of Licence B would be extinguished upon a declaration by the ABA that New World was unsuitable to hold such a licence. 4. Lenfest extricated New World, and the Shareholders, from this impossible situation by acquiring the shares in New World. Quite plainly, if not for Lenfest's assistance New World, like UCOM, would have been in the position of being unable to exercise its rights to Licence B. The written Agreement that was reached by Lenfest and the Shareholders of New World on 17 November 1993, was arrived at only after lengthy negotiations involving the parties and their advisors. No representations, such as those you have alleged, were made prior to the Agreement being signed and in fact to avoid allegations such as this, the Agreement was expressly drafted to ensure that the parties acknowledged that it contained the entire understanding between them. In the circumstances, it is untenable for you to assert that certain critical representations were made on behalf of Lenfest to the Shareholders, upon which those Shareholders relied, but in respect of which the Agreement is silent. I have spoken to John Elliott concerning your allegation that he informed you that 'at 6pm‑7pm last night we had in contemplation the matters which have given rise to the Australis announcement to the Stock Exchange today.' John denies making any statement to that effect and you might let us know by return, who it is that claims to have been so informed by John Elliott? Under the Agreement, the Shareholders are entitled to be paid a substantial amount of money on account of their effort in progressing matters in relation to the application for Licence B up to 17 November 1993. That sum of money is required to be paid by Lenfest within 1 business day after Licence B is issued to New World. Your unwarranted demand for payment before it is contractually due is in the circumstances quite extraordinary. The only conclusion that can properly be drawn is that the claimed representations have been alleged in an attempt to obtain an added advantage under threat of litigation. To institute, or to threaten to institute, such legal proceedings in pursuance of a purpose unrelated to a bona fide dispute is simply extortion and is an abuse of the Court's process. There is no substance to the allegations that you have made. Lenfest will honour its obligations under the Agreement and the Shareholders will be paid in accordance with the terms of that Agreement. However, you are on notice that Lenfest will take whatever action may be necessary to enforce its rights under the Agreement. Your threats in items (c) and (d) on page 2 of your letter, are in breach of your obligations. If you persist in these threats we shall have no option but to instruct Lenfest's lawyers to seek injunctive and other relief to enforce our legal rights. Should you instruct your lawyers to apply to the Federal Court, as threatened in your item (b), we require you to produce this letter to the Court at the time of the application. You can be assured that we will move immediately to strike out those proceedings as an abuse of process. Yours faithfully, [signed by Don Heller]" 363 That evening, Mr Hadid sent a further letter to Mr Lenfest: "Dear Gerry, I understand that you met with Rod Price three weeks ago. Neither you, Don Heller nor Wayne Burt told us, or in any way suggested that there was any discussion between you and Australis. In my opinion I would be justified in accepting the advice I have received, that you have deceived me, and I feel entitled to repudiate the agreement. I am shattered that the anger and disillusionment of my shareholders should be caused by your actions. My shareholders and I want our money immediately. They are insisting that the actions set out in yesterday's letter to you be implemented at once. For the first time I am prepared to accept that my loyalty to you should not interfere with their rights. We have been advised that you are responsible for any losses we suffer in A. Please inform Don that I received his letter today and that it was Lenfest that was in total control of funding the licences over the last three months. It was Steve Plant who further deceived us by announcing that you will definitely be funding A then giving us no option at the last minute. You have our bank account details. Pay immediately as we will not entertain such lawyer's rhetoric. Yours sincerely Albert Hadid" 364 Mr Hadid, on the same day, complained in vigorous terms to Dr Burt. His handwritten letter was faxed several times, commencing at about 2.30 pm. The following is a transcription of it: "DR WAYNE BURT 19 NOV, 1993 2581124 CONFIDENTIAL Wayne You have betrayed my trust, as a director of BAIN this is most concerning. The shareholders are incensed, They want their money, NOW, Wayne We mean Now There is only undesirable alternatives for you (all of you) Now it makes sense why you suddenly shifted from 30% Free Carry to 10% Free Carry. Why $117m licence will be valued for $90m after its payed for. Why you didn't care for Turnbull's dismissal and advised me not to be depressed about it, that Lenfest & you didn't care for them. All the promises you made and that beeing in your hands and trusting you payed off. I trusted you, you virtualy singalmindely plotted and directed me into believing you and accepting everything you proposed. Even the nice twist of $13m instead of $12.5m was a wonderful performance. I can write a book. You as my proffessedadvisor friend and underwriter have a lot to answer for. We demand a meeting with you immediately. Before we loose licence A then you, BAIN and Lenfest will be held totaly responsible, you have already caused great damage to our business including LICENCE A. ALBERT on behalf of UCOM" 365 Copies of that document were despatched to Mr John Barnes and Mr Maurice Newman, respectively Chief Executive and Chairman of Bain. Bain made no separate written reply. Dr Burt's evidence was that he was advised in conference by a partner of Clayton Utz, Mr Sidney Wang (Mr Wang), that a separate reply on behalf of Bain was unnecessary, its position being sufficiently covered by the letter already prepared by Clayton Utz and sent by Mr Heller on behalf of LCI. There was, however, oral communication between Dr Burt and Mr Hadid and members of the UCOM team. 366 The convenient starting point is a conversation, of which Dr Burt gave evidence, between Dr Burt and Mr Lynch on 24 November. Dr Burt's account of it was not challenged; it is supported by a note which he made of the conversation and its substance is reflected in a letter which he wrote to Mr Hadid the following day. Mr Lynch telephoned Dr Burt. He said that Mr Hadid had cooled down and wanted Dr Burt to help him. The particular help wanted was that Dr Burt should act as "the real peacemaker" and assist in obtaining a deposit on a cascaded bid for licence A. The suggestions were that Dr Burt might refer Mr Hadid to someone who would pay the deposit; alternatively Dr Burt might persuade Mr Lenfest to advance the deposit; a third possibility was that Dr Burt might persuade Mr Lenfest to pay the $13,000,000 early. Dr Burt demurred: "Look, Robert, I don't really want to buy into any of that. I think I've … had enough at the moment and I don't see I can help on these fronts. Why don't you talk to Gerry yourself? Why doesn't Albert call Gerry?" Mr Lynch replied: "Look, obviously the relationship is very strained there and Albert doesn't want to call him … the problem in a nutshell was that Gerry promised complete disclosure and that's why Albert's so upset." 367 After further expressions of reluctance by Dr Burt, Mr Lynch said: "Look, I told you don't worry about that. Forget the legal threats that come from Albert because that's just his standard operating procedure and that he just fires them off at the time in case they're later relied upon but you can forget that … Albert's told me that … he doesn't want to be unfriendly towards you, that he's got no hidden agenda and that he's got no intention of taking legal action against you and in fact he wants you to help him … Albert would eventually like to make up with you and return to friendship … He just fired off those letters and now he's fine about it all. He's happy, hopes the business is successful and he's concentrating on the A. That's where he's putting his energies and effort." 368 Dr Burt was sufficiently mollified to conclude the conversation as follows: "Well, look, I think it was a useful telephone call. Give my regards to Albert and thank him for the call but I am going overseas shortly anyway and I really don't think I'm in a position to help on either of those three points but I appreciate the call." 369 Dr Burt's letter to Mr Hadid summarised the proposals put by Mr Lynch; Dr Burt then expressed a willingness to help, subject to confirmation that "you and the shareholders are genuinely prepared to stop making threats against Bain and me, … confirm that you have abandoned any actions that may be contemplated, and would honestly like me to do what I can … ." Subject to that, Dr Burt agreed to attempt the role of peacemaker and assist in obtaining a deposit on licence A, "but, as before, you must understand that I cannot act as your adviser, and I cannot guarantee results." 370 Mr Hadid's evidence was that he did not speak to Dr Burt, after 18 November, before channels of communication were opened by Mr Lynch. On 19 November he made several attempts to contact Dr Burt, which were unsuccessful. Later, Dr Burt made several attempts to contact Mr Hadid, but Mr Hadid was not prepared to accept the calls. Dr Burt, on the other hand, said that he and Mr Hadid had a telephone conversation on 19 November. Dr Burt complained about what he described as the abusive letter; Mr Hadid demanded that Dr Burt obtain payment of the $13,000,000 immediately and threatened to ruin his career unless he did so. Dr Burt pointed out that the deal with Australis did not represent a sale for $138,000,000 of that which LCI had purchased for $13,000,000: the $138,000,000 represented LCI's total outlay. Mr Hadid denied that a conversation in those terms occurred. 371 During the weekend of 20 and 21 November Dr Burt had a conversation with Ms Scott. That happened because Ms Scott had Mr Hadid's mobile telephone (she said that Mr Hadid had given it to her because he did not wish to receive calls from Dr Burt) and Dr Burt tried to telephone him on it. Dr Burt's evidence of the conversation was that he asked to speak to Mr Hadid; Ms Scott said that Mr Hadid did not wish to take Dr Burt's call; Dr Burt reiterated his request; Ms Scott reiterated her response. Ms Scott gave evidence of other things said on both sides, which Dr Burt denied: "Wayne said, 'Why won't Albert talk to me, why is he so upset, what's wrong', and I said, 'Albert doesn't want to talk to you, he's very disappointed and hurt and he feels betrayed by a friend and an adviser.' And then Wayne said that '… I wasn't aware of any deal between Lenfest and Australis and even if there was a deal this is more money than Albert will see in a life time, so what's his problem', and I said, 'You don't know Albert, it's not just the money, it's the principle.' " 372 Mr Hadid gave evidence of a somewhat similar conversation with Dr Burt, which he placed a short time after 19 November "because he was speaking to Mr Lynch." The conversation as recounted by Mr Hadid (denied by Dr Burt) went as follows: "I said, 'Dr Burt, you have betrayed me and I feel very upset about that' and he said, 'But you've got to believe me. I had no knowledge of any discussions between Lenfest and Australis. I was in the dark, same as you were prior to the 18th.' I said, 'How am I supposed to believe that when all the press and everything else is stating your role in this and the media releases and so on.' He said, 'Yes, Albert, but I became aware of it on the 18th when they did the deal', and he said, 'Look, if you give me a release I will help you with Licence A.' I said, 'There you go, you're only giving me words again. I don't think you're trying to help me, you just want a release.' He said, 'Albert, you've got to believe me. I had no knowledge of discussions between Lenfest and Australis until the 18th.' " 373 Mr Hadid gave evidence of a further conversation with Dr Burt towards the end of November. It commenced with a discussion about the possibility of LCI releasing Mr Hadid, and the other former shareholders, from their obligations of confidentiality, for the purpose of raising a deposit for licence A. The conversation proceeded, according to Mr Hadid: "He said, 'You've got to give me a release.' And I said, 'Wayne, stop asking for a release. There is no releases. It's your duty to try and assist us because you promised to do Licence A for us anyway.' And he said, 'I'll see what I can do and come back to you.' " 374 Dr Burt denied that that conversation took place; he gave evidence of a conversation, of which he made a file note, on about 1 December. After some preliminary discussion of progress in relation to licence A, Dr Burt mentioned his letter of 25 November and suggested that Mr Hadid sign a copy and return it. The conversation, according to Dr Burt, proceeded as follows: "He said, 'Look, Wayne, don't ask me for a release and I won't ask you for an apology.' And I said, 'What do you mean?' He said, 'Well, look, it's all behind us now, I have forgotten about it all, I'm not going to sue you, I'm not going to take any legal action and you should be comfortable with that.' And I said, 'Well, is that your firm assurance because that's the one that's been given to me by Mr Lynch?' And he said, 'Yes, you have got my undertaking that I harbour no ill will towards you, I don't want to sue you, I have got no interest in legal action and I'll never take any against you.' And he said, 'But would you be prepared to help me?' And I said, 'Well, if you sincerely mean those assurances then I'd look at it.' And he said, 'Yes, I do, I mean them.' He said, 'Look, I really want to do business with Gerry and I'd like you to advise me.' I said, 'Albert, just like the last time I'm not going to act as your adviser, we have been round this so many times but I'm not going to act as your adviser, that's not what my interest is.' And he said, 'Well, as you know we need money for the A and maybe you could help introduce us to someone.' I said, 'Sure, I'd look at doing that.' " 375 The conversation then turned to a proposal that Dr Burt speak to LCI in order to see whether they might be prepared to advance funds to pay the deposit on licence A. Mr Hadid denied that he ever said to Dr Burt that he would never take legal action against him.

(v) Licence A - Century 376 UCOM Australia did not pay on 17 November, as required by the conditions of the allocation, the amount required to acquire licence A. There was, accordingly, a cascade to another company controlled by Mr Hadid which had bid about $87,000,000. That bidder did not pay the deposit and accordingly there was a further cascade to a bidder called Payvision Australia; Mr Hadid, or a UCOM company, had obtained an option over that bid, the amount of which was $85,000,000. Mr Hadid sought investment by Time Warner, but the negotiations did not reach finality and there was a further cascade, this time to another UCOM company called UCOM Pay‑TV Pty Limited; its bid was $77,001,000. That company was announced as the successful bidder at the end of November; the deposit was required to be paid by 3 December. Negotiations continued with Time Warner; the next bidder, however, should there be a further cascade, was a company called Capricorn Entertainment Pty Ltd in which Time Warner had an interest of 11.66 per cent. 377 It was in those circumstances that Dr Burt's aid was enlisted. Matters proceeded swiftly and, in some respects with (once again) striking informality. The evidence is that Dr Burt spoke to Mr Plant; Mr Plant said that LCI had no interest in investing in licence A but suggested that either Century or Continental might be interested; he suggested that Dr Burt contact Mr Bernard Gallagher (Mr Gallagher), the President of Century. Dr Burt did so, with the result that, on his evidence, Century agreed to invest and also to appoint Dr Burt (or Bain) as its adviser; in that capacity, according to Dr Burt, he proceeded to negotiate with Mr Hadid. 378 Century's agreement to invest must, at least to some extent, have been at that point provisional. Century did not provide the funds necessary to pay the deposit for licence A because (according to the evidence of Dr Burt and Mr Lenfest) it had not obtained the board approval necessary to authorise such a payment. Mr Lenfest (or possibly LCI - it does not matter) advanced the amount - about $4,000,000 - necessary to pay the deposit; the advance was made without security and without documentation but was made (again, according to the evidence of Dr Burt and Mr Lenfest) on the footing that it was a short term loan to Century: Mr Lenfest's evidence was that he was satisfied, from his knowledge of Century and particularly his acquaintance with both Mr Tow, its owner and chairman, and Mr Gallagher, that the advance would be repaid. 379 Nor, initially, did Century acquire, or participate in the acquisition of, the successful bidder. That role fell to a company specially formed for the purpose, the name of which was Uncanny Pty Ltd (Uncanny). One of its principals was a Mr John Leaver (Mr Leaver), who was associated with a financier and investor called Continental Venture Capital Limited (Continental Venture Capital). The acquisition by Uncanny took place, and the deposit was paid, on 3 December. The following account of what happened depends largely on the evidence of Mr Johnston which is supported, substantially, by both Mr Elliott and Mr Hadid. It is not in all respects consistent with Dr Burt's evidence. On 3 December Dr Burt, who was overseas, told Mr Johnston that he would receive some documents from Uncanny and requested him to forward them immediately to Mr Hadid. The documents arrived and Mr Johnston passed them on. They comprised a form of letter of agreement and draft minutes and other corporate documents intended to give effect to some of its provisions. The effect of the draft letter of agreement was that Uncanny was to procure payment of the deposit for licence A; the bidder would issue sufficient shares to Uncanny to leave Mr Hadid or his nominees with 8.5 per cent of its issued capital; Mr Hadid and his colleagues would resign from the board of the bidder but Mr Hadid would have the right, once the licence was issued, to appoint a "third party" director; Uncanny would "enter into a separate drama commissioning agency agreement, on terms to be agreed with you"; and the bidder would enter into a co‑operation agreement with Australis. 380 In the meantime, Clayton Utz had suggested that LCI and Bain obtain formal releases from Mr Hadid and the former shareholders of New World of any claims arising out of the November transactions, and had prepared a draft form of release for that purpose. Mr Elliott was instructed by LCI that the money advanced for payment of the deposit was to be applied for that purpose only upon receipt of an executed deed of release. That proposition had not been put to Mr Hadid. Later on 3 December there was a meeting at Bain's offices. Its purpose was to arrange for signature of the letter of agreement and the taking of the corporate steps necessary to give effect to it, so that the deposit might be paid before the time for payment expired. The meeting was attended by Mr Johnston, Mr Hadid, Mr Cooper, Mr Lynch, probably Dr Gadir, Mr Leaver, Mr Crase and Mr Elliott, who brought with him the deed of release. After some discussion about the form of the letter agreement, its terms were agreed. Mr Johnston then said that "as part of the funding proposal we wanted a release to be signed" and the form of release was handed to Mr Hadid and to his advisers. They read it; Mr Hadid refused to sign it, saying that it was not part of the agreed deal. Mr Johnston and Mr Hadid then both spoke to Dr Burt on the telephone; Dr Burt said that the release was required; Mr Hadid said that in that case there was no deal and he, Mr Lynch and Mr Cooper (and, presumably, Dr Gadir) then left. There followed further telephone conversations between Mr Johnston and Dr Burt, resulting in Dr Burt countermanding the instruction that a release was required. Mr Johnston went to look for Mr Hadid and his team and found them still standing outside the building; he informed them that the release was no longer required; the agreement was then signed, the other necessary steps taken and the deposit paid. 381 The evidence by no means elucidates clearly the exact process by which Century finally acquired an interest in, and ultimately ownership of, licence A. Apparently little happened during the balance of December and Mr Hadid expressed mounting concern. On 9 December, for instance, he wrote to Dr Burt about the "many loose ends" which remained to be dealt with and the embarrassment this might cause at a forthcoming meeting with the Trade Practices Commission. He went on: "I have real concerns as to why Century will not come out until after Christmas. This was not what we agreed to. I trust that there are no talks taking place without finalising matters with us as you and I agreed before any other discussion with Australis or anyone else etc., take place. A journalist … rang and spoke to Robert Lynch. He asked him to confirm that Century paid the deposit on the A Licence on behalf of UCOM. I hope to God this is the case; I recall the day before we agreed, when you said you were arranging for Lenfest to send the money. The following day you said we must come to arrangements with Century now seeing they, and not Lenfest are transferring the money for the deposit, that Gerry didn't want to take the risk again. However, no one from century [sic] has been in contact with us. I am becoming concerned. They must come to Australia immediately as our agreement says this will be done as soon as practicable. I like, and am very happy for Gerry and I hope he makes many millions. I will not consider signing any releases. Why do you keep pushing this point? Don't ask for a release and I won't ask for an apology." 382 At all events, matters had progressed sufficiently by 5 January for representatives of Century to meet Mr Heller, Mr Plant, Mr Price and Dr Burt in Houston, Texas, in order to negotiate the basis of a co‑operation agreement with Australis (as controller of licence B). A memorandum from Mr Plant to Mr Lenfest dated 11 January 1994 summarised the position: "Through a Cooperation Agreement between the A Licensee and Australis, strictly conforming to applicable Australian law, we felt that services provided to the Australian public from the A License, the B License and Australis MMDS Licenses could be enhanced. To this end, at a meeting on January 5, 1994, Australis and Century Communications reached an agreement in principle for Century to invest fully in the A License under the terms of the Cooperation Agreement and to provide additional working capital as needed. Based on a pro rata split of invested capital, Australis would be entitled to receive 79% and Century 21% of Accumulated Nett Operating Cash Flow." 383 On 19 January, Continental Venture Capital issued the following somewhat cryptic press announcement: "Continental Venture Capital Limited (CVC), Australia's largest independent venture capital company, announced today that it had joined with US pay television operator Century Communications Corporation, to form a 100% owned subsidiary, Continental Century Pty Limited (Continental Century), to acquire a 91.5% interest in UCOM, the provisional holder of Satellite Subscription Television Broadcast Licence A. … The proposed capital structure will be financed by a mixture of equity and debt with approximately $30 million in voting and non voting shares being issued with a further $50 million provided in debt by Century. … CVC proposes to invest approximately $5 million in Continental Century." 384 In due course the licence was paid for and issued. There were disputes between Continental Venture Capital and Century, as a result of which Century bought out Continental Venture Capital's interest. Then, following disputes between Century and Mr Hadid, Century ultimately (in July 1994) acquired the interests of Mr Hadid and his colleagues for about $20,000,000; they applied that sum in subscribing for shares in Australis. 385 Although at first sight these later dealings with licence A are somewhat peripheral to the issues in this proceeding, a good deal of time was spent eliciting evidence about them. This, perhaps, resulted, at least in part, from the following combination of circumstances, said to indicate that the dealings with licence A were part of a plan originating at the meetings in St Louis. First, the post‑St Louis action plan concluded with a step described as "determine century interest." Secondly, there was a further action plan in evidence, of which no one claimed or admitted authorship (but which bears the hallmarks, I think, of an LCI document), which is undated but sets out a number of steps to be taken by various participants in relation to licence A. It is as well to set out that "Action Plan" in full: "Action Plan All actions should commence immediately: Action Responsibility 1. Secure written form of release SM / SP / WB (litigation) from UCOM directors and principals. 2. Prepare Cooperation Agreement CU / TCM / SM / SP / DH (A/B Licenses). 3. Document and Perfect Security SM / SP / CU for A License deposit. 4. Document understanding with SM / CU Australis (credit of $4MM). 5. Develop underwriting strategy SP / DH / WB / SM for B License/Australis. Commence Action 6. Negotiate and define Century's SP / DH / GH / SM / RP role in Licence A ($ Commitment, etc).. 7. Prepare and approve Technical DH / RP / SC / AU Services Agreement. 8. Contact Potential Investors to DH / SP / WP / RP / SC supplement Century's capital infusion. Close transactions ASAP. 9. Develop plan for operating and GL / DH / SP strategic support for the venture (Lenfest).

Code: SM = Sam Morris TCM = Tress Cocks & Maddox DH = Don Heller GL = Gerry Lenfest SP = Steve Plant RP = Rod Price WB = Wayne Burt SC = Steve Cosser CU = Clayton Utz AU = Australis personnel" 386 Thirdly, Mr Plant wrote a handwritten note to Mr Lenfest, accompanying his memorandum of 11 January to Mr Lenfest. It read: "This represents a brief status update. I was purposely careful in avoiding references to Lenfest orchestrating the process; however, Malone should know that it all came about because of Lenfest. This should not get wide distribution. Please discuss at your convenience."

(w) Drama commissioning agency; commencement of proceedings 387 No drama commissioning agency agreement, of the kind contemplated in the 17 November sale agreement, was entered into. The circumstances are conveniently summarised in evidence given by Mr Heller, which is substantially consistent with Mr Hadid's evidence. In January 1994, at a lunch at Doyles Restaurant, Circular Quay, attended by Ms Keating and Mr Porter as well as Mr Hadid and Mr Heller, Mr Hadid asked about progress with the commissioning agency; Mr Heller's response was that it was too early to enter into serious discussions about it. It may be noted, in passing, that although Mr Hadid's relationship with those concerned with licence A (including Dr Burt) had become somewhat difficult, his relationship with Mr Heller was cordial. During the lunch Mr Hadid presented Mr Heller with some ties. Mr Heller responded with the following letter referring, apparently, to a conversation during the lunch: "Thank you for the Ties, it was most thoughtful of you. I enjoyed our lunch on Saturday. It was good to see Robie and Anne again. I hope the concert goes well. I admire the generosity of time someone like Robie puts into a venture like that. Prior to my next visit, I will notify you so we can plan a meeting. Please remember my suggestion about calmness as it will not only assist in the transaction, but more importantly, be of benefit to your health. See you in February." 388 Mr Hadid raised the topic with Mr Heller again during a telephone conversation, probably in March. Again, Mr Heller responded that it was appropriate to defer the question at least until mid‑year. 389 In April Mr Elliott asked Mr Heller, by letter, whether an agreement had "yet been put in place." He reminded Mr Heller that the obligation to procure the agreement rested with LCI and expressed a concern "that Lenfest Communications Inc does not find itself on the end of a legal action by Mr Hadid either because it has not fulfilled its obligation under the 17 November Agreement, or indeed because it does not have the power to fulfil its obligation under the 17 November Agreement." That drew from Mr Heller the following response: "Nothing has been done to date, awaiting the outcome of his involvement with the A Licence and development of programming line‑up for Australis. Thanks for your interest." 390 On 28 April Mr Hadid wrote to Mr Heller about the drama commssioning agency agreement: "Should I be doing something or should I continue to wait for you? Even though you suggested that you will commence providing the Pay TV service in Australia by July this year, I had come to the conclusion, since supported by industry opinion, that you will not go to air until later this year or early next year. Whatever date is the reality, I do need to plan ahead. What do you suggest?" 391 Nothing further, apparently, having happened, Mr Hadid wrote a further letter to Mr Heller on 28 June. Mr Heller responded on 15 August: "Unfortunately you were not in Sydney during my recent visit. The trip came up on short notice and I did not have the opportunity to call ahead. Hopefully, we can get together during my next visit which should be within the next six weeks. I have received your correspondence of April 28 and June 28 regarding your role in the proposed 'B' License movie channel. When I return we can discuss your role. As you have indicated, there are a number of open issues to be resolved. I understand that the governmental authorities are still considering how content rules will apply to the movie channel. I would hope these issues can be resolved soon because answers to those questions will facilitate our discussions." 392 Mr Heller said that, additionally, he asked Mr Elliott to draft a formal drama commissioning agency agreement. The document was not used, however, because Mr Gamble, then the chief executive of Australis, said that he would deal with Mr Hadid about the matter. Subsequently, in December, Mr Gamble told Mr Heller that he (Mr Heller) should resume discussions with Mr Hadid. The matter was then overtaken by the commencement of these proceedings. 393 Mr Hadid gave evidence of discussions with Mr Gamble which became acrimonious, prompting the following letter faxed by Mr Hadid to Mr Gamble on 21 December 1994: "Dear Neil, I will no longer tolerate your stand over tactics, dealing with me as a secondary priority. Not only were we manipulated in doing the deal with Lenfest, but now for you to deny any knowledge of the existence of the commissioning agency, and to say that you know nothing about it but that it is between Lenfest and me, is in my opinion nothing other than corporate cowboy behaviour with total disregard for the truth and the rights of others. It is incredible and dishonest to pretend you are unaware of the agreement and then to say that Don Heller has tried to gain a seat on the studios committee to see what he could do for us. It is your duty as chief executive of Australis to discuss this with Gerry Lenfest and Rodney Price, who according to Wayne Burt, were the two, especially Rod Price, who dictated the terms of the agreement. I will leave it to you to contact Don Heller since it was he who suggested at lunch that I discuss the commissioning agency with you as you were handling it. Unless I get recognition in writing of full acceptance and intention to comply with the commissioning agency then the next step will be my prerogative. I do not wish to entertain phone calls and social niceties from anyone including yourself or Rod Price. I will not sue immediately as I do not want to spoil anyone's Christmas, however from 2nd January next I will act as I see fit. Yours faithfully Albert Hadid cc: Rodney Price Gerry Lenfest" 394 These proceedings were commenced on 20 January 1995.

Mr Hadid's pleaded case 395 It is necessary to describe in some detail the claims which are made in the statement of claim against each respondent.

(a) Sources of obligations of LCI and Mr Lenfest 396 The statement of claim identifies what are said to be sources of duties owed to Mr Hadid by LCI and Mr Lenfest. The duties claimed to arise are contractual, fiduciary and duties of care sounding in tort.

(i) Joint Venture Agreement 397 The first source is what is described as the Joint Venture Agreement. That is pleaded as an agreement partly oral and partly written, the written part being the two letters of 29 August 1993 signed by both parties, the oral part being derived from the conversations about that date between Mr Hadid and Mr Lenfest. The Joint Venture Agreement is pleaded as one between Mr Hadid, on behalf of himself, the other shareholders of New World and UCOM Australia (described as "the UCOM Consortium"), New World and UCOM Australia and (on the other side) Mr Lenfest on behalf of himself and LCI. Apart from what is contained in the letters, the Joint Venture Agreement is said to have included an express term that: "… the parties would seek investors in either or both of the licences in order to achieve: i) the repayment of the Deposits; ii) the commercial exploitation of the licences subject to the free‑carried interest … and opportunities of management [that is, the management arrangements set out in the letters of 29 August]." 398 It is said to have been an implied term of the Joint Venture Agreement that LCI and Lenfest would ensure that: "a) each party would act in the best interests of the Joint Venture; b) neither party would act to the detriment of the other in relation to the affairs of the Joint Venture; c) neither party would enter into agreements or arrangements or otherwise place itself in a position which conflicted with the expressed and/or implied terms of the Joint Venture Agreement either at all or without giving proper notice to the other party; d) each party would disclose to the other party all circumstances, material and information relevant to the affairs of the Joint Venture including their own intentions and actions; e) each party would not place itself in a position to profit from the use of confidential information communicated to it by the other party under or by reason of the Joint Venture; and f) each party would not place itself in a position to make secret profits out of the affairs of the Joint Venture." 399 Then, the Joint Venture Agreement is said to have been a source of fiduciary obligations: Mr Hadid and LCI and Mr Lenfest "were joint venture partners in the proposed acquisition and exploitation of Licence A and Licence B and as such, both Lenfest Communications and Gerry Lenfest owed to the Applicant fiduciary duties in connection with their performance of the Joint Venture Agreement …."

(ii) Solicitation Agreement 400 The second claimed source of obligations on the part of LCI and Mr Lenfest is what the statement of claim describes as the Solicitation Agreement. That agreement is said to have been made orally, in the discussions between Mr Lenfest and Mr Hadid on about 31 August 1993. Its terms are said to have been these: "a) Lenfest Communications and Gerry Lenfest would use their best endeavours to seek a purchaser of, or investor in, all or some of the shares in New World and/or [UCOM Australia] and/or the licences; b) the Applicant and the UCOM Consortium would support that endeavour by the supply of all material information in its possession from time to time concerning the licences, potential investors in the licences and commercial exploitation thereof; c) Don Heller and Steven Plant of Lenfest Communications had the authority of Gerry Lenfest and Lenfest Communications to deal with the Applicant and all other persons in this regard; and d) the Applicant, Lenfest Communications and Gerry Lenfest would keep each other appraised [sic] and informed of any developments in their attempts to find such a purchaser or investor."

(b) Duties arising from (and from carrying out) the Joint Venture Agreement and the Solicitation Agreement 401 The Joint Venture Agreement and the Solicitation Agreement are said to have given rise, on the part of LCI and Mr Lenfest, first, to fiduciary duties, "including" duties the pleaded content of which is in substance precisely the same as that of the pleaded implied terms of the Joint Venture Agreement; secondly a duty: "… to exercise reasonable skill and care in the carrying out of work pursuant to the Joint Venture Agreement and the Solicitation Agreement in that Lenfest Communications and Gerry Lenfest knew, or ought to have known, that in order to carry out the Joint Venture Agreement and the Solicitation Agreement Lenfest Communications and Gerry Lenfest would or might have to do or not do, as the case may be, those things [required to be done or not to be done in accordance with the pleaded fiduciary obligations];" and, thirdly, a curiously expressed duty to provide information: "A duty to provide material information concerning the results of attempts to seek to commercially exploit Licence A and B pursuant to the Joint Venture Agreement and the Solicitation Agreement and as such the Applicant repeats the implied terms of the Joint Venture Agreement as set out [earlier in the statement of claim]." 402 Finally, LCI and Mr Lenfest, "by reason of and in carrying out the Solicitation Agreement", are said to have held themselves out as having special skill in obtaining finance and/or investors; it is said that they knew or ought to have known that Mr Hadid relied on them to exercise reasonable skill and care in relation to securing investors; and that Mr Hadid in fact relied upon them to do so. Thus, LCI and Mr Lenfest owed Mr Hadid: "… a duty of care in relation to securing an investor or investors in the licences or in any corporate vehicle utilised for the exploitation of the licences."

(c) Sources of obligations of Bain and Dr Burt 403 The statement of claim then turns to sources of obligations said to arise on the part of Bain and Dr Burt. The first source is an alleged agreement to act as adviser to Mr Hadid in relation to the financing of, and opportunities for, the commercial exploitation of the licences. The consideration for the agreement is said to have been that Mr Hadid proposed to the parties to the Joint Venture Agreement that Bain be employed as financial adviser to the Joint Venture (that is, the venture arising under the Joint Venture Agreement) and underwriter of any capital raising in connection with the exploitation of licence A and/or licence B. The agreement is said to have been partly express and oral, arising from conversations between Dr Burt and Mr Hadid between 30 August and 1 September 1993 and partly implied from the conduct of the parties on or from 1 September 1993. 404 Next, it is pleaded that on or about 11 September 1993 Mr Hadid provided to Bain "particulars of all financial analyses and information concerning the licences in writing" and orally communicated to Bain information as to: " a) the terms of the Applicant's and the UCOM Consortium's dealings with Lenfest Communications and Gerry Lenfest (in particular the Joint Venture Agreement and the Solicitation Agreement); b) steps taken to finance or find investors in either or both of the licences; c) the identity of prospective investors in the licences; and d) all other information concerning the affairs of the Applicant and the Ucom Consortium as they were requested by Burt and/or Rowan Johnstone [sic] of Bain … ." 405 The next source of duties pleaded is constituted by circumstances said to have given rise to a duty of care in relation to the provision of advice. It is said that Bain, by Dr Burt, held itself out as having special skill in providing financial and investment advice and knew, or ought to have known, that Mr Hadid relied upon Bain to provide full and frank advice, and to exercise reasonable care in respect of the giving of advice, as to the opportunities for the exploitation of the licences so as to maximise the benefits "flowing to the participants of the Joint Venture Agreement and the Applicant." Bain is said to have provided, or purported to provide, advice, counsel and information to Mr Hadid as to those matters (particularly, in Bain's letter to TPL of 30 August 1993, its letter to Mr Hadid of 16 September 1993 and in conversations between Dr Burt and Mr Hadid).

(d) Obligations of Bain and Dr Burt 406 From those sources, the following duties are said to have arisen on the part of Bain in favour of Mr Hadid. First, Bain is said to have owed Mr Hadid fiduciary duties of substantially the same kind as those said to have been owed by LCI and Mr Lenfest: they included duties that Bain would: "i) act in the best interests of the Applicant and thereby not act to the detriment of the Applicant in relation to the exploitation of the licences; ii) not enter into agreements or arrangements or otherwise place itself in a position which conflicted with the affairs of the Applicant (in particular the exploitation of the licences) either at all or without giving proper notice to the Applicant; iii) disclose to the Applicant all circumstances, material and information relevant to the exploitation of the licences including its own intentions and actions; iv) not place itself in a position to profit from the use of confidential information communicated to it by the Applicant; v) not place itself in a position to make secret profits out of its relationship with the Applicant; …" 407 Secondly, Bain is said to have owed: "… a duty to exercise reasonable skill and care in providing advice, counsel and information to the Applicant in that Bain knew, or ought to have known, that in order to provide full and frank advice, counsel and information to the applicant it would or might have to do or not do, as the case may be, [those things which its fiduciary duties required it to do, or not to do]." 408 Thirdly, it is said that Bain was subject to a contractual duty to provide advice, counsel and information to Mr Hadid in accordance with implied terms having the same content as its alleged fiduciary duties. 409 There are then said to have arisen a separate series of duties owed by Bain "to the participants of Joint Venture Agreement." They are said to have arisen from the circumstance that: "[B]etween about 13 October 1993 and 18 November 1993, Bain acted as adviser to the participants to the Joint Venture in relation to its attempts to arrange for the sale of all or some of the shares in New World and/or [UCOM Australia] and in relation to the commercial exploitation of the licences." 410 The particulars given of that allegation are Bain's letter to Mr Hadid and LCI of 13 October 1993. As a result of that, Bain is said to have owed "to the participants of the Joint Venture Agreement" duties (fiduciary, contractual and sounding in tort) described in precisely the same terms as the duties Bain is said to have owed to Mr Hadid, each duty in this case being owed to each of the "participants of the Joint Venture Agreement." 411 Finally, Dr Burt is said to have known that Bain owed to Mr Hadid, and to each of the Joint Venture participants, each of the pleaded fiduciary, contractual and tort duties and himself to have owed to Mr Hadid, and to each of the participants, fiduciary duties corresponding to those owed by Bain.

(e) Project Midsummer and its consequences 412 There is then a series of factual allegations about matters arising out of the Project Midsummer proposal. They can be described in a summary way. First, it is said that before 1 November 1993 Bain initiated the proposal to either or both LCI and Australis. The proposal is said to have required and contemplated the proposed transactions being kept confidential and Bain receiving fees upon their successful completion. Then it is said that LCI and Australis agreed to carry out the proposal and entered into a written agreement (the 3 November letter prepared by Mr Heller) for that purpose. The paragraph of that letter concerning confidentiality is specifically pleaded, as is a summary of its principal terms. The pleader describes the agreement said to arise from the letter as "the 3 November Agreement." 413 Next, it is said that pursuant to the proposal and the 3 November Agreement each of the respondents agreed that they and their agents would perform various tasks allocated to them in accordance with the two "Action Plans." There follows a pleading of mutual agency: steps taken and things done by each respondents were done for and on behalf of each other "as steps in furtherance of the Project Midsummer Proposal, the 3 November Agreement and the Action Plans." These allegations are pleaded in paragraphs 24, 25, 26, 27 and 28 of the statement of claim. What follows should be quoted in full: "29. By reason of paragraphs 24, 25, 26, 27 and 28 each of the Respondents knew that each of the other Respondents would, if asked by the Applicant and/or his servants or agents whether Australis was interested in taking an interest in the licences, falsely deny such interest or otherwise dissemble the true state of affairs. 30. By reason of paragraphs 24, 25, 26, 27 and 28 above, each of the Respondents expressly agreed to keep secret from the Applicant the agreement of Australis and Lenfest Communications to adopt the Project Midsummer Proposal, the Action Plans and the existence of the 3 November Agreement. 31. By reason of the Project Midsummer Proposal, the Action Plans and the 3 November Agreement, each of the Respondents knew that Lenfest Communications must acquire all, or substantially all, of the Applicant's shareholding in New World to carry into effect the 3 November Agreement. 32. By reason of paragraphs 24, 25, 26, 27 and 28 above, each of the Respondents knew that any or all of Lenfest Communications, Gerry Lenfest, Bain and/or Burt would seek to procure the Applicant to sell his shareholding in New World without knowledge of, and without being told of, the Project Midsummer Proposal, the Action Plans and the 3 November Agreement. 33. Each of the Respondents knew that information concerning the existence of the Project Midsummer Proposal, the Action Plans and the 3 November Agreement was information material to the Applicant's decision as to whether, and if so, at what price and upon what terms to dispose of all or some of his shares in New World to Lenfest Communications or to any other party."

(i) Licence A 414 Two discrete sets of representations are then said to have been made to Mr Hadid on behalf of LCI and Mr Lenfest. The first set is described as "the Licence A representations." They are statements said to have been made by Mr Plant on about 21 October 1993. The representations alleged to have been made are that: "a) Lenfest Communications would itself purchase Licence A; b) the purchase of Licence A would greatly assist in finding a purchaser of, or investor in, all or some of the shares in New World and/or Licence B which would be found by Lenfest Communications and Gerry Lenfest pursuant to the Joint Venture Agreement and Solicitation Agreement achieved without any time pressures; c) the purchaser of, or investor in, all or some of the shares in New World and/or Licence B would be a friendly competitor; and d) an operating company owned 50% by Licence A and 50% by Licence B would be established by the Joint Venture." 415 It is said that in reliance on the licence A representations Mr Hadid continued not to seek investors in licence A himself, did not agitate the question of performance by LCI or Mr Lenfest of the Joint Venture Agreement or the Solicitation Agreement and, ultimately, on 17 November caused the shares in New World to be sold. The licence A representations are said to have been false at the time they were made in that LCI had not decided to acquire licence A and did not propose the other matters represented.

(ii) "The Representations" (lack of investor interest) 416 The second series of representations pleaded is defined by the pleader simply as "the Representations." They are of considerable importance. They are said to have been made in the course of giving effect to the Project Midsummer proposal, the Action Plans and the 3 November Agreement and to have been made orally on and immediately before 17 November 1993 by Mr Lenfest, Mr Heller, Dr Burt and Mr Johnston on behalf of each respondent. The Representations are said to have been that: "a) Australis was not interested in the purchase of, or investment in, either New World or the licences; b) there were no parties, other than Lenfest Communications, interested in the purchase of, or investment in, all or some of the shares in New World or the licences; c) Lenfest Communications, being the only interested party, would agree to purchase all of the shares in New World; d) unless the Applicant agreed to sell to Lenfest Communications and Burt, Lenfest Communications would lose the Deposits." 417 The Representations are said to have been made in order to induce Mr Hadid and the other shareholders to sell their shares in New World to LCI or its nominees at an undervalue. Relying on the Representations, Mr Hadid (it is said) caused the shares in New World to be sold to LCI and to Dr Burt for $13,000,000. As a result, Mr Hadid claims to have lost the opportunity to: "a) seek to deal directly with Australis in relation to the exploitation of Licence A and/or Licence B; b) seek to enforce the Joint Venture Agreement in relation to a dealing with Australis by Lenfest Communications; c) seek to have any other investor approached to compete with Australis as to the terms upon which that investor might be permitted to exploit either, or both, Licence A or Licence B; and in particular: d) maintain his free‑carried interest as described in the Joint Venture Agreement or negotiate the nature and extent of some other free‑carried interest in the entity that would exploit the licences; e) negotiate for a continuing role in, and provision of, management services in the operation of the licences or an interest in the operator entity; f) negotiate for more extensive involvement in the provision of drama content programming and thereby the opportunity to earn more extensive fees from production of and/or procuring of drama; g) negotiate for the provision of equipment and services by sale or lease to either or both of the operator of the licences or subscribers of Pay‑TV services; h) negotiate for rights as franchisee of regional broadcasting within the Pay‑TV network established under the licences or either of them, with Australis or any other investor." 418 Finally, falsity is pleaded: before 17 November 1993 Mr Price on behalf of Australis had expressed to representatives of LCI an interest in purchasing substantially all of the shares in New World.

(iii) Alleged infringement of s 52 of the Trade Practices Act and s 42 of the Fair Trading Act 419 By reason of all of those matters, combined with the allegations about Project Midsummer (including the allegation of mutual agency) each of the corporate respondents is said to have engaged in conduct infringing s 52 of the Trade Practices Act and each respondent to have engaged in conduct infringing s 42 of the Fair Trading Act. Each respondent in each group of respondents (LCI and Mr Lenfest, Bain and Dr Burt, Australis and Mr Price) is said to have been involved (s 75B of the Trade Practices Act, s 61 of the Fair Trading Act) in the contraventions by the respondents in each other group.

(g) Breach of particular duties pleaded 420 The pleading then returns to the particular duties alleged against LCI and Mr Lenfest and against Bain and Dr Burt, and pleads breaches by LCI and Mr Lenfest as follows: "The failure by Lenfest Communications and Gerry Lenfest to disclose to the Applicant any expression of interest by Australis, the Project Midsummer Proposal, the Action Plans and/or the 3 November Agreement or any other expression of interest by Australis in the acquisition of, or investment in, Licence B was a breach of: a) the Joint Venture Agreement; b) the Solicitation Agreement; c) the fiduciary duty owed to the Applicant; d) the duty of care owed to the Applicant, by Lenfest Communications and Gerry Lenfest." 421 Similarly, the failure by Dr Burt and Bain to disclose those matters is said to have been a breach of the pleaded "advisory agreements", "fiduciary duty" and "duty of care" on their part. 422 It is pleaded that the Representations were false to the knowledge of LCI and Mr Lenfest and of Bain and Dr Burt; it is pleaded also that Mr Price and Australis knew that the Representations had been made to Mr Hadid and were false and that Mr Hadid was not told of the Project Midsummer Proposal, the 3 November Agreement and/or the Action Plans. Those circumstances, together with those said to result in the breaches of the pleaded duties to which I have just referred, are the basis of additional allegations of breach, and participation in breach, of fiduciary duty. In the case of LCI and Mr Lenfest, the particulars of breach are that they: "a) failed to disclose their dealings with Bain and/or Burt in [sic] or about 1 November 1993 and thereafter (including Project Midsummer, the Action Plans and the 3 November Agreement); b) placed their interest and duty to the Applicant pursuant to the Joint Venture Agreement to the Solicitation Agreement in conflict; c) profited by reason of their relationship with the Applicant without the Applicant's informed consent and without disclosing the nature and extent of any such profit; d) dealt with property the subject of the fiduciary relationship to their profit; e) failed to disclose material information to the Applicant in relation to their dealing with property the subject of the fiduciary relationship; f) failed to act in the interests of the Applicant in breach of their obligations under the Solicitation Agreement; g) profited by the use of confidential information communicated to them by the applicant under or by reason of the Joint Venture Agreement and/or the Solicitation Agreement; h) fraudulently represented to the Applicant that no‑one other than Lenfest Communications was interested in the purchase of, or investment in, all or substantially all of the shares in New World and/or Licence A or B." 423 The particulars of the breaches by Bain and Dr Burt are similar. They are said to have: "a) placed their interest and duty to the Applicant in conflict; b) profited by reason of their relationship with the Applicant without the Applicant's informed consent and without disclosing the nature and extent of any such profit; c) failed to disclose material information to the Applicant in relation to dealing with property the subject of the fiduciary relationship; d) profited by the misuse of confidential information communicated to them by the Applicant; e) preferred the interests of Lenfest Communications and Australis to that of the Applicant; f) fraudulently represented to the Applicant that no‑one other than Lenfest Communications was interested in the purchase of, or investment in, all or substantially all of the shares in New World and/or Licence A or B." 424 It is alleged that, "by reason of the matters pleaded above", Bain, Dr Burt, Australis and Mr Price "each acted dishonestly, or with lack of probity and/or conscious impropriety and knowingly participated in" the breaches by LCI and Mr Lenfest; a similar allegation is made against LCI, Mr Lenfest, Australis and Mr Price in relation to the breaches said to have been committed by Bain and Dr Burt.

(h) Conspiracy to cheat and defraud 425 The statement of claim then turns to conspiracy, and pleads it compendiously: "By reason of the matters pleaded above, the Respondents conspired with each other to cheat and defraud the Applicant to cause him to dispose of his interest in New World by the Sale and at an under value."

(i) Inducement to breach contract 426 Bain, Dr Burt, Australis and Mr Price are said to have intentionally induced LCI and Mr Lenfest not to perform their obligations under the Joint Venture Agreement and the Solicitation Agreement; similarly, each of LCI, Mr Lenfest, Australis and Mr Price is said to have intentionally induced Bain and Dr Burt not to perform their contractual obligations to provide advice, counsel and information.

(j) Corporations Law breaches 427 The final series of obligations said to have been breached by the respondents arises under the Corporations Law. Each respondent is said to have breached s 1000 by both (by themselves or their agents) inducing Mr Hadid to deal in securities by making a statement known to be misleading, false or deceptive and dishonestly concealing from Mr Hadid a material fact. The misleading, false or deceptive statement was that: "There was no other person, apart from Lenfest Communications, interested in investing in, or purchasing, all or substantially all of the shares in New World or any interest in Licence A or B, when in fact Australis had agreed to purchase all or substantially all of the shares in New World." 428 The material fact, said to have been dishonestly concealed, was that Australis had agreed to buy, and LCI had agreed to sell, at least 90 per cent of the shares held by at least 75 per cent of the shareholders, to enter into a five year management agreement with LCI and to cause LCI "to acquire a 25% interest in Australis." 429 Next, Bain and Dr Burt are accused of contravening s 849 and s 851. The breach of s 849 is said to have occurred because Dr Burt, on behalf of himself, Bain, Australis and LCI, advised Mr Hadid to sell shares in New World (in other words, recommended that he do so). Australis and LCI were "associates" of Bain and Dr Burt within the meaning of that term in s 849. In making the recommendation, Dr Burt failed to disclose that he, Bain, LCI and Australis would receive benefits and advantages in connection with Mr Hadid dealing in the shares as a result of the recommendation (fees and commissions for Bain and Dr Burt, a management contract and shares in Australis for LCI and, for Australis, control of licence B, LCI's management services, a capital contribution by LCI and the "foreclosing" of "competition in Pay TV.") Those benefits, it is said, might reasonably have been expected to be capable of influencing Dr Burt and Bain in making the recommendation. 430 The breach of s 851 arose, it is said, because, having regard to their knowledge of the investment objectives of Mr Hadid and his particular needs in relation to his dealing with control of licence A and licence B, Dr Burt and Bain did not have a reasonable basis for making the recommendation. A purpose other than advancing Mr Hadid's objectives and satisfying his needs, particularly that of advancing the interests of LCI, Australis, Bain and Dr Burt, was not a reasonable basis for the recommendation. It is alleged that by reason of s 852, Bain and Dr Burt are liable to compensate Mr Hadid for loss and damage consequent upon his acting in reliance on the recommendation. 431 Finally, each respondent is alleged to have infringed s 995. In connection with a dealing in securities (shares in New World) they engaged in conduct that was misleading or deceptive, or was likely to mislead or deceive, by: "a) representing to the Applicant that there was no other person, apart from Lenfest Communications, interested in investing in, or purchasing, all or substantially all the shares in New World, or any interest in Licence A or B, when in fact Australis had agreed to purchase all or substantially all of the shares in New World and was interested in the acquisition and/or use of Licence B; or b) failing to disclose to the Applicant, as was the fact that Australis had agreed to purchase, or was prepared to treat to purchase all or substantially all of the share capital of New World and was interested in the acquisition and/or use of Licence B when it was: i) misleading not to do so by reason of a material change in circumstances (to wit, the Australis interest) since it was represented that no one was interested; or ii) the duty of Lenfest [sic; sc, presumably, Lenfest Communications] and Bains to disclose the information to Hadid by reason of their agreement and duties aforesaid."

(k) Contumelious disregard; relief claimed 432 Finally, it is pleaded that the respondents' conduct in relation to the Project Midsummer Proposal, the Action Plans and/or the 3 November Agreement amounted to conscious wrongdoing in contumelious disregard of Mr Hadid's rights. Mr Hadid is said, by reason of the matters pleaded, to have suffered loss and damage. The principal relief sought is damages (including exemplary damages) and equitable compensation (Mr Hadid elected for damages rather than an account of profits). Various other ancillary relief, particularly declarations, is claimed as well.

Defences and cross‑claims against Mr Hadid 433 It is sufficient, and not materially inaccurate, to say that all of the substantive allegations against each respondent are denied by that respondent. The respondents, however, rely on a number of particular defences as well. LCI, Lenfest, Bain and Dr Burt also rely on cross‑claims against Mr Hadid.

(a) LCI and Mr Lenfest 434 LCI and Mr Lenfest rely on the releases in the 17 November agreements as releasing them from each of the causes of action alleged in the statement of claim. 435 Then, LCI and Mr Lenfest plead three misrepresentations said to have been made to Mr Lenfest by Mr Hadid on or about 29 August 1993. They are that an underwriter had agreed to underwrite the capitalisation of the holders of licence A and licence B, subject only to the deposit on the licences being paid; that MDS technology had been prohibited by Commonwealth legislation from competing with subscription broadcasting services until July 1997; and that if the deposits were paid and LCI exercised its option to select an interest in either of the licences, the company holding the interests selected would be capitalised on terms conferring on the Lenfest Group a free carried shareholding in the selected company of not less than 13.5 per cent of the shares issued on capitalisation. Each of those representations is said to have been untrue; the third is said to have been a representation as to a future matter which Mr Hadid did not have reasonable grounds to make. LCI, it is alleged, in reliance on the representations, paid Mr Hadid $A10,700,00 and entered into the agreement constituted by the letters of 29 August. As a result, any fiduciary duty owed by LCI or Mr Lenfest to Mr Hadid resulted from the misrepresentations, so that Mr Hadid is disentitled to equitable relief for breach. 436 Additionally, those alleged misrepresentations are said to have constituted conduct in breach of s 52 of the Trade Practices Act and s 42 of the Fair Trading Act so that if the Joint Venture Agreement, the Solicitation Agreement, the fiduciary duties alleged by Mr Hadid or the agreement constituted by letters of 29 August existed, then Mr Hadid's rights under them existed under a contract or arrangement within the meaning of s 87(2) of the Trade Practices Act or s 72(2) of the Fair Trading Act; that being so, it is said, on 17 November 1993 Mr Hadid was liable, at the suit of LCI and Mr Lenfest, to have an order made varying the contract or arrangement so as to require Mr Hadid to transfer to them Mr Hadid's shares in the capital of New World. That being so, Mr Hadid, if misled by LCI or Mr Lenfest, suffered no loss (no submissions were made by senior counsel for LCI and Mr Lenfest in support of either of the defences based on the alleged misrepresentations; submissions were made, however, in support of a cross‑claim based on them, to which I shall come). 437 There is a defence, against claims for equitable relief, on the basis of laches, acquiescence and delay. The particulars given are these: "(a) Failure to take any steps to rescind, terminate or restrain completion or further performance of the agreements of 17 November 1993 upon becoming aware of the existence of the arrangements made between the First and Fifth Respondents concerning Licence B. (b) Requiring and accepting the sum of $13.0 million payable under the agreements of 17 November 1993 after becoming aware of the existence of the arrangements made between the First and Fifth Respondents concerning Licence B. (c) Soliciting and accepting the benefit of the help and assistance of the Fourth Respondent in progressing the new Licence A bid. (d) Not commencing these proceedings before 20 January 1995." 438 There is, finally, a defence that the proceedings are not properly constituted, so that Mr Hadid is not entitled to any relief whatsoever, on the footing that if the duties pleaded were owed to Mr Hadid, they were not owed to him solely and the others to whom they were owed have not been joined. 439 The cross‑claim of LCI against Mr Hadid is straightforward. LCI repeats the allegations in its defence about the alleged misrepresentations, claims that they were misleading or deceptive or likely to mislead or deceive in contravention of s 52 of the Trade Practices Act and s 42 of the Fair Trading Act and that, by reason of relying on them, LCI has suffered loss and damage.

(b) Bain and Dr Burt 440 Bain and Dr Burt also rely on defences that the action is not properly constituted and that Mr Hadid's claims to equitable relief are barred by laches, acquiescence or delay; those defences are in substantially the same terms as the corresponding defences of LCI and Mr Lenfest. They also rely on the releases, so far as they extend, in the agreements of 17 November. In addition, however, they rely upon the release and limitation of liability contained in the mediation agreement of 15 November, together with conversations between Mr Hadid and Dr Burt: "… which took place on and prior to 17 November 1993, and which were to the effect that the Applicant would release the Third and Fourth Respondents from all possible liability in respect of their efforts to assist the Applicant, on the one hand, and the First and Second Respondents, on the other hand to reach an agreement in respect of the pay‑television licences then under discussion." 441 Bain and Dr Burt plead also that the mediation agreement expressly relieved them of any obligation to disclose information during the negotiations which took place between 15 and 18 November. 442 Bain and Dr Burt rely also on an agreement by Mr Hadid not to sue, alleged to have arisen in the conversations between Dr Burt and Mr Lynch on 24 November and between Dr Burt and Mr Hadid on or about 1 December. Alternatively, they say that Dr Burt and Bain relied on what was said in the conversations by assisting in progressing "the new Licence A bid", with the result that (it is said) it is unjust, inequitable and unconscionable for Mr Hadid to maintain the proceedings against Bain and Dr Burt and Mr Hadid is estopped from so doing. 443 Finally, in relation to the claim for exemplary damages, Bain and Dr Burt rely on a deed of mutual releases dated 15 July 1994 entered into upon the resolution of the disputes between Mr Hadid, Century and Bain and Dr Burt in relation to licence A. 444 By a reply to the defence of Bain and Dr Burt, Mr Hadid says that he was not a party to the mediation agreement; that neither it nor the agreements of 17 November, as a matter of construction, release his claims against Bain or Dr Burt; and that, because of dishonesty on the part of Bain and Dr Burt and conduct by them which was misleading or deceptive they cannot rely on any of the 15 or 17 November agreements because of failure of a condition precedent and estoppel, and because the agreements are liable to avoidance. 445 Bain and Dr Burt have a cross‑claim against Mr Hadid. First, they say that if it is held that Mr Hadid was not personally a party to the mediation agreement of 15 September 1993 (and so not bound by the releases and indemnities in it), he is liable to Bain and Dr Burt for damages under the Trade Practices Act and the Fair Trading Act, the measure of which is the amount of any damages which they are found liable to pay Mr Hadid. That is said to be so because Mr Hadid (it is alleged) represented that his signature of the mediation agreement, in terms on behalf of New World, also bound himself and the other shareholder. Bain and Dr Burt claim also, against Mr Hadid, any damages which they may be held liable to pay to the other respondents on their cross‑claims against Bain and Dr Burt. 446 Mr Hadid, by his defence to the cross‑claim, said that he was not a party to the mediation agreement; that, in any event, Bain and Dr Burt did not act honestly in the mediation, and are thus disentitled to rely on any release; and that their alleged misleading conduct and participation in the alleged conspiracy entitled Mr Hadid to declarations that the indemnities and releases relied on are void ab initio.

(c) Australis and Mr Price 447 Australis and Mr Price also rely on the defence that the proceeding is not properly constituted and, in relation to equitable relief, on the defence of laches, acquiescence or delay. Additionally, they say that if Australis or Mr Price was a principal in respect of any conduct of any of the other respondents then they are entitled to the benefit of any release by Mr Hadid of any of those respondents.

(d) Cross‑claims between respondents 448 There are cross‑claims as between the respondents, as to which no submissions have yet been made. There are claims for contribution or an indemnity under s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) by LCI and Mr Lenfest against Australis and against Bain and Dr Burt, by Bain and Dr Burt against LCI, Mr Lenfest, Australis and Mr Price and by Australis and Mr Price against LCI, Mr Lenfest, Bain and Dr Burt. There is, however, a further cross‑claim of LCI and Mr Lenfest against Bain and Dr Burt to which Bain and Dr Burt have not filed a defence and as to which a question may arise whether they should have leave to do so. It is to the effect that if Bain or Dr Burt was the agent of LCI or Mr Lenfest and in that capacity made any representations which were fraudulent or in breach of s 52 of the Trade Practices Act, s 42 of the Fair Trading Act or s 1000 of the Corporations Law and if, in consequence, LCI and Mr Lenfest are held liable to Mr Hadid in damages, then the representations were made in breach of an implied term in the agency agreement, so that the liability of LCI and Mr Lenfest to Mr Hadid was caused by that breach by Bain and/or Dr Burt.

Credit 449 Mr Hadid's case was pleaded as one including allegations of conscious and deliberate wrongdoing by each respondent: the making of representations known to have been untrue and conspiracy to defraud, the purpose being to induce Mr Hadid to sell property, for the benefit of the respondents, at an undervalue. The case was opened as one of that nature and the evidence led by Mr Hadid was consistent with such a case. The particulars given of the various allegations in the statement of claim make it clear that, in large part, those allegations are based upon statements said to have been made on behalf of the various respondents in the course of various meetings and conversations. Again, the case was opened consistently with that state of affairs and Mr Hadid and the other witnesses called to give evidence in support of his case were taken in detail through a great number of conversations in which they claimed to have participated. The narrative which I have given is by no means a complete statement of nearly seven months of oral evidence (or, for that matter, of about forty‑five volumes of documentary evidence) but it sufficiently demonstrates that there is acute controversy about almost every conversation of which evidence was given. 450 Although no part of the pleaded case was abandoned, the focus shifted somewhat in final address. It did so in three ways. First, considerable stress was placed upon what were said to be misrepresentations, involving each of the five active respondents, by silence or half truth. Secondly, it was put that it was not necessary, in order to decide the case favourably to Mr Hadid, to make findings as to where the truth lay in the vast bulk of the factual matters in controversy. As senior counsel for Mr Hadid put it: "… the great bulk of our case depends upon evidence of facts which are quite uncontroversial and, indeed, are matters about which we know nothing but come exclusively out of the [respondents'] camp and to the extent there is evidence of them they make out that which we say." 451 Additionally, it was said that the case is "replete with contemporaneous documents"; they provided a much sounder basis to resolve most of the disputed issues than oral evidence given a considerable time after the events. Thirdly, however, it was put that if on any issue I were left uncertain then: "… for reasons we have adumbrated in [written submissions concerning credit], that your Honour would prefer the evidence of the witnesses called by the applicant to the evidence of the witnesses called by the respondents on those issues both because they're congruent with the probabilities and because they're inherently credible." 452 I accept, both as a general proposition and as one which has particular application to this case, that contemporaneous documents, at least where there was no contemporaneous motive for misrepresentation or concealment, are likely to prove a better guide to the truth than unaided recollection. As will appear, however, it cannot by any means be said that contemporaneous documents, though in many instances they are helpful, provide a certain guide to the resolution of every significant factual dispute in this case. 453 I accept also that the inherent probabilities are to be taken into account and may often be helpful in resolving doubtful or disputed questions of fact. There is a number of questions in this case, as again will appear, where inherent probabilities are important. 454 Nevertheless, it must be recalled that this case begins with an event which undoubtedly occurred but which might reasonably have been regarded as inherently improbable in the extreme. Mr Lenfest (whose impulses one might have expected to be restrained somewhat by the presence of a large and assertive equal shareholder), on the strength of a fortuitous introduction by someone for whom he had a high regard and of two telephone conversations with persons of whom he had no prior knowledge, in a country of whose television industry and regulatory system he was entirely ignorant, agreed to commit $US7,800,000 of his company's money by way of deposit on what were to be the first two subscription television broadcast licences to be issued in that country; and, though at the time he may not have known this, he did so in circumstances where both the Hi Vision and the UCOM groups had spent many months unsuccessfully seeking investors in successive bids for the two licences. Beyond the general proposition that rashness, in an experienced and successful businessman, may be supposed to have its limits, inherent probabilities may be of little assistance in forming a conclusion as to the terms of so unlikely a transaction. The question is, given the various accounts of what was said during the last few days of August and on 1 September 1993, what findings are to be made as to the agreement or understanding reached between Mr Hadid and Mr Lenfest? As will appear, in addition to inherent likelihood, contemporary documents and the actions of the parties are of some assistance but are not determinative. The question remains, who is to be believed as to various elements of what was said? 455 That is a good example, because all parties are in agreement that, on any view of the case, it is necessary for me to make findings as to the existence, and terms, of what the statement of claim calls the Joint Venture Agreement and the Solicitation Agreement. Similar questions arise, however, in relation to many aspects of the case. It is, of course, quite true that where questions arise as to dealings between the respondents, not involving Mr Hadid or anyone on his side, ordinarily the only evidence is that emanating from the respondents; but as to that (an obvious example is the St Louis discussions and the activities surrounding them) the question arises, to what extent should I accept, and in what respects reject, evidence given by the individual respondents and witnesses called by the respondents? The question of credit necessarily arises, a fact recognised by the parties, each of whom made substantial submissions on the subject. 456 The respondents made submissions adverse to the credit of Mr Hadid, Dr Gadir, Mr Cooper, Mr Noah, Mr Egan, Mr Wright, Ms Scott and, to a limited extent, Mr Blanks. Senior counsel for Mr Hadid made similar submissions concerning Mr Lenfest, Mr Heller, Mr Plant, Dr Burt, Mr Price and, to a limited extent, Mr Grimes. Senior counsel for Mr Hadid disclaimed any attack on the credit of Mr Elliott; the position became somewhat less clear in the course of submissions in reply; in the end, however, the matter seemed to resolve itself into an exegesis of precisely what it was that Mr Elliott was asked on 16 November, and whether his memory might, in one respect at least, have been faulty. Certainly it was not directly submitted that he was a dishonest witness; and it is perhaps appropriate that I anticipate to the extent of saying that I regard him as an honest witness. I shall deal with the particular episode later. I accept that those witnesses whose credit was not impugned gave truthful accounts of the events as they recalled them. It does not follow, of course, that their recollection is in every case accurate and complete. 457 Before dealing with the evidence of particular witnesses, I should make some general comments. First, there were suggestions of deliberate concoction on the part of Mr Hadid and his witnesses, particularly a strong submission by senior counsel for Bain and Dr Burt that in large part their evidence represented a concerted endeavour to deceive the Court. I must deal with that submission, but I shall defer doing so until later in these reasons. Secondly, some reliance was placed, in submissions for the respondents (again, particularly, Bain and Dr Burt), on aspects of demeanour; no doubt such matters may assist, but the pressures involved in giving evidence, particularly where it extends over many days, or even weeks, must be recognised; and I do not derive any particular help from those matters in this case. Thirdly, and obviously, it is not surprising that, after five years, memories should differ or should be inaccurate or less than clear. Indeed, it is more surprising that, after that lapse of time, a witness, particularly one who in the meantime has been heavily engaged in other activities, should recall, without the aid of contemporary notes, the precise detail of a series of conversations. Fourthly, a notable feature of a good deal of the evidence was that witnesses gave accounts of other people saying things as the witness might have said them. For example, I heard Mr Hadid, Mr Cooper and Dr Burt give evidence for sufficiently extended periods to be satisfied that each of them has a mode of expression which is quite different from those of the other two; and each tended to recount things said by the others in a way in which he might himself have said them. That is not surprising, or a matter going to credit, but in considering probabilities account must be taken, for instance, of the distortion naturally occurring when Mr Hadid gave evidence of an utterance of Dr Burt, or vice versa. Fifthly, most witnesses (including all those about whom submissions were made as to credit) gave their evidence in chief orally. Each had, however, previously filed an affidavit or a statement or outline of evidence, in some cases more than one. A few brief sections of those affidavits, statements or outlines were tendered and admitted, but the great bulk of them does not form part of the evidence in the case. Nevertheless, a good deal of attention was devoted to them in cross‑examination, particularly where oral evidence in chief departed from, and especially where it added to, the content of the documents which had been filed. Finally, though I have considered the submissions in their entirety, I propose, in dealing with the credit of individual witnesses, to consider specifically only some particular matters, in each case matters which seem to me particularly helpful or significant; and some matters are better dealt with in the context of particular events.

(i) Mr Hadid 458 Counsel for the respondents submitted that Mr Hadid's evidence was not to be relied upon; particularly, that it was in large part fabricated, the fabrications being based (in part) upon a study of documents available to him, and designed both to support particular aspects of his case and to repair what otherwise might be deficiencies or difficulties. It was said also that Mr Hadid had a tendency to gross exaggeration in recounting events (particularly conversations) and a propensity to make grossly exaggerated claims. All those matters were said to be illustrated by the first of the particular instances to which I shall refer.

(A) Nomura, New York 459 During June and July 1993 Mr Hadid, on behalf of the UCOM group, had discussions with Nomura Securities International, Inc (Nomura, New York) of New York. Two letters are in evidence, each dated 23 June 1993 from Nomura, New York to Mr Hadid. They are expressed as confirmations of engagement of Nomura, New York by UCOM to perform particular services. Both are signed on behalf of Nomura, New York; one is signed by Mr Hadid. One contemplates Nomura, New York rendering "financial advisory and investment banking services … in connection with the possible joint venture, or sale of any of the tangible or intangible assets or equity of the Company or its wholly‑owned subsidiaries … to any business entity(s)." Nomura, New York was to advise and assist in identifying potential "Partners" and to contact such of them as UCOM might designate; it was also to advise and assist in negotiating and structuring a resulting transaction. For that it was to receive an initial fee and a monthly retainer. The other letter contemplated the provision by Nomura, New York of financial advisory and investment banking services in connection with "structuring and initial capitalization of the Company." For that it was to receive a fee calculated as a percentage of the value of a completed transaction. Both letters expressed the engagement to be for one year and contemplated renewal; both provided for termination by either party on 30 days' written notice. 460 Subsequent correspondence indicates that Mr Hadid asserted, but Nomura, New York denied, that contractual rights and obligations had arisen between the parties. Whether that was so or not, however, Nomura, New York indicated to Mr Hadid, a few days after 23 June, that it was not in a position to proceed with the engagement, apparently on the basis of a perceived conflict of interest. Correspondence continued between the parties about the possibility that Nomura, New York might nevertheless in some way assist UCOM. In response to what they understood to be threats of legal action by UCOM, Nomura, New York terminated those discussions by letter dated 22 July 1993. 461 The nature of those perceived threats is evident from a letter written by Mr Hadid to Nomura, New York on 22 July (Sydney time): "Nomura is in a position to rectify it's [sic] obligation to UCOM by using its position and contacts to find partners for UCOM … . Another solution is Nomura pays the Australian Department of Transport and Communications … on behalf of UCOM A$177m on or before 30 July, 1993 (Australian time) plus costs and commitments made by UCOM to other persons of approximately 2% as previously mentioned. UCOM then agrees to transfer 75% of the equity in UCOM to parties suitable to it and reimburse Nomura for the amounts paid by it plus interest and fees to the extent of the proceeds from such transfers." 462 After receiving Nomura, New York's letter denying liability and terminating discussions, Mr Hadid wrote on 24 July 1993: "… We are not threatening legal action but simply taking the only option you are forcing upon us. We much prefer to work this out to our mutual satisfaction. Both Wasserstein Perella and Nomura Australia calculate the value of the license [sic] as approximately A$450m today and A$2,800m in 10 years. The profits at the end of the 10 year period are approximately A$2,600m making it a total of A$5400m opportunity you are possibly depriving UCOM by your actions … I hope that we can resolve this without lawyers. It's your decision." 463 There matters seem to have rested. I should, however, before turning to Mr Hadid's evidence, quote parts of a letter written by Mr Hadid to Mr Robert Long (Mr Long) of Nomura, New York on 6 July 1993. Referring to discussions between Mr Hadid and Nomura, New York, apparently in the last week of June, Mr Hadid wrote: "… In your presentation you stressed your company's ability to be of unique assistance to UCOM through your investment banking and financial advisory services and the strength and extent of your contact base and ability to raise debt and equity funding. You pointed to Nomura's strong underwriting achievements and your access to billions of dollars of discretionary and non‑discretionary funds and highlighted the priority of your interest in Australia because of your company's interest in our region …" 464 Mr Hadid went on: "After you made it clear you would be interested in considering taking on the job subject to the satisfactory outcome of a study by your team as to its feasibility, we provided all the information they sought. You subsequently agreed the project was of interest and that you would like to take it on. However you felt there was an area of possible conflict with WP which you needed to clear. You advised me later that you had cleared with WP any such doubt about conflict and that we could proceed with formalising an agreement. This was done. I left you with the understanding that you would continue work on the Business Plan, and would send two or three people the following week to Australia to complete all necessary work on the documents required by yourself and Turnbulls to present to clients." 465 Particularly to be noted are the reference to a presentation in which strength of contacts and access to billions of dollars in funds were mentioned and the statement that a business plan had been given to Nomura, New York, questions about it had been asked and answered and work remained to be done on it, in Australia. 466 Senior counsel for LCI and Mr Lenfest asked Mr Hadid what the basis was for his belief, when he spoke to Mr Lenfest at the end of August, that a 30 per cent free carried interest was achievable in each of the licences. His answer was: "Nomura, New York did the financials and I agreed with it and Margaret Combs agreed with it." 467 Mr Hadid was then pressed as to whether there was any written communication from Nomura, New York referring to the 30 per cent free carried interest being achievable. He said that he did not know whether such a piece of paper existed but: "… I think it was that they approved our business plans, they looked at the figures and were happy and signed up on the basis that 25 per cent or 30 per cent free carry is the plans that we gave them and we talked to them and they did the analysis for a week, we stayed there for a week with them before they agreed to sign up and they said it is achievable." 468 There was then the following exchange: "What is the piece of paper that you gave to Nomura New York which you say recorded a 25 to 30 per cent free carried interest as being something which was achievable? - We gave them our figures and business plans when we were in New York. They went right through the analyses and that was discussed at some length and they agreed with it, Margaret Combs in fact knew about it, … and Nomura New York agreed that 30 per cent free carry is achievable, they signed the deal and said, 'We'll send our team because the Australian team is too small, we'll send our team, they'll follow you to do the business and we can achieve that for you and we'll use our money if we have to.' " 469 Senior counsel later took Mr Hadid to the terms of the two letters of engagement: "In substance their agreement was to provide advice and assistance, was it not? - Structure, sell, use their own clients. They told me they had an $80 billion investment which they could deal with 30 or 40 at their own discretion." 470 Mr Hadid agreed that the letters contained the substance of Nomura, New York's engagement, subject to a qualification: "… The qualification is that Mr John Long … gave me assurances, that he was looking forward to using their muscle power internationally because he said New York is probably the most important west branch of Nomura and that they would utilise all their financial and other skills to bring us to the 30% free carry, 25‑30% which they agreed to because they did their own analysis and in fact to use money which is at their discretion which they would use once they had completed the work. All he said preliminary work shows that we can achieve this together." 471 Later, Mr Hadid was asked about the position when he wrote to Nomura, New York on 1 July, asking them to reconsider: "Is it right that one of the services you were looking to Nomura to perform pursuant to 23 June engagement is the examination and approval of your business plan? - To finalise the approval of the business plan. … Which [sc approval] you did not have at the time you wrote this letter on 1 July 1993? - I didn't have it in final form, but I had it in the initial form. They approved it. They maybe spent an extra week to approve our plan in New York, sir. … Is it right to say that as at 1 July Nomura had not given its final seal of approval to any business plan that you had submitted? - It has given its approval to what they had seen and done up to that point, sir." 472 Pressed further on the subject, Mr Hadid said this: "… They said they were very keen to come and work here … . They signed documents which come [sic] from their New York office. They were prepared to put up their own money; they were prepared to send their people to do the work; they told me they wouldn't follow failures; they knew about negative press. These people were very keen and they did tell me they had 30 or 40 billion dollars which they are prepared to use once we go to the next stage." 473 Then: "Do you agree that as at 1 July 1993 Nomura had not given its final approval to any UCOM business plan? - … They've given the first final approval but they haven't given the final approval where the business plan can be taken to the market, no, sir." 474 Mr Hadid was then asked about his letters of 22 and 24 July. Mr Hadid agreed that, although he wished to work together with Nomura, New York to mitigate losses and preferred not to take legal action, he thought it was reasonable to require Nomura, New York to pay $177,000,000 due to be paid very shortly on the then current bid for licence A (the first bid, on which no deposit had been payable). 475 He was then asked about his aim in writing the letter of 24 July. The question was whether his aim was to acquaint Nomura, New York with the amount of the loss UCOM claimed to have suffered as a result of Nomura, New York's breach of contract. Mr Hadid was reluctant to accept that proposition: "Sir, my aim was to try and work out a solution. I was the one that was living here every day with the government, the press, sleepless nights, with a duty to the process and not anyone else and these people, they made me waste the most important time when I could have been looking at other banks and extended us for a week, promised us to come over and they reneged; …" 476 After some further fencing on the same subject: "I don't know that at that point that's what … my intention was … but it certainly does acquaint them with the fact that we both, through their reneging of the agreement, are potentially losing a very important opportunity. Now, you could say that to a degree, because I say here, we are still prepared to do what we can to assist you to remedy your obligation to Ucom. So, in one way, yes, you can interpret what you said to be correct, but I don't know that that was my prime objective when I wrote this letter." 477 After more on that topic: "When you wrote this letter were you seeking to convey to Nomura that, as a result of their misconduct, they were exposed to a potential liability to you of the order of $5.4 billion? - As I said, I may have conveyed that. I may have, in fact, meant to convey that. My recollection, and that's all I can give you, is … that I am saying to them by the standards that would be closest to heart to you by a company you own in full, another company you own part of, here in Australia, look at the value of this opportunity. I may have because obviously I talk about the other situations but as I look at it from here, the thing that comes to my mind is not, you caused me $5.4 billion damage, is that you are causing damage to a business which you and your company say is very valuable. I may have meant it the way you said it. … I don't know the answer to that, sir." 478 Senior counsel for Mr Hadid submitted that the cross‑examination was "a textbook case of taking a question and answer out of context": Mr Hadid did not attribute to Nomura, New York anything more than a puffing statement about the funds they had under management, coupled with an indication of a possibility, should a transaction be approved and proceed, that some of those funds might be used, perhaps on a bridging basis. The letters, it was said, were not legal threats: explicitly, they had been prepared without advice and suggested a commercial solution. But the evidence, in my view, cannot be so simply explained. I have referred to the character of some of it as "fencing", and that character appears in the parts I have quoted; and there is a consistent strain of exaggeration both as to the stage of the "approval" process reached and as to the commitment undertaken by Nomura, New York. It is significant, I think, that that strain can be seen in evidence about a matter by no means central to the proceeding.

(B) Alan Elkhatib 479 UCOM's dealings with Mr Alan Elkhatib bear, once again, only a peripheral relationship to any of the issues in this case. Much attention, however, was devoted to the subject in cross‑examination of Mr Hadid and other witnesses and it is necessary that I deal with what emerged. 480 Mr Elkhatib was a cousin of Mr Hadid. Mr Hadid gave evidence that: "… he is like a brother of mine. I have raised him since he was about 10." 481 In June 1993 he was aged 22. He was employed by one of Mr Hadid's companies as a computer salesman. On 2 June 1993 UCOM Pty Ltd entered into an agreement with Mr Elkhatib. The agreement was signed on behalf of UCOM Pty Ltd by Dr Gadir. Its terms were: "1. In consideration of UCOM agreeing to pay to AE a Fee of:‑ (i) 1.00 percentum of funding raised by UCOM from whatever source incidental to its requirements to secure any satellite pay TV license for which it has bid, or (ii) one million five hundred thousand dollars ($1,500,000.00), or (iii) one third of the total of all commisions [sic] or fees paid to any other party or parties in regard to funding the licence, whichever is the least, subject to the succeeding paragraph, AE AGREES to arrange the introduction of UCOM to a party or parties for the purpose of providing finance, the name or names of which party or parties shall be provided to UCOM and thereafter, subject to paragraph three (3) hereof, an introduction will be effected as required by UCOM. 2. The Fee referred to in the preceding paragraph shall not be contingent upon successful closing of funding by the parties introduced or which AE has nominated for introduction but shall be an overriding fee to which AE shall be entitled in any event by reason of his appointment hereby as principal broker on behalf of UCOM. 3. It is acknowledged as a condition of this agreement that any party to be introduced as above may already be part of UCOM's established contacts as at the date hereof. 4. This agreement is non‑exclusive and shall not be construed either expressly or by implication as giving rise to any relationship of principal and agent between the parties. 5. All matters passing between the parties hereto shall be 'commercial in confidence' and it is expressly agreed that AE shall keep confidential and not disclose to anyone except as authorised by UCOM any information provided by it in respect to this agreement. 6. Payment of the fee hereby agreed to will be upon issue of the satellite subscription television licence. 7. In this agreement:‑ (a) UCOM means UCOM Pty Limited and any other companies associated with UCOM Pty Ltd having similar shareholding (but not necessarily identical) and formed for the purpose of bidding for the issue of a satellite subscription television licence. (b) 'Pay TV license' or similar description means either satellite subscription television licence 'A' or 'B' to be issued by the Australian government." 482 "AE" is, of course, Mr Elkhatib. By its terms, the agreement simply required Mr Elkhatib to introduce to UCOM a party or parties for the purpose of providing finance; a party so introduced might be "part of UCOM's established contacts." In return for that service, Mr Elkhatib was to receive a fee the minimum amount of which was considerable, the maximum amount potentially very large indeed. The entitlement to the fee was not contingent on a party introduced actually providing funding but was one to which Mr Elkhatib was entitled in any event when one of the licences was issued. The execution of the agreement was not authorised or ratified by the resolution of UCOM's directors: it was, of course, agreed to by Dr Gadir (who took primary responsibility for negotiating it) and Mr Hadid; Mr Blanks claimed not to have been consulted about it (though Dr Gadir gave evidence that Mr Blanks was consulted). 483 What qualities did Mr Elkhatib have which fitted him for the appointment, and why was it thought necessary or desirable to appoint him? Mr Hadid said this: "The qualities he has is he is an exceptionally good negotiator. He is a communicator, he has built his whole youth basically training himself to communicate with people and at that point in time … we are so obviously isolated by the press and everything else we required someone we can trust." 484 And what exactly was he expected to do? "… he was meant to introduce us, bring us together with parties like Nomura, Turnbulls, Mr [Nicholas] Whitlam. His job was not to financially structure the situation but to introduce us. That was his role." 485 Shortly after his appointment, Mr Elkhatib ceased any activity on behalf of UCOM: "Is this right that somewhere in June or July of 1993 you told [Mr Elkhatib] that he was no longer required to perform the services referred to in this contract? - We told him to hold back, that … we have Nomura New York. … Did you at any later point in time re‑engage his services? - Yes, sir. When? - He was the one who introduced us to Mr Nicholas Whitlam. When did you engage his services which resulted in the introduction to Mr Nicholas Whitlam? - It would have been I think November 1993. So is it right to say that between the end of June 1993 or the beginning of July 1993 and November 1993 Mr [Elkhatib] was not retained to perform any services for the UCOM Group? - That was subject to debate between him and us. We believe he wasn't. He believed he was. But so far as you are aware in that period there was nothing which he did by way of provision of services to the UCOM Group? That is the case, is it not? - Other than support me internally that would be correct, yes sir. When you say support you internally what do you mean by that? - Sir, the whole computer company at the time everyone did everything they can to support the process seeing the difficulties that we have." 486 Mr Hadid gave evidence that he regarded the agreement with Mr Elkhatib as entirely proper. Dr Gadir gave evidence that he was satisfied that it was a reasonable arrangement in the circumstances: he was "reasonably happy about it." He denied that it was a sham or that he knew at the time that its effect was to "load an incoming investor or financier with $1,500,000 as an expense of the venture." Later he was prepared to concede that, with hindsight, it might have been overly generous and that he "might have had" misgivings about the propriety of the arrangement on the footing that "… I was not particularly happy about the amounts involved." 487 Mr Blanks gave the following evidence: "Did you have any knowledge of [Mr Elkhatib's] experience? - No … I wouldn't have known what his experience was. Did you know of any facts which made it appropriate that UCOM should pay him a sum of money in the order of millions of dollars for representing it in connection with the raising of funds? - No. Is that a matter that troubled you at all? - Yes. Did you express your troubles to Mr Hadid? - Yes. What did you tell him? - I think I told him that I didn't see that Mr Elkhatib was likely to succeed in representing us, as far as I was aware he didn't have … any quality of contacts who could provide funds and that I didn't see the agreement as necessarily one that would stand up to legal scrutiny." 488 Having given evidence that he could not recall informing Mr Heller of the arrangements with Mr Elkhatib or of their relationship, Mr Hadid gave the following evidence: "Nor did you disclose to Mr Heller that this claimant for $3 million was a 22 year old computer salesman? - [You] just reminded me sir, in fact I showed Mr Heller Mr Elkhatib's contract and discussed him at the first visit that Lenfest had with us. … Well what did you tell him? - We … were discussing about the pre‑Lenfest stage and what I did discuss … regarding Mr Elkhatib was, I said, this man is a young cousin of mine, we hired him at a time when we were finding it hard to be able to go out ourselves in public and … on the surface in public, so we hired him to act as an in‑between and in fact I recall saying to him, the reason you find Simon has signed the agreement, not me is because I wanted the UCOM directors to be on notice and obviously this guy being close to me means that Simon signed the agreement so it stays at arm's length." 489 That was said, according to Mr Hadid, "in the UCOM board room": he "imagined" that those present would have been Mr Heller, Mr Plant, probably Dr Gadir and Mr Egan. 490 Dr Gadir gave evidence that he could not recall whether he was present at any such conversation. Mr Egan gave no evidence about such a conversation. Mr Noah, however, gave evidence of a meeting in the board room on Mr Egan's premises during Mr Heller's and Mr Plant's first visit at which Mr Heller, Mr Plant, Mr Hadid, Mr Wright, Mr Noah and Dr Gadir, Mr Egan and Mr Elkhatib were all present. Mr Noah gave evidence of a recollection of a discussion between Mr Elkhatib and Mr Heller or Mr Plant "in relation to an arrangement for success fees/introduction that Mr Elkhatib introduced to UCOM." After that discussion Mr Elkhatib left and the meeting proceeded to other topics. Mr Noah was unable to recall precisely what was said by Mr Elkhatib, or what was said to him in response. The matter had not been referred to in his outline of evidence. No one else gave evidence of such a meeting. Mr Heller's evidence was that during his first visit he had no discussion with Mr Hadid about Mr Elkhatib and that he had never met Mr Elkhatib. Mr Plant gave evidence to the same effect. The subject was not raised with Mr Heller (or, for that matter, Mr Plant) in cross‑examination. 491 It will be recalled that, towards the end of his second visit to Australia, Mr Heller asked Mr Hadid to provide a list of the expenses which UCOM would seek to recover on sale or capitalisation of the licences, and that such a list was provided in a letter dated 7 October 1993 addressed to Mr Plant. By far the largest of the "financial commitments" listed in the letter was an amount of $1,500,000 described as "brokers fees" due to Alan Elkhatib. A note was appended, as follows: "Mr Elkhatib is arguing for $3 million but we believe we can hold him to the above." 492 Mr Hadid gave the following evidence as to his belief about Mr Elkhatib's entitlement: "When you wrote this letter of 7 October you did not believe that Mr Elkhatib could justify a claim to $3 million, did you? - No, I did not agree with him at all. When you wrote this letter of 7 October you did not believe that he could justify a claim for $1.5 million? - I think I - he had an argument which I was listening to it. When you wrote this letter of 7 October you did not believe that he could justify a claim to $1.5 million, did you? - Sir, this has all got to be taken into … Can you answer my question? - Yes, sir. I can answer that. At the time I wrote the letter he had an argument which logically I was obliged to be completely open with my partners because his deal and most of these things happened well before they came on board and that was explained to them thoroughly. When you wrote this letter you did not believe that Mr Elkhatib could justify a claim to $1.5 million, did you? - I did - I believe at that point in time he did and I believed he could justify arguably. However, later on I kept arguing with him, as I said. When you wrote this letter of 7 October you did not believe he could justify a claim to $1.5 million, did you? - Sir, I did but I was still arguing with him. I didn't actually pay him." 493 The subject of Mr Elkhatib came up in a conversation between Mr Hadid and Dr Burt, put by Mr Hadid in late October and by Dr Burt in November. Mr Hadid gave the following evidence as to his state of mind at that time: "At the time when you say you sought Burt's advice on this subject of the Elkhatib contract, you knew in your own mind, didn't you, that he was not entitled to $1.5 million? - Yes, I believe that, yes, your Honour. I didn't believe … And you believed at this time that he was not entitled to a 100 or even 200,000? - No, I disagree with that. I don't know what I believed - I believed he certainly deserved something but exactly what I would have thought maybe in the vicinity of even $300,000 but Dr Burt was probably more right than I was." 494 Senior counsel for LCI and Mr Lenfest submitted that the following findings should be made: "• That the agreement with Elkhatib was entered into with a view to passing off to potential investors and financiers as a genuine out of pocket expense, a payment in favour of Hadid's favourite cousin for which there was no commercial justification, and which would only be made if the investor/financier accepted the claim …; • That Hadid and Gadir in their evidence attempted to cover up the true nature of the arrangement; • That Hadid and Noah gave false evidence as to the alleged disclosure of the arrangement to Heller." 495 Similar submissions were made by senior counsel for Bain and Dr Burt. 496 Senior counsel for Mr Hadid described the whole matter as a distraction: it had nothing to do with any issue and the agreement predated any relevant event. That latter point, of course, is true. Secondly, it was contended that Mr Hadid, in his evidence about the contract and Mr Elkhatib, was frank. Thirdly, the letter of 7 October disclosed the deal and the controversy surrounding it. Fourthly, the only persons who were affected financially by the transaction were in fact Mr Hadid and his fellow shareholders, they being the only persons with a commitment to pay Mr Elkhatib arising out of whatever moneys were available to make such a payment. Fifthly, if the amount of the commitment to Mr Elkhatib seemed unduly great, the most probable reason on the evidence was that the agreement was "home grown" having been drafted by Dr Gadir and Mr Lynch without legal assistance - and its effect, on the evidence, was unintended. Finally, Mr Hadid's reaction to Mr Elkhatib's claim - to deny its extent - sits oddly (it was said) with the proposition contended for by the respondents. 497 In the end, the Elkhatib matter is doubtless by no means the most important aspect of the case. It does concern me, however, particularly in relation to the credit of Mr Hadid and Dr Gadir. If drafted without legal assistance, the agreement in relevant respects was remarkably clear in its terms. It provided for a very large minimum payment, it specified in plain terms the minimal nature of Mr Elkhatib's obligations and it provided as unambiguously as any lawyer's document could that Mr Elkhatib was entitled to his fee whether or not a financing resulted from his efforts. Certainly Mr Hadid stated in the letter that he did not accept the full claim of $3,000,000 (as alleged) but he did say that he thought Mr Elkhatib could be "held to" $1,500,000 in circumstances where he then thought, on his evidence, that Mr Elkhatib's claim for that sum was "arguable" (although some weeks later his view was that Mr Elkhatib's real claim was no more than one fifth of that sum, and very likely less than that). Next, I do not accept the proposition that only the UCOM shareholders' financial interests would be affected: the expenses would be paid from money provided by investors; "free carry" would not be reduced. If, as apparently was the case, the only disclosure finally relied upon was that contained in the letter, including the annotation, that is hardly anything approaching a full disclosure of the circumstances. Finally, in my view the evidence which I have quoted is not to be regarded, except as to those matters which were undeniable, as obviously frank. 498 In short, the episode in my view is a discreditable one. Particularly, to put forward, in the circumstances revealed by the evidence, the sum of $1,500,000 as a commitment appropriately to be met out of money forthcoming from an investor (whatever the level of expectation that the claim would actually be accepted) does, I think, in the light of the evidence given about it, reflect poorly on Mr Hadid's credit; and, perhaps to a slightly lesser degree, on that of Dr Gadir who, it should be added, forwarded Mr Hadid's letter of 7 October to Mr Heller.

(C) Response to Bain's letter of 13 October 1993 499 Senior counsel for the various respondents pointed to a number of instances of what they described as "verbals" in Mr Hadid's evidence. Particularly, it was said, on numerous occasions where an aspect of Mr Hadid's case had to be made out or where, for example, something potentially inconvenient in a contemporaneous document needed to be explained or contradicted, Mr Hadid would falsely attribute the necessary admission, explanation or contradiction to a representative of one of the respondents. Senior counsel for Mr Hadid retorted that exactly the same might be said of evidence given on behalf of the respondents, particularly Mr Lenfest's evidence of the conversations of late August and early September. A number of those matters can be dealt with satisfactorily only in the context of the particular events. There is one particular matter, however, which is appropriately dealt with now. 500 It will be recalled that Dr Burt and Mr Johnston signed a letter from Bain addressed to both Mr Plant and Mr Hadid. I have set out the letter at par 175 and recorded some of the evidence about the surrounding events. Given that the credit of Mr Johnston was not challenged, his evidence, recorded in par 174, should perhaps be noted particularly. Some additional aspects of the surrounding circumstances should be mentioned. The request for the letter arose in a context where the ABA was pressing UCOM for written confirmation of the availability of an underwriting. In a statutory declaration, which he sent to the ABA (from the United States) with a letter dated 17 September 1993, Mr Hadid said: "We have received oral advice from Bains and Nomura Securities that those firms would be prepared to underwrite the full financing of the licence holders upon the commitment of key U.S. investors. I believe that other potential underwriters may wish to participate in the underwriting." 501 On 21 September the ABA asked UCOM for "evidence from Bains and Nomura Securities" to confirm this oral advice. That drew from Mr Hadid the following reply, in a letter of 27 September: "We cannot at this point provide written evidence from Bains or Nomura Securities that those firms would be prepared to underwrite the full financing of the licence holders upon the commitment of key US investors, written confirmation has been requested but not been obtained to date. However, negotiations have continued between Lenfest and UCOM parties on one hand, and each of Turnbulls, Bains and Nomura Securities, relating to the details of the functions of the parties and the sharing of obligations and reward relating to the underwriting. Finalising the original oral advice from Bains and Nomura Securities is secondary to proceeding to concrete commitments from US investors." 502 That prompted the following further request from the ABA: "The ABA notes that you have not provided written evidence from Bains or Nomura Securities as requested by the ABA, but that you have requested such information from these companies which is not yet available to you. Please supply this evidence as soon as it becomes available to you. If it is not yet available to you, please indicate when you expect to receive it. In the meanwhile, please provide the ABA with any evidence (e.g. diary notes, copies of correspondence, minutes of meetings, etc) of negotiations instigated or carried on by UCOM and New World in this regard." 503 On 30 September Mr Hadid and Mr Heller met representatives of the ABA. On 6 October Mr Hadid wrote to the ABA: "We refer to the response of Mr Don Heller to this question at the above mentioned meeting. UCOM is still talking to Nomura and Bains jointly with the Lenfest Group, with a view to obtaining beneficial commercial terms. We understand that Lenfest Group representatives may be involved in discussions with other underwriters. However, priority is being given to finalising an Offering Memorandum and to obtaining key U.S. investors. UCOM undertakes to provide to the ABA the evidence required by this question, as soon as it becomes available." 504 By 12 October the ABA was becoming impatient. It wrote concerning a number of documents or evidence which were to have been provided to it but had not yet been forthcoming. Among them: "… we note that you undertook to provide the ABA with evidence of negotiations with Bains or Nomura Securities instigated or carried on by UCOM and New World 'as soon as it becomes available.' … The ABA has not yet been provided with any of this information or notified of any progress in these negotiations. Could you please provide the outstanding information and advise the ABA of the current status of discussions and negotiations between UCOM and New World and any other party with whom discussions or negotiations have been taking place in relation to the sale of equity in either company. This response should be provided by close of business on Wednesday, 13 October 1993." 505 Sly & Weigall were acting for UCOM (or LCI or both - it does not matter) in relation to the dealings with the ABA. Mr E C Mathews (Mr Mathews) of that firm (who did not give evidence) completed an attendance note of a lengthy conversation, or series of conversations, with Mr Hadid on 13 October. It includes the following notes: "AH says getting something from Bains today. Calls (Alan Johnson) (out) trf's to another - in corp services … AH puts me on hold whilst he calls to see if a letter from them is coming. … AH says letter coming from Bains - should be tonight but tell ABA prob Fri morning - no better to say have spoken to Bains. … Me: who are people at Bains (I to put in letter, Bains: [Rowen Johnston Wayne Burke] AH: I'll also call Nomura now re same: [I put on hold again by AH] I suggest letter from B & N just saying they're involved. AH says no, letter will state commitment to project." 506 On 15 October Sly & Weigall sent the Bain letter to the ABA as indicating Bain's "current views." 507 I have set out in par 177 Mr Hadid's evidence about an ensuing conversation with Dr Burt and, at par 178, Dr Burt's evidence. Cross‑examination of Mr Hadid elicited a concession that the conversation was one to which he had not referred either in his affidavit filed in the proceedings or in an outline of evidence in reply (though he had referred to, and attached a copy of, Bain's letter of 13 October). 508 Mr Hadid's evidence that his fundamental complaint to Dr Burt was that the letter was inconsistent with what Dr Burt had previously said was subjected to vigorous cross‑examination by senior counsel both for LCI and Mr Lenfest and for Bain and Dr Burt. In the former cross‑examination Mr Hadid was asked to identify inconsistencies between the content of the letter and what Dr Burt had previously said. The exchange began: "Please look at the letter and would you identify for us each statement contained in it that you regard as being inconsistent with what he had told you previously? - I did tell him that I hadn't received the letter which he is talking about. That's the letter from Turnbulls." 509 After a few further false starts, Mr Hadid considered the letter for about ten minutes. Mr Hadid continued: "He said - sorry - the arrangements outlined in the letter do not cause us to believe that less than the full amount required could be raised as required from an appropriate geared vehicle. This view takes into account the profit projections provided by UCOM which have not been independently verified. Now, … that statement caused me alarm for a couple of reasons." 510 The cross‑examination continued: "Mr Hadid, my question was please identify the statements contained in this letter which you say are inconsistent with information previously given to you by Dr Burt verbally … is this one such statement? - Yes … the statement is one such statement. What is the next statement? - The immediately listed, the timing [referring to the unadvisability of going to the market during the Christmas period, so that the program should begin in late January] … Would you please identify any other statements contained in this letter which you say are inconsistent with information previously given to you orally by Dr Burt? - 'The directors of the investment vehicle being immediately acceptable.' Your Honour as I understand this question, … it does not mean the subjects have not been discussed with Dr Burt. Then is the third statement in the letter which is inconsistent with what Dr Burt had previously told you orally the statement 'the directors of the investment vehicle being immediately acceptable to the market'? - Well, yes, sir, I see some inconsistencies there. That's what I am saying. Well, that is three. How many more are there? - Adequacy of cornerstone investors. That is four? - The identity of the owner of the licence. That is five? - And the last - well, I mean he said it could be bought but I don't know that's inconsistent. What I want to know do you say that the statement commencing with the [word 'arrangements' or any part of that statement] is inconsistent with what you had previously been told by Dr Burt orally? - To a degree, yes sir. Are there any other statements contained in this letter which are inconsistent with what you say you had previously been told by Dr Burt orally? - Not that I'd see at the moment sir." 511 Making every allowance for the pressures of cross‑examination and of many weeks in the witness box, in a context where the basic inconsistency alleged was that Bain had given an oral commitment but the letter did not reflect a commitment, that evidence is somewhat remarkable. Counsel returned to the same subject a little later in the cross‑examination, with similar results. Finally: "When Dr Burt sent you this letter of 13 October you did not believe that it was a correct specification of Bain's then position in relation to underwriting. You rang Dr Burt and he told you that he agreed with you. Is that what you say? - We had a telephone conversation as soon as - sorry, soon after I received this fax and the conversation largely reflects that Dr Burt agrees that there's some negotiating to do, that it does not necessarily reflect the accuracy of the final underwriting. All I want to know is when you rang Dr Burt to seek confirmation or disavow it, have you a belief that this letter did not correctly set forth Bain's then position in relation to underwriting, did he tell you that it was a correct statement of the position or an incorrect statement? - I don't - didn't use the word is it correct or incorrect, sir. But you wanted to know whether what he had put in that letter was Bain's then position in relation to the underwriting, did you not? - Yes, sir. What did he tell you, that it was or it was not? - He largely agreed that it needed negotiating with Lenfest face to face. Are you asking his Honour to accept that when you called Dr Burt after receiving this letter he told you that his letter was largely an incorrect statement of Bain's then position in relation to underwriting? - No, I'm asking his Honour to … understand when I spoke to Dr Burt … that Dr Burt agreed with me he needed to sit with Lenfest and negotiate the deal and in fact by the end of that conversation I even agreed that I'd continue to support him. So we may have had that difference, he was angry, I was angry, he wanted something and I wanted him to keep straight with the representations. … You wanted to learn from Dr Burt as to whether your assessment that his letter of 13 October did not set forth Bain's true position in relation to underwriting was right or wrong? - It did not reflect my understanding, no, sir. Are you saying that Dr Burt confirmed that in your conversation with him? - That's it largely, yes, sir." 512 Mr Hadid gave evidence that he did not recall whether he had instructed Sly & Weigall to send Bain's letter to the ABA. In later cross‑examination, however, he agreed that he must have known that it was sent. 513 Cross‑examination by senior counsel for Bain and Dr Burt drew attention to the circumstance that in his list of inconsistencies between the letter and earlier discussions Mr Hadid had not included what he regarded as the "major inconsistency" that the letter did not reflect a commitment (albeit conditional) which had already been made. Mr Hadid then gave evidence about a portion of the conversation he claimed to have had with Dr Burt in which he said the letter of 13 October did not "marry up with" Bain's earlier letter of 30 August (see par 90). He explained that as follows: "… when you put those two letter[s] together which by then would have been fresh in my mind, that he seemed to be more succinct and had the positive steps on how to go, with this one he was expressing some negativities. For example, … he [was] saying things like well, Cornerstone is something that came out but also saying things like, directors immediately now. Before, he was saying, directors can be found through the process. You know, he was being more negative and that is again, part of the politics I'm talking about in the sense that he wanted to force Lenfest to sit with him and respect him and that first letter was more what you call an unemotional underwriting presentation than the letter he sent us." 514 Mr Hadid then agreed that he was saying that the letter of 13 October was an "emotional letter from Dr Burt"; that in turn led to an exchange in which Mr Hadid was asked to indicate those passages in the letter which were "emotional" and those which were "unemotional." It is fair to say of that exchange that it did not advance matters substantially beyond the statement in the answer which I have just quoted, except, perhaps, by emphasising the oddity of the proposition which Mr Hadid had accepted and, having accepted it, was not prepared to renounce. 515 In reply, senior counsel for Mr Hadid submitted that the suggestion that Mr Hadid's alleged conversation with Dr Burt was a recent invention was largely contradicted by Mr Mathews' attendance note. As I understood the submission, counsel relied on a section of the note beginning: "AH explains to sitn betw L. & UCOM that L want to renegt the deal betw them but UCOM says we have a deal." 516 That sentence itself, however, plainly records a remark, interpolated by Mr Hadid into the conversation, about the relationship between LCI and UCOM: the words "we have a deal" cannot be taken as a reference to the relationship between Bain and any other party; it refers to the relationship, established at the end of August, between LCI and UCOM. What the note does record is that, in response to a suggestion by Mr Mathews that letters sought and expected from Bain and Nomura would simply say that they were involved, Mr Hadid said "no, letter will state commitment to project." The problem with that, however, lies in both the somewhat loose expression "commitment to project" and, more importantly, the conjunction of Bain and Nomura. There was no evidence that Nomura had committed itself to an underwriting; indeed the evidence is that it did not. Nor (apart from evidence of a conversation on or shortly before 14 September, to which I shall come) is there any evidence that Mr Hadid was led to believe, or in fact believed, that Nomura was committed. Indeed, he expressed in his evidence a scepticism borne of experience about what he had come to regard as the overly enthusiastic utterances of Andrew Price, and Mr Hadid's evidence (contrary to that of Mr Lenfest) was that in his telephone conversation with Mr Lenfest, Andrew Price did not commit Nomura to an underwriting. On that footing, it can, I think, scarcely be said that Mr Mathews' record of what was said to him by Mr Hadid is anything like a clear contemporaneous indication of a belief by Mr Hadid that Bain was committed (even conditionally) to underwrite. 517 Mr Hadid gave evidence that, shortly before he left for the United States on 14 September 1993, he had conversations with both Dr Burt and Andrew Price: "Tell us the circumstances in which that happened? - Yes, when I was speaking to Dr Burt and Andrew Price from Nomura and they said, you know, 'Put in a good word for me, we want to do the underwriting', and I said, 'Mr Lenfest is concentrating on the US key investors … that's what he wants to do before he does the underwriting.' They said, 'Well, as soon as you find the US key investors we are prepared to underwrite so could you please ensure that Mr Lenfest is aware of that …, that we'd like to do the underwriting.' " 518 Versions of that conversation given in chief and in later cross‑examination are set out in par 135 and par 136. 519 Mr Hadid was then referred to the statement in his statutory declaration of 17 September that the preparedness of the underwriters to underwrite was conditional on the commitment of key United States investors: "Did you intend to convey by what you there wrote, … that the preparedness of Bains and Nomura to underwrite the financing was dependent upon the commitment of key United States investors? - No, sir. Because according to you each of those companies was prepared to underwrite whether or not key United States' investors were found? - I know Bains certainly was and I know Nomura were happy to sort of be involved as well, but I was focusing less on them. And why did not you tell the Australian Broadcasting Authority what, according to you, is the truth? - I did. According to you these companies had told you that they were prepared to underwrite the full financing of the licences whether or not commitment was obtained from key United States' investors? - Yes, sir." 520 Mr Hadid maintained that there was no inconsistency between the statement in the declaration and his evidence about the extent of the commitment of Bain and Nomura. 521 Mr Hadid's view of Nomura's commitment was, on that evidence, less than sanguine and that is, of course, consistent with his other evidence about Nomura and its representatives. A good deal of attention was focused, in cross‑examination of Mr Hadid, on the extent to which, and whether conditionally or not, Dr Burt had by 13 October expressed, on behalf of Bain, a commitment to underwrite. Ultimately, I think a fair summary of Mr Hadid's evidence was that he considered Dr Burt to have expressed great keenness, commencing at least with Bain's letter of 30 August, and to have committed to an underwriting shortly before 14 September: following the "due diligence meeting" at Bain's offices on 10 September. That commitment, according to Mr Hadid, was reinforced by Dr Burt in the conversation (denied by Dr Burt) set out in par 171: "Now I'm prepared to do this thing with or without the US investors …". 522 There is no doubt that Bain, and in particular Dr Burt, propounded with some enthusiasm the proposition that, if there was an underwriting to be done, they should be chosen to do it. That is the tenor of Dr Burt's evidence and it emerges from the evidence of others, including Mr Egan. It is evident from the letter of 30 August, from the accounts of the meeting with Mr Heller and Mr Plant on 6 September and from the letter to them which followed. But commitment is another matter. Whatever view one takes of the evidence about which documents were delivered to Dr Burt (or other representatives of Bain) on what occasions, on no view could it be said that Bain's review of the UCOM materials was anything like complete by 14 September. The meeting on Saturday, 18 September (par 138) was still to occur. Nor was there a proposed transaction, defined with anything approaching precision, to be underwritten. Nor had there been any serious discussion of the terms of an underwriting. Furthermore, Mr Egan (among others) gave evidence of a meeting attended by Mr Plant, as well as Dr Burt and Mr Johnston, on 28 September. His evidence, supported by his note, referred to Bain's approval procedures on the footing that they were yet to be implemented. Mr Plant, in the period leading up to the request which produced Bain's letter of 13 October, did not believe that Bain was committed, conditionally or otherwise. In short, both the evidence (apart from that of Mr Hadid) and the inherent probabilities support a finding that up to, and including, 13 October, Bain had expressed enthusiasm for the prospect of an underwriting but no commitment. Each of the letters from Bain, to UCOM on 30 August, to Mr Heller and Mr Plant following the meeting of 6 September and to Mr Hadid and Mr Plant of 13 October is consistent with enthusiasm on the part of Bain, coupled with vigorous promotion of itself by way of emphasis of its past successes, its financial capacity and its international connections, but no commitment. Indeed, there are striking similarities between the attitude adopted by Bain and that displayed earlier by Nomura, New York; and in my view a similar propensity to exaggerate is to be found in Mr Hadid's evidence about each. 523 In the circumstances, it might not have been surprising to hear of a conversation between Mr Hadid and Dr Burt about whether the tone of Bain's letter of 13 October should be taken as indicating that its ardour had cooled somewhat. But I am unable to accept that a conversation took place substantially in the terms alleged by Mr Hadid: particularly where, though his outline of evidence in reply referred to the letter of 13 October and had a copy annexed to it, a conversation of that nature had not been mentioned either in Mr Hadid's affidavit or in the outline.

(D) Free carried interest 524 Mr Hadid (and also Dr Gadir and Mr Egan) attributed to Dr Burt and Mr Johnston and to LCI's representatives an acceptance of the proposition that a 30 per cent free carry was achievable. 525 For Dr Burt (and Bain), the history begins with the conversation, denied by Dr Burt, which Mr Hadid claims to have had with Dr Burt on 2 September. It is referred to in par 96. Dr Burt, according to Mr Hadid, expressed the view that 30 per cent looked high and there ensued some jocular reference to TPL's views on the subject. There followed Mr Hadid's conversations with Mr Johnston recounted in par 141 and par 142. What is striking about the two accounts of those conversations is that there is not much difference of substance between them. On both versions Mr Johnston is saying that until numbers are analysed it is impossible to say what free carry might be achievable: Mr Hadid adds some examples, two of which appear somewhat extreme, which Mr Johnston denied having mentioned. Secondly, there is a contemporaneous document, written by Mr Hadid. In a fax of 27 September 1993 to Ms O'Connor, he wrote: "Cass, you understand with regards to the free carry in each licence, with all due respect, your gut feel is irrelevant. However, as we have since agreed so has Bain and Nomura, free carry will be judged purely on the business considerations. As Rowan from Bain said '50% or 20%, it is not about a figure, but the business considerations.' " 526 Thirdly, Dr Burt gave evidence that about this time Mr Hadid, in conversation with him, said that Mr Johnston had accepted that a free carry of 30 per cent was attainable. Dr Burt's reply was that he could not believe that Mr Johnston had said any such thing; he checked with Mr Johnston; Mr Johnston denied that he had said any such thing. Mr Johnston gave evidence of his conversation with Dr Burt, substantially as Dr Burt had recounted it. 527 Next, there is evidence of Mr Noah, referred to in par 138 and par 139. Mr Noah, Mr Johnston, Dr Burt and Mr Grimes agree that they met at Bain's offices on the morning of Saturday, 18 September. Mr Noah gave evidence of meeting Dr Burt, alone, on a weekday following the "Saturday meeting": Dr Burt then displayed detailed knowledge of the UCOM model and said that it supported a 30 per cent free carry and "any figure is reasonable and it's only depended on how you package it to the market." When Mr Noah's attention was drawn to the fact that Dr Burt travelled overseas on 18 September and did not return until 27 September, he suggested, somewhat hesitantly, that those who met on 18 September met also on 11 September. I have already said that I find that there was only one Saturday meeting, and that it occurred on 18 September. I do so for a number of reasons. First, all participants who gave evidence were in agreement that they met on 18 September and Mr Grimes' diary for 1993 has an entry for a meeting concerning UCOM on that date. Secondly, the confidentiality agreement was returned to UCOM, signed, only on 16 September. Thirdly, both Mr Johnston and Mr Grimes made notes on copies of the model bearing a print date "17 September", that being, on their evidence, one of the documents handed over on the Saturday. Fourthly, Mr Noah offered no clear evidence of what might have been the purpose of two Saturday meetings or of what might have been done (or handed over) on 11 September in addition to what was done (and handed over) on 18 September. Fifthly, the suggestion that there might have been two Saturday meetings emerged only in cross‑examination, only with hesitation and only on the footing that there was no other obvious basis to explain a meeting with Dr Burt before 18 September at which he was sufficiently well informed to make the statements attributed to him. In short, I am satisfied that Mr Noah's evidence about a weekday meeting with Dr Burt between 11 and 18 September is mistaken and that no such meeting took place. 528 Then there is the evidence of Mr Hadid set out at par 169, concerning a telephone conversation with Dr Burt late in September or early in October, and Dr Burt's different version set out in par 170. 529 There is also evidence of Dr Gadir. His evidence of the meeting described in pars 157, 158 and 159 began with words attributed to Dr Burt: "I'm advising Albert you guys want the 30% carriage. I believe we can achieve that, we can do the underwriting. We just have to wait for Lenfest to give us the go ahead and we can do it." 530 Dr Burt denied saying that. Neither Dr Burt's nor Mr Egan's notes of the meetings refer to it, nor did Mr Egan give evidence that any such thing was said. Cross‑examination of Dr Gadir elicited the concession that his account of that conversation in his outline of evidence did not record that statement of Dr Burt's. His explanation was: "Well, the evidence I gave here in court was obviously an elaboration of methods of that time [ie, the interview with lawyers resulting in the preparation of his outline]. It was a long time ago and it is clear to me that at the time I was asked for the written evidence, I did not recall that particular item." 531 In fact, what happened is clear enough. Dr Gadir gave evidence of a meeting in October attended by Dr Burt, Mr Hadid and (probably) Mr Egan. That is, no doubt, the meeting which other participants placed on 8 October. I have described the evidence about it in par 172. Dr Gadir attributed to Dr Burt the statement that he believed that 30 per cent free carry could be achieved so long as they had "the foundation investor signing off." Again, Dr Burt denied that. He attributed a similar remark to Dr Gadir and, to himself, the observation that 30 per cent sounded high but, in substance, it was too early to form a firm view. Mr Egan's notes do not mention the topic of free carry, nor did he mention it in his oral account of the meeting. However, the version given by Dr Gadir in his written outline is in evidence. The resemblance between it and his oral account of the late September meeting is obvious: "Albert wanted me to come up and give you some encouragement. We will do the underwriting. You're after 30% free carry. We will deliver it as soon as Lenfest gives us the green light. I am advising Albert, and am pretty clear on what is happening. Everything will work out …" 532 It will be recalled that 8 October is the day on which Mr Hadid claimed to have met Dr Burt at the Wentworth Hotel (before the meeting with Dr Gadir and Mr Egan), where Dr Burt among other things said, according to Mr Hadid, "I can tell you I could in fact justify even a little more [than 30 per cent] if I could sit with Lenfest." 533 Late October brought the conversation between Mr Hadid and Dr Burt dealt with in pars 198 to 200. Asked whether he was now moving from 30 per cent, Dr Burt replied (according to Mr Hadid) that free carry was not an issue, it would not stop the deal and that LCI and UCOM should agree on a figure. It may be mentioned, in passing, that the remarks attributed to Dr Burt are by no means obviously consistent with a firm view on his part as to what an appropriate figure was or what level of free carry the business plans would support. At about the same time, according to Mr Hadid (par 211), Dr Burt, in a telephone conversation with Mr Hadid, was asked what his position was on free carry and he replied "off the record" that Bain was not against 30 per cent but that LCI and UCOM had to reach agreement. Mr Hadid conceded in cross‑examination that the remarks attributed to Dr Burt were not included in accounts given in his affidavit and in his outline of evidence in reply. During the same period the "birthday meeting" (par 213) occurred. Mr Hadid did not recount any discussion of free carry at that meeting (in fact he gave no account of the meeting in his evidence in chief but was directed to it only in cross‑examination). He gave evidence, however, that Mr Noah was there and Mr Noah himself gave evidence of his presence. Senior counsel for Mr Hadid elicited the following evidence from Mr Noah: "Could you tell his Honour what was the substance of what was said between those people on that occasion? - Mr Hadid was querying Dr Burt in relation to his position in relation to the 30 per cent free carried interest and he referred to Turnbulls saying that Turnbulls agreed with that free carried interest. Dr Burt['s] response was, he was critical of Turnbulls' approach and critical of Turnbulls' previous dealings with their clients. Did he say anything concerning the free carried interest as you recall it? - He [Dr Burt] did say that 30 per cent could be achievable. … What else did he say, do you recall? - To the best of my memory I believe he said the words to the effect that it is reliant on various elements, one of which - and people - one of which is - being Lenfest. Did he say anything further on the subject of Lenfest that you recall? - He said words to the effect to Mr Hadid, That you have to work it out with Lenfest and inform me of the position of your united positions, so to speak." 534 Dr Burt's evidence was that Mr Noah was not present but Mr Johnston was (Mr Noah said that Mr Johnston ushered him and Mr Hadid in to see Dr Burt but did not stay for the meeting). Dr Burt's account had Mr Hadid asking about 30 per cent free carry and Dr Burt responding that Mr Hadid should not be fixated on a particular figure but should "come up with something that is able to be funded and then the free carry will be negotiated in that process." Cross‑examination of Dr Burt established that he had not, in his outline of evidence, referred to free carry as a topic discussed at that meeting. Mr Johnston gave evidence that: "Albert raised the issue of having a 30 per cent free carried interest again and I said again that we simply could not say, or I could not say, what free carried interest was available to him until we had a model and until we knew what was achievable by potential investors." 535 Shortly after those events Dr Burt travelled to the United States for the meetings in St Louis. Immediately upon his return, on 8 November, he met Mr Hadid and Ms Scott. The meeting is described at pars 263 to 266. Mr Hadid gave evidence that Dr Burt said that he could "do the 30 per cent" but the statement was qualified: the deadline was fast approaching, Mr Hadid had to come to an agreement with LCI and the licence had to be paid for. According to Ms Scott's account, Dr Burt said he had no problem with the 35 per cent (later corrected to 30 per cent) and that it did not matter what the free carry was. Dr Burt denied that those things were said; his note of the meeting does not refer to a discussion of free carry. 536 There followed the dinner on 11 November, at the Treasury Restaurant. It is common ground that free carry was discussed and that Dr Burt expressed the view that 30 per cent was unattainable. That, according to both Mr Hadid and Mr Cooper, drew a protest from Mr Hadid that what Dr Burt was now saying was inconsistent with what he had said previously. Dr Burt denied that aspect of the conversation. According to him it was a lengthy conversation, largely between himself and Mr Cooper. His account, which is consistent with the note which he claimed to have made immediately after dinner, was that Mr Cooper suggested that the licences should be valued and that free carry might be obtained based upon the valuation. Dr Burt's response to that proposition was: "… I don't think that's a plausible idea because the institutional investors will not wear a valuation that arbitrarily ascribes a value in addition to the cash on a licence." 537 Further discussion about the "premium" which Mr Hadid and his associates might expect for introducing the opportunity drew, according to Dr Burt, this response from him: "… look, you have to be realistic about these things. You tried for six months to find someone to pay the deposits, you and Hi‑Vision, and now that someone has paid you you really have to deal directly with them. I can't give you an arbitrary premium that one can promote contribution to. Lenfest are the people you have to talk to about that. … the only way to get a gift of equity - which is essentially what free carry is - is from Lenfest at the outset on capitalisation, so do your best now to get what you can but remember you won't get a second bite of the cherry if you get a good free carry then you will get a lift as the business goes on and if it is valued up by the market then effectively you will get the same lift as everybody else …" 538 By contrast with the other participants, Dr Burt was cross‑examined only very briefly about the dinner and not at all about the discussion of free carry. According to Mr Hadid (Dr Burt denied it) Mr Hadid expostulated with Dr Burt the following day on his apparent change of position. Mr Hadid's evidence about it is set out in par 307. 539 Mr Hadid's evidence of the negotiations at the Regent Hotel (denied in these respects by Dr Burt) attributed to Dr Burt a statement that Mr Hadid could not possibly ask for $US25,000,000 for licence B, that being the equivalent of 15 per cent free carry, but, on the other hand, an agreement that he would underwrite licence A on the basis of a 30 per cent free carry. 540 Finally, there is Mr Hadid's handwritten letter of complaint of 19 November, set out in par 364. Prominent among the complaints was: "Now it makes sense why you suddenly shifted from 30% Free Carry to 10% Free Carry. Why $117m licence will be valued for $90m after its payed for. …" That is a plain accusation, written shortly after the relevant events, that Dr Burt had changed his position. 541 There is also a good deal of evidence, some of it conflicting, about the attitude of LCI's representatives to free carry. According to Mr Hadid, Mr Lenfest, by the time he and Mr Hadid spoke on 29 August, was sufficiently informed to express a confident view that: "30 per cent vendor shares … are quite possible to achieve from the figures providing that we pay for the licences and use 70 per cent of the shares to raise the money that would be needed to pay for the licence fees and the operations of the licences …" 542 Mr Lenfest's evidence was that he did not hold the view, at that time, that 30 per cent was achievable. His account was that Mr Hadid told him that 30 per cent was achievable. In that, he was supported by Dr Gadir who gave this evidence about the conversation: "Mr Hadid said words to the effect, we have been talking to the institutions and to potential underwriters who have informed us that we can achieve up to 30 per cent free carried interest and we should … in fairness share that free carried on a 50/50 basis. Mr Lenfest [said], while I don't have any problem with that but perhaps we should allow for the fact that if the free carried goes below a certain amount then there is a certain protection for Lenfest interests in that regard given that we are taking the risk and putting the money in for the deposits …" 543 In cross‑examination he dealt with the matter again: "Was this topic [of] 30 per cent free carried interest something that was mentioned in the conversation with you or was it something which, as you understood it, had been mentioned in the earlier conversation to which you were not a party? - I believe it was mentioned in the conversation to which I was a party. Mr Lenfest asked a question to this effect: what if you cannot raise 30 per cent free carry in each licence? - Yes, and that was the basis on which we formulated the agreement that we did." 544 The only witness who gave evidence of any discussion of free carry involving Mr Heller or Mr Plant, during the first LCI visit, was Mr Egan. He gave evidence that he met Mr Heller and Mr Plant at the Ritz‑Carlton Hotel during the evening of 6 September. Among other things: "Stephen Plant and Don Heller said words to the effect that they were happy to continue seeking the 30 per cent free carried interest that had been agreed with Albert Hadid. They were to share equally in that free carried interest and that structure was what was effectively promoted as our structure for the financing." 545 The force of that evidence, however, was somewhat diminished by the following evidence which Mr Egan gave in cross‑examination: "Was there any discussion during the course of this evening meeting, on your evidence, of 6 September about free carried interest? - Not to my recollection. Your note, exhibit 195, does not refer to any free carried interest, does it? - No. And your recollection as to what was said at this evening meeting on 6 September 1993 is based wholly upon the content of your note, is it not? - No. In so far as you have a recollection about the content of what was discussed at the meeting, it is based wholly upon the content of your note? - That's correct. So if the note does not refer to free carried interest then you could not have any recollection of there being a discussion about free carried interest at this meeting on the evening of 6 September, right? - That doesn't follow. But you do not have a recollection of any discussion about the free carried interest apart from your note, do you? - I can't remember. … Well then, whatever else is clear, you have no recollection of any discussion about free carried interest at this meeting on 6 September, is that right? - Not to my recollection. … Did Heller and Plant at this meeting say words to this effect, that they were happy to continue seeking the 30 percent free carried interest that had been agreed with Albert Hadid, that they were to share equally in that free carried interest and that that structure was effectively promoted as a structure for the financing? - I don't recall that being said. … Well, how do you explain to his Honour why it is that you gave evidence about a discussion concerning free carry last Wednesday but you cannot recall any such discussion on that topic today? - I don't have an explanation." 546 The subject of free carry arose in the negotiations with Time Warner. All those who attended the meeting on 17 September, with the exception of Mr Hadid, gave evidence that the topic was raised at that meeting. Mr Lenfest and Mr Heller said that the reaction of the Time Warner representatives was that 30 per cent was too high. Mr Plant's evidence was that they said that Time Warner would consider no more than 5 to 10 per cent. Mr Blanks gave this evidence: "Did not the Time Warner representatives or one of them at this meeting indicate that in their view 30 per cent free carried interest was much too high? - They might have done, yes. Well, they did, did not they? - I think they did, yes. They did? - Yes. They said it was excessive? - Yes. And they said that a free carried interest of the order of 5 to 10 per cent was appropriate? - Yes. And that a free carried interest of more than 5 to 10 per cent was simply not viable? - Yes. Mr Hadid was present when those statements were made? - Yes. Did he make any response to them? - I don't think he did, no. Can you recall whether anybody else did? - I think Mr Lenfest did. What did he say as best you can recall it? - I think he said something like, well, that is what we believe at this stage is achievable and we are participating on that basis and that's what we're asking for." 547 The topic was clearly enough flagged in the "Investor Offering" prepared by Mr Heller (using UCOM figures and attaching the July UCOM information memorandum) which was handed to the Time Warner representatives: the proposal was that there would be a 30 per cent carried interest in each licence. What happened following the meeting is described in par 154 and par 155. What had occurred at the meeting was plainly sufficient to suggest to Mr Lenfest that a revised proposal should suggest a carried interest not greater than 20 per cent and that LCI and UCOM should be prepared to withdraw even from that position. The 30 per cent proposal was maintained, however, on Mr Hadid's insistence. Two other matters should be noted. During the exchange of drafts of the revised proposal to Time Warner, the difference between Mr Hadid and LCI as to what was meant by "free carry" or "carried interest" emerged plainly for the first time; and Mr Hadid's evidence that he told Mr Heller, without provoking any reaction from him, that Mr Lenfest regarded 30 per cent as achievable seems at best somewhat unlikely given the terms of the draft which Mr Lenfest had prepared and what he had written about a possible need to retreat from 20 per cent. Mr Heller's account of what was said, on the subject of free carry, between him and Mr Hadid was: "Mr Hadid said to me that he was concerned about the proposal. He specifically didn't want to propose to Time‑Warner a free carry less than 30 per cent and I said to him that I had difficulty proposing back to Time‑Warner something that they had already rejected and he said to me that I was not authorised to make any proposal to Time‑Warner that didn't have a 30 per cent free carry interest included there. I reminded him that when we left Time‑Warner Gerry said that he would be flexible and he was insistent that we propose back to them 30 per cent free carry." 548 On 21 September Mr Plant wrote a memorandum to Mr Lenfest reporting on a conversation with Mr Schwall of Time Warner "concerning his preliminary reaction to our investment proposal." There was no outright rejection, but there were three significant issues to be resolved, of which the second was as follows: "Schwall clearly stated that a 30% carried interest by UCOM and Lenfest, et. al. in licenses A & B was too high in that it would not enable Time Warner to achieve its return on investment objectives. He indicated that a 5‑10% carried interest would probably be more appropriate, although he would have a better feel after running the numbers. …" 549 In that context, Mr Hadid gave evidence of a conversation with Mr Plant (denied by Mr Plant), said to have occurred towards the end of Mr Plant's second visit to Sydney, shortly after Mr Heller's return to the United States. The conversation, as recounted by Mr Hadid, began with a discussion of a request by LCI that, for the time being, UCOM "hold back" from establishing new contacts. The conversation of which Mr Hadid gave evidence proceeded as follows: "I said, 'Well, time is running out, Steve, you know. How long can we hold back for', and he said 'Just wait til we see what happens with Time Warner and TCI, you know Don has been called back to go and see John Malone …, both Time Warner and TCI are very keen, they're showing us all the right signs, so can you just ask [Dr Gadir and Mr Egan] not to do anything yet', and I said, 'Well, from what I hear …, Time Warner is saying Don has said they are offering 5 to 10 per cent free carry, I can tell you that, you know, that won't be accepted' … . He said, 'Well, you know, Don doesn't know what he is talking about, this is my area, it's not Don's area. In any event, 5 to 10 per cent is not acceptable to anyone. I can tell you these people are very keen, just give them the chance to see what happens.' " 550 Optimism of that order seems remarkable indeed given that, although Time Warner had expressed the view that pay TV in Australia had real prospects, it had at the same time raised three major difficulties with the proposal which had been put to it, one of which was the level of free carry demanded. TCI's attitude, when Mr Lenfest and Mr Heller met Dr Malone, became clear and was unfavourable; but if it is assumed that the conversation is said to have happened before Mr Plant knew the results of that meeting, it could hardly be said, on the evidence, that Mr Plant had reason to think that TCI was "very keen, … showing … all the right signs." If one considers those surrounding circumstances, Mr Hadid's account of that conversation seems highly improbable. 551 Towards the end of his third visit, but before he was aware of Project Midsummer, Mr Plant wrote his memorandum of 25 October to Mr Heller. In it he said two things of immediate relevance; and he said them following several conversations with, among others, Bain and TPL. One was that free carry "would not be practical above the 10 per cent level." The other was: "Albert seems to take the position that unless he secures a free carry in excess of 20‑25% he will let the process cascade down and secure another party to finance the down payment (highly unlikely but felt by him to be achievable). This would create a forfeit of Gerry's deposit." 552 In the meantime, with the explicit approval of UCOM, Mr Heller approached Cox and Continental. He had meetings with them in mid‑October. Mr Lenfest's proposal to Mr Hadid in his letter of 26 October suggested, among other things, a carried interest (ie, in shares carrying no right to vote or receive distributions until other shareholders had recouped their investment) of 5 per cent and added: "I believe the above is fair and the best we can do based on our discussions with the United States cable television companies and the Australian financial institutions." 553 It was suggested, on behalf of Mr Hadid, that that letter formed an early part of an endeavour to exert pressure on Mr Hadid in order to induce him to part with his interest in the licences on terms favourable to LCI. What Mr Lenfest wrote, however, is consistent with Mr Plant's memorandum to Mr Heller, and was written shortly after the arrival of that memorandum; and on 27 October Mr Lenfest wrote on behalf of LCI to both Cox and Continental proposing a 10 per cent carried interest, on the footing that: "No distributions will be made to the owners of the carried interest until the operating investors have recouped their investments with interest." 554 What is to be made of all that? It is convenient, perhaps, to begin with LCI. If Mr Hadid's evidence is accepted, Mr Lenfest was able to agree on 29 August that "30 per cent vendor shares … are quite possible to achieve" and later gave Mr Hadid cause to be confident that he maintained that position despite the meeting with Time Warner and despite his draft proposal, incorporating provision for a carried interest of 20 per cent (from which it might be necessary to retreat). When the draft revised proposal to Time Warner was discussed, Mr Heller himself took the view - see par 155 - that 30 per cent was achievable and was prepared to accept from Mr Hadid that that was Mr Lenfest's view also. By the end of the second LCI visit, though Mr Heller apparently had become nervous about the feasibility of 30 per cent, Mr Plant remained robustly optimistic. 555 Mr Hadid's evidence is supported by Mr Egan, to the extent that Mr Egan recounted Mr Plant and Mr Heller, during the first LCI visit, saying "words to the effect that they were happy to continue seeking the 30 per cent free carried interest that had been agreed … ." But Mr Hadid's version of what was said during the conversation of 29 August is not supported by Dr Gadir, who supports, in this respect, Mr Lenfest's account. And even assuming, contrary to Mr Lenfest's evidence, that he had read with some care the information memorandum and projections faxed to him by Mr Hadid - and accepting that the evidence shows that Mr Lenfest was prepared, on occasion, to throw caution to the winds - nevertheless, it seems in the highest degree improbable that he would have expressed such an opinion in circumstances where he knew nothing of the Australian environment and, particularly, nothing about the Australian capital markets. Mr Egan's account of a conversation which he could not, shortly after he gave evidence about it, remember at all, and which finds no reflection in his contemporaneous note, cannot be given any serious weight. The written material makes it plain that, first, the reaction from potential United States investors and, perhaps later, the results of inquiries made in Australia convinced Mr Lenfest, Mr Heller and Mr Plant that nothing like 30 per cent was likely to be achieved. The written material is not voluminous, but it is consistent; and the impression it gives is not one of a sudden shocking discovery but of a state of affairs which emerged quite early and which later events consistently reinforced. I do not accept that Mr Lenfest, Mr Heller or Mr Plant ever agreed that 30 per cent free carry was likely to be obtained. 556 So far as Bain and Dr Burt are concerned, the position is more complex. Mr Hadid's account of his September conversation with Mr Johnston is consistent with his fax of 27 September to Ms O'Connor. His account of the meeting of 8 November is supported by the evidence of Ms Scott. And the handwritten letter of complaint, written after the Australis transaction was announced, is consistent with Mr Hadid's evidence that Dr Burt, having initially supported 30 per cent, later became (presumably at the Treasury Restaurant dinner) an advocate of 10 per cent only. Mr Noah's account of his meeting with Dr Burt following the "Saturday" meeting (par 527) would offer some support if it could be accepted; I have already given reasons, however, for my conclusion that Mr Noah's evidence about that meeting is mistaken. His evidence of the "birthday meeting" (par 533) is a good deal closer to the position which both Dr Burt and Mr Johnston claim to have expressed. Mr Hadid's account also has some support in the evidence of Dr Gadir about a meeting in late September or early October (par 529 and par 530). 557 On the other hand, there is, first, the evidence of Mr Johnston. There was no suggestion that he should be regarded as an untruthful witness, and I regard him as a truthful one. Nor was it suggested that his recollection, in this respect, was at fault (the cross‑examination of Mr Johnston on this point concentrated on a suggestion that Mr Johnston should have told Mr Hadid that he had not seen the latest version of the UCOM model provided to Bain). Indeed, on this topic, unlike for example the detail of a series of conversations which occurred over a relatively short period, it might be expected that his memory would be reliable. Mr Johnston's evidence was to the effect that Mr Hadid frequently asked whether a 30 per cent free carried interest was attainable and Mr Johnston told him that it was pointless to consider the size of a potential free carried interest until a set of figures was available and one could work out what was "in it" for investors. "Hypothetically everything is possible but until we see the model we do not know what can be achieved." That, of course, is substantially the same position as Dr Burt claimed consistently to have taken; and Mr Johnston supported Dr Burt's account of a conversation in which he checked with Mr Johnston an assertion by Mr Hadid that Mr Johnston had accepted the attainability of 30 per cent. Secondly, the cautious letter of 13 October was written assuming a substantially lower carried interest than 30 per cent. 558 Thirdly, and, I think, more importantly, whatever lack of interest LCI may have shown in Bain during earlier visits, and between visits, there is no doubt that Mr Plant spent a good deal of time with Dr Burt during his third visit. Mr Plant's evidence was that the views which he expressed to Mr Heller, towards the conclusion of that visit, were based on, among other things, discussions with Bain, and it would be surprising if that were not so. Nothing said to Mr Plant during his visit dissuaded him from the view that a 5 to 10 per cent free carry was the best that could be hoped for: indeed, his discussions in Australia had, he said, confirmed that view. There is no reason why, in a handwritten note sent to Mr Heller at that time, he should have dissembled or expressed a degree of pessimism which he did not feel. It would be somewhat remarkable if Dr Burt had, in discussions with Mr Hadid, taken a highly optimistic view of the achievability of 30 per cent and continued, despite occasional backslidings, to express that view but said nothing that might have dissuaded Mr Plant from a much more sober assessment. 559 Next, the view expressed by Dr Burt at the Treasury Restaurant dinner was, undoubtedly, consistent with Mr Plant's late October assessment. It would ordinarily be remarkable that he would confidently and constantly tell Mr Hadid one thing and then, without warning, firmly advocate, at a dinner attended by Mr Hadid, Mr Cooper and Mr Heller, an entirely different position. It might be said - as it was submitted - that by 11 November Dr Burt had a clear interest in bringing about the consummation of the Project Midsummer proposal and therefore in dampening Mr Hadid's expectations. Perhaps - though less obviously - it might be said that his discussion with Mr Plant shortly before the revelation of Project Midsummer was coloured by the fact that Dr Burt had already devised Project Midsummer in outline and hoped that it might proceed. But, if so, his lack of firmness the following day, as recounted by Mr Hadid, is not easy to explain; still less is it easy to explain a ready acceptance, on 8 November, that the 30 per cent could be achieved. 560 Finally, and I think significantly, Mr Hadid claimed to recall, in detail, a series of separate conversations, many of them occurring in quick succession, over a substantial period of time five years before he gave evidence. He had no contemporaneous record of his own of any of those conversations and, on occasions when others were present and took notes, no one recorded an acceptance by Dr Burt of the proposition that 30 per cent might be attained. Additionally, and I heard Mr Hadid and Dr Burt give evidence over very many days, I find very surprising the fluctuating enthusiasm with which, and the different terms in which, Dr Burt was said to have accepted that 30 per cent free carry was attainable. 561 Those matters throw great doubt on the proposition that Dr Burt agreed, at any time, that a 30 per cent free carried interest was achievable. In order to conclude with any confidence that he did not, however, it is necessary to deal with two particular matters: one is the evidence of Ms Scott, the other is the letter of complaint. It was submitted that Ms Scott's evidence was untruthful; that she was a friend of Mr Hadid and gave her evidence in a way which she believed would assist his case. The proposition which she attributed to Dr Burt (par 265) is much more extravagant than Mr Hadid's version: "… and it does not matter what the free carry is, … he said that, 'I think the market will take it.' " 562 I cannot believe that Dr Burt said that: for reasons already given, that is not at all what one might have expected from him on the morning of his return from the United States and it is, of course, completely at odds with what he said at the dinner on 11 November (when, after all, he did not need to convince Mr Heller: if the message he sought to deliver then was for anyone, it could only have been for Mr Hadid and Mr Cooper). Equally, in those circumstances, I do not accept that Dr Burt said that he could "do" 30 per cent (I accept that the reference to 35 per cent was, as Ms Scott said in cross‑examination, simply a mistake). It does not follow, in my view, that Ms Scott was an untruthful witness. I do not regard the absence of a reference to free carry in Dr Burt's notes as a reliable indication that nothing was said on the subject: Dr Burt, like the other note takers, tended to record information given by others, not what he himself said, and it would not be particularly surprising if the question of 30 per cent free carry was raised and if Dr Burt gave an answer of the general sort described by Mr Johnston. It is unnecessary, of course, to find that any such thing happened; but it might have; and if it did it might explain, taken together with the fact that Ms Scott worked in close association with Mr Hadid and his associates at the time, her recollection of what was said. Whether that is so or not, however, the evidence that Dr Burt confirmed the achievability of 30 per cent on 8 November is, in my view, so improbable in the circumstances that it is not to be accepted. 563 The handwritten letter of complaint, which I have set out in par 364, conveys a clear suggestion that Dr Burt, having previously said that 30 per cent was achievable, had withdrawn from that position and had done so because of his knowledge of, and involvement in, the dealings between LCI and Australis. It was submitted on behalf of Bain and Dr Burt that the letter of complaint should not be regarded as a genuine expression of anger and dismay but rather as an example of the deliberate use of synthetic rage in order to achieve a tactical objective: in this case, prompt payment of the $13,000,000 so that a deposit could be paid on the next bid for licence A. Certainly it is true that, after a short interval, peace was made to the extent that Dr Burt agreed to assist in obtaining a deposit for licence A. I cannot believe, however, that the letter was deliberately and carefully designed, complete with vigorous emphasis and lapses in grammar and spelling, to simulate emotions not genuinely felt. Nor do I believe that, in faxing it several times over a short period, Mr Hadid displayed calculation, not agitation. There was, no doubt, an element of calculation. The letter did not merely express rage, and its threats of retribution were conditional. They would be carried out only if Dr Burt (encouraged, perhaps, by his superiors) did not arrange immediate payment of the $13,000,000. 564 There are, no doubt, alternative ways of viewing what happened. One is that Mr Hadid felt genuinely aggrieved but was a sufficiently astute businessman to see that the wrong done to him might be turned to advantage in achieving his aim to secure and finance licence A. The other is that he accepted that the deal with Australis was proper, if surprising in the speed of its realisation, but saw in it the opportunity to pursue an advantage by pretending grievance. I find that the former alternative truly represents the substance of what happened. The latter in my view is too far‑fetched to accept. To accept it would involve finding that Mr Hadid had, on short notice, not only seen the advantage to be gained from giving an appearance of fury but had also been sufficiently skilful to produce a letter showing every sign of genuine agitation and embellished with allegations which, though known by him to be fictitious, he perceived as likely to advance his commercial objectives. To opt for the second alternative, additionally, necessarily incorporates the conversation with Mr Elliott on 18 November as part of the design and dismissing as pure invention evidence given by Mr Hadid's associates of their discussions, among themselves, of the perfidy of Bain and LCI. 565 But to accept that Mr Hadid was genuinely angry, and genuinely believed that he had been wronged, is not necessarily to accept that he was right or, particularly, that what he alleged was true. Consistently with the finding I have already made, of course, I do not accept that Mr Hadid included the allegation about Dr Burt's attitude to free carry knowing both that it was untrue and also that, therefore, Dr Burt would immediately see that it was untrue and dismiss it. It must also be borne in mind (and this is a matter to which I shall return) that neither Bain nor Dr Burt himself made any specific written reply to the handwritten letter. 566 How, then, is the making of the allegations in the handwritten letter, in those circumstances, to be reconciled with the considerations arising from the evidence, to which I have referred and which I regard as powerful, indicating that Dr Burt never accepted that a 30 per cent free carry was attainable? The answer, I think, can only lie in the fact that Dr Burt never, until, perhaps, the Treasury Restaurant dinner, actually said, in so many words, that 30 per cent was unattainable. That would be consistent with Dr Burt's own evidence (which I have not otherwise taken into account for the purposes of this discussion) and equally consistent with the evidence of Mr Johnston. Undoubtedly Dr Burt initially said that 30 per cent might be somewhat high, and it may be - as he said - that he expressed that view on later occasions as well, but he did not go further. To take as acceptance a response of the kind of which Mr Johnston gave evidence is by no means uncharacteristic of Mr Hadid's reactions to many matters and events, as demonstrated by the evidence: particularly, perhaps, in relation to the Nomura, New York affair. 567 I find that Dr Burt did not, at any time, express the view that a free carried interest of 30 per cent was attainable. I do so without relying on his own evidence. I do not accept Mr Hadid's evidence to the contrary. I should perhaps add that I see no reason to doubt that Mr Hadid believed that a free carry of 30 per cent might be attained, and he may well have argued that case with conviction. Mr Blanks, for instance, gave evidence that, on the basis of Mr Hadid's expressed views, he believed in the feasibility of 30 per cent and was prepared to dismiss more cautious statements of Mr Heller.

(E) Conclusion 568 The four matters which I have discussed in some detail lead to conclusions which may be summarised as follows. Mr Hadid gave evidence on one matter - the 30 per cent free carry - which, taking account of evidence including, of the oral evidence given by witnesses on behalf of the respondents, only that of Mr Johnston, I cannot accept. On that issue, as well as on the Nomura, New York episode and the subject of an underwriting commitment and the letter of 13 October, he gave evidence which (even if it represented his genuine recollection or view) was at best significantly exaggerated and coloured and, as to particular matters (notably, perhaps, the alleged conversation with Dr Burt following receipt of the letter of 13 October), was untrue. The Elkhatib matter represents, in my view, at best an attempt to persuade LCI that in the circumstances a settlement for $1,500,000 with Mr Elkhatib would be a good result (that which Mr Elkhatib might be held to) when it was not; and his evidence on the subject (see, for example, that quoted at par 490 and par 492) is not such as to inspire confidence. That is not an isolated feature of Mr Hadid's evidence. More generally, a number of his accounts of conversations have qualities which invite scepticism: for example, an ability to recall, in the absence of contemporaneous notes, conversations in precise and lengthy detail, and in some cases where the conversations recounted - or particular aspects of them - were not included in Mr Hadid's affidavit or outline and, on a few occasions, where the conversation emerged for the first time only in cross‑examination. His accounts of conversations, also, are notable for the attribution to other parties (as well as to himself) of an unlikely degree of extravagance of language and expression blended, at times, with incoherence. I have, in the narrative part of this judgment, recorded a good deal of the evidence which, in my view, reveals those qualities: I refer particularly to the conversations set out in pars 95, 96, 171, 191, 232, 307, 312, 339 and 340. 569 In a case in which allegations of serious wrongdoing are made against each respondent, those findings about Mr Hadid's evidence have obvious consequences for allegations which depend wholly, or largely, on his evidence.

(ii) Dr Gadir 570 It was submitted also that Dr Gadir was not to be regarded as a reliable witness. A number of matters were relied on in support of that submission. The significant matters relied on, however, go directly to what was said during the August conversations between Mr Hadid and Mr Lenfest and to the suggestion, said to have been made numerous times by Dr Gadir, particularly to Mr Heller, that Australis was a logical potential investor or "partner." It will be necessary to discuss both those matters in detail. It is better to deal with Dr Gadir's credit in those contexts.

(iii) Mr Egan 571 Mr Egan's evidence is of some importance, because he was one of the few note takers at meetings in which he was involved. It was not suggested, and there is no reason to suppose, that his notes are not genuine contemporary records. Several aspects of them, however, require them to be treated with caution. One is that Mr Egan accepted the proposition, in relation to his notes of the meeting of 10 September at Bain's offices, that they were "a mixture of your own notes of what various people said and of thoughts of your own." Secondly, Mr Egan did not record who was present at meetings; for example, if he alone met representatives of LCI, the note typically would be headed simply "Lenfest"; if he attended a meeting at which representatives of both LCI and UCOM were present, typically it would be headed "Lenfest/UCOM"; similarly, his notes of the meeting of 10 September were headed "Bain/Nomura/UCOM." Thirdly, and perhaps most significantly, usually he did not identify, in his notes, who said what. Thus, his oral evidence attributing particular remarks to particular people in most instances finds no direct support in his notes; and a number of those attributions are controversial. 572 The evidence about the meeting of 10 September is described in some detail in par 118 and the following paragraphs. There is no need to set it out again. I accept, however, the submission of senior counsel for Bain and Dr Burt that the attribution to Dr Burt of the technical and regulatory matters with which Mr Egan's notes commence is improbable in the extreme. It is both unnecessary and, I think, impossible to resolve some of the controversial attributions, but the three sets of notes taken at the meeting contain what may well be a clue to the way in which at least some should be resolved. It is notable that the Bain representatives did not make notes of those matters which Mr Egan's notes specifically attribute to Bain: for example, "Bain - want to understand all key variables" and "Bain: details of u/w background & success." There is nothing surprising about that. Nor is there anything surprising about Mr Egan's failure to note at all a matter which both Dr Burt and Mr Grimes noted quite fully, that is the description by each of the UCOM representatives of his background and role. One does not, perhaps, normally write down what one knows perfectly well already; nor, perhaps, does one normally write what one is saying while saying it. The three sets of notes all record, in slightly varying ways, what I have described as the technical and regulatory matters. The proper inference, I think, is that these were matters of which UCOM representatives (other than Mr Egan) spoke; they were, after all, those most likely to be well informed on those subjects. 573 There are aspects of Mr Egan's evidence which reinforce scepticism about his attributions and, more generally, about his account of the events in which he participated. I have already mentioned his evidence about the meeting in which, in evidence in chief, he claimed that Mr Plant and Mr Heller had "said words to the effect that they were happy to continue seeking 30 per cent free carried interest that had been agreed with Albert Hadid." A second example, in itself of no great significance to any issue in the case, arose in cross‑examination concerning a letter which Mr Egan wrote on 24 September 1993 to Mr Hadid. Its subject matter and purpose are indicated by his opening paragraph: "Further to our recent discussion regarding the choice of underwriter and financial advisor [sic] for the UCOM Group, please find below an outline of decision parameters you should utilise in the correct choice of such partners." 574 Mr Egan listed the "major underwriters in Australia"; the list did not include Bain or Nomura. There was, however, a recognition that discussions were already proceeding with Bain and Nomura: "For you to gain the maximum effectiveness from my advice on the financial structuring, I will need to be involved in your discussions with all financial parties, including Bain & Co. and Nomura Australia." 575 Mr Egan was asked whether the letter did not clearly imply that, as he understood it at the time, no choice of underwriter had been made. His reply was "not formally." A little later he said that it was implicit in the last paragraph I have quoted from the letter and in a succeeding paragraph ("any underwriting agreements should be vetted by me before execution") that Bain and Nomura had been selected to act in an underwriting role. The cross‑examiner then asked from which words the implication arose and Mr Egan conceded that he could not point to any. Then: "It is perfectly plain from the first paragraph of this letter, is it not, that you understood the choice of underwriter to be a matter for the future? - Yes. … Did you intend that the letter should mean what it said? - Yes." 576 Certainly it was recognised in the letter that discussions were proceeding with Bain and Nomura (Mr Egan had, after all, been present at the meeting of 10 September) but equally plainly he proceeded on the basis that it was still open to Mr Hadid to make a different choice; and Mr Egan in the letter expressed the view that it would be sensible at least to consider a different choice. 577 Of perhaps greater concern is the number of occasions (to one of which I have already referred) on which Mr Egan gave evidence of conversations of which he made no note at the time. For example, Mr Egan gave evidence about the meeting on Sunday, 5 September referred to in par 100. He made no note of that meeting but gave, in chief, detailed evidence about what happened and what was said. Uncontroversially, he said that a financial model was produced and discussed. He said that Mr Heller and Mr Plant: "… said words to the effect that they were happy with the changes at this point in time, that they would like to undertake a far more thorough and detailed analysis of the model, that there would be subsequent meetings to do that. …" 578 Then, he said, Messrs Wright and Noah joined the meeting and tabled "a document known as Project Koala listing." Then, according to him: "Ian Wright and Bert Noah said words to the effect, 'That this is the Project Koala listing and it was a listing that had been prepared for the Hi‑Vision Project, that it included a number of investment prospects' and they then proceeded to go through a line by line description of each prospect." 579 They discussed all the names on the list. Mr Heller and Mr Plant made comments from time to time about parties they knew, as to whether they were good or bad prospects; Mr Egan, however, did not remember them remarking on any particular names within the list. The conversation on that topic continued over two or three hours. Then: "Don Heller said words to the effect, 'That as Lenfest was in charge of the financing that this list would be their responsibility to follow up for any further financing issues.' " 580 "Everyone", said Mr Egan, "was essentially agreed with that comment." The conversation then turned to competitive issues, including MDS and cable. That, however, was brought to an end when: "Mr Heller and Mr Plant essentially said that they were aware of those issues and they didn't need a long dissertation on that topic." 581 Mr Egan then proceeded to give an account of the meeting on 6 September, described in par 101. 582 In cross‑examination Mr Egan gave the following evidence about the meeting on 5 September: "You have no note of the meeting with Messrs Heller and Plant, do you, on 5 September? - I don't recall. What time do you say you met with Messrs Heller and Plant on 5 September? - I don't recall. Was it in the morning or the afternoon? - I don't recall … The state of your recollection is without a note that you are unable to recall whether the meeting of 5 September took place in the morning, the afternoon, or the evening, are you? - If you remind me of the contents of the meeting, I'll be able to tell you when I believe it took place. Well, what happened at this meeting on 5 September? - I don't remember. … What day of the week was 5 September 1993 - I believe it was a Sunday. So nothing that you can recall of importance happened on 5 September 1993 so far as arrangements between UCOM and Lenfest is concerned? - I believe there was a further discussion about the financial model. Can you do any better than that as to what the content of that discussion was? - No. … So does it follow from that that your recollection of events in these proceedings is substantially dependent upon your notes? - That's correct … Where you do not have a note of any matter that you have given evidence about you are relying for that evidence wholly upon your recollection? - That's correct. A recollection which is, would you not agree, deficient? - No. Less than perfect? - I should imagine most recollections are less than perfect. Less than reliable? - If I have a recollection it should be reliable. Well, if you gave evidence about a discussion on 5 September, on 22 April, in your evidence in chief, but cannot recall any discussion in any detail of any meeting on 5 September 1993 today would you not agree that your recollection is, at least as to the events of 5 September, less than reliable? - No." 583 Later in cross‑examination Mr Egan said that he first saw the Project Koala list at the meeting on 6 September; but he agreed that it was not referred to in his notes of that meeting. 584 A further example may be found in Mr Egan's evidence about quite a significant matter, the topic of a drama commissioning agency, discussed on 12 November. Mr Egan's note of the meeting includes the following: "Local content ‑ Don says HBO can do better deals than AH on Australian content. ‑ AH deal on Aust content may exclude Turner, HBO etc from doing a deal." His account of the meeting, given in evidence in chief, included the following: "Don Heller then said words to the effect that whilst he had agreed with Albert at the beginning of his visits to Australia that he would have the exclusive rights to the Australian drama production or sourcing for the licences, that he believed that there would be a better program acquisition strategy if Albert wasn't in control of those rights particularly in relation to two US programmers, one I remember to be HBO, the other I don't recall. He then went on to say words to the effect that he thought it was unlikely that HBO and the other programmer would deal direct with Albert anyway." 585 He gave that evidence without reference to his note; he was referred to the note shortly afterwards, but gave no further evidence on that topic. In cross‑examination he gave the following evidence about the same meeting (he had his notes of the meeting in front of him): "Was there any discussion on this occasion about local content, what should be done about providing local content? - I don't recall. Did Heller on this occasion say words to this effect, that whilst he, Heller, had agreed with Albert at the beginning of his visit to Australia, that he, Albert, would have the exclusive rights to the Australian drama production or sourcing for the licences, that Heller believed that there would be a better programme acquisition strategy if Albert was not in control of those rights. Did he say that? - He said that they could do better deals if Albert was not involved with certain programmers. But he did not say anything about Albert and Heller having agreed at the beginning of Heller's visits to Australia that Albert would have exclusive rights to Australian drama production or sourcing of the licences, is that right? - I don't recall him saying that. If you had earlier given evidence in this case that such a statement was made on this occasion by Heller, that evidence would be incorrect, would it? - If I had said that Don Heller had made statements in this meeting regarding discussions regarding local content or Australian film production rights to Albert Hadid, in this meeting? Yes? - Probably. Probably would be incorrect? - Probably." 586 The cross‑examiner then read to Mr Egan the transcript of the evidence in chief which I have quoted. That led to the following exchange: "Was that evidence true or false? - It's true. Notwithstanding that you could not recall any evidence to that effect just a moment ago? - That's correct." 587 One further example will suffice. Mr Egan gave evidence of a meeting on 30 September. In addition to himself, those present were Mr Noah, Dr Gadir, Mr Plant and Mr Heller. There was a detailed discussion of the UCOM model. On the following day, 1 October, the same people, he said, met again. Asked whether he recalled who spoke on that occasion, he replied: "Don Heller and he said words to the effect that he was very happy with the model … That he was happy with the penetration rates utilised in the original model which showed a penetration rate somewhere around 25 per cent at the end of year five and around 40 I think to 42 per cent at the end of year 10. Bert Noah then said words to the effect that he would make the final adjustments and that that will be presented to Don and Steve early the following week." 588 What turned out to be the final version of the model was subsequently produced, and: "It was used in various discussions with prospective financiers, investment bankers, stock brokers, advisers and it was sent to Don Heller in the United States." 589 However, in cross‑examination, Mr Egan said that the first meeting in which he participated with Mr Heller and Mr Plant, after the meeting on 30 September, took place on about 5 October. He made no note of the meeting. To his recollection, there was no meeting before 5 October at which Mr Heller approved a model. After some questions and answers concerning the model, the cross‑examination proceeded: "Would it be wrong to say that after the meeting of 30 September … a meeting took place the following day concerning the model? - Not to my recollection. So it would be wrong to say that, would it? - That's correct. Would it be wrong to say that the parties who attended the meeting on the 30th … also attended a meeting … on the next day … - I don't recall a meeting on 1 October." 590 Later, the cross‑examination returned to the final version of the model: "Now, you, is this correct, did not give it to Mr Heller …? - I don't believe I gave him this document, no. And you cannot give evidence, can you, at all that it was sent to Heller in the United States? - I don't remember this document being sent to Mr Heller in the United States … Well, why was it … that you said … that the document was used in various discussions with respect to financiers, investment bankers, stock brokers and advisers and it was sent to Don Heller in the United States? - I may have been confused with the documents sent in the middle of September." 591 He finally said that the document was given to Mr Heller at the Ritz‑Carlton Hotel, fairly early in the morning of 5 October, in a "mezzanine or lounge section outside of the restaurant area." 592 Mr Egan's notes are, I think, reliable for what they actually say. I have discussed his oral evidence sufficiently, I think, to demonstrate that his interpretations of his notes are to be treated with considerable caution and that his evidence of matters as to which he took no notes cannot safely be regarded as reliable.

(iv) Mr Noah 593 I have already explained at par 527 why I cannot accept Mr Noah's evidence that there may have been two "Saturday meetings", on 11 and 18 September, or that he had the separate conversation, which he described, with Dr Burt after the meeting, which undoubtedly did occur on Saturday, 18 September. 594 Mr Noah did not take notes. He said that he did not keep a diary for 1993 or any record of meetings he attended or conversations he had. In that context, his evidence about the circumstances in which he came to be called is of some significance. He mentioned, in answer to a question in cross‑examination, that he had been asked a particular question by senior counsel for Mr Hadid in conference on the Thursday morning before he was called to give evidence. These questions and answers followed: "But prior to last Thursday, you had been asked that question before, hadn't you? - I hadn't had any dealing with any of neither Mr Hadid nor his lawyers in relation to the case before Thursday. That's just not right, is it? - It is right." 595 Mr Noah was then reminded that he had signed an outline of evidence on 22 March 1996 and that that document had been prepared by Mr Hadid's solicitors: "You signed that document in order to authenticate the truth of the statements that you had made in them, did you not? - Yes, that's the procedure. And you prepared this document after conferring with Mr Hadid's solicitors? - What do you mean, conferring with? … Talking to? - Yes. Discussing the case with them? - Yes. And what you were endeavouring to do in this document was to set out your best recollection of the events to which it related, weren't you? - Some of which, yes." 596 In summary, Mr Noah's evidence was that in early 1996 he signed a statement prepared after a discussion with Mr Hadid's solicitors. Otherwise he had not discussed the case with Mr Hadid or any of his lawyers until the Thursday before he gave evidence in April 1998. It would hardly be surprising, in those circumstances, if his memory of the detailed sequence of events were less than clear or that he should claim to recall (as he did) a number of matters of which no one else gave evidence and which were denied by other witnesses. 597 Mr Noah gave evidence of a meeting on a weekday during the first visit of Mr Heller and Mr Plant at which were present, in addition to Mr Heller and Mr Plant, Mr Noah himself, Mr Wright, Mr Hadid, Dr Gadir, Mr Egan and Mr Elkhatib. He gave evidence of where the various participants sat around the table. He said that when he entered the room there was a discussion in progress between Mr Elkhatib and Mr Heller or Mr Plant. He could not recall the detail of what was said, but the discussion was "in relation to an arrangement for success fees/introduction that Mr Elkhatib introduced to UCOM." 598 No one else gave evidence of any such event; no one else gave evidence of the presence of Mr Elkhatib at any such meeting; and Mr Heller denied ever having met Mr Elkhatib, as did Mr Plant. Mr Heller also denied having met Mr Noah during the first LCI visit. Mr Noah was taken to his account of the meeting in his outline of evidence: "Look at the sentence which appears after the date, what does it say? - Present at the meeting were Mr Heller, Mr Plant from Lenfest, Mr Hadid, Mr James Egan, Dr Simon Gadir and Mr Ian Wright. Right, and that sets out your recollection of the persons who were present at that meeting, does it not? - No, it doesn't … In this affidavit he said that you recall attending a meeting in the boardroom at James Egan's offices, do you not … and then you set out who was present at that meeting, do you not? - I did say part of, yes. There is nothing in this statement that says, 'Part of the people present at that meeting were …' - is there? - At the same time it does not say that they are the only people who were present there." 599 His explanation of his omission of Mr Elkhatib's name from those present was that there were "more than two reasons": "One of them is I was not involved with Mr Elkhatib, I didn't deal with him, as I said earlier in the UCOM business, number 2, it was none of my business and number 3, the question was never asked specifically to me by Mr Hadid's lawyers of who was specifically present in that meeting and number 4 is, as I just said, I read the outline of evidence of Mr Heller and Mr Plant and primarily I was replying to the incidents that were stated in their outline of evidence." 600 Mr Heller denied that he had ever been to the UCOM premises in Stanmore. No one else, except Mr Noah, gave evidence that he had. Mr Noah gave an account of a meeting at Stanmore attended by Mr Heller and said that Mr Heller had been to the Stanmore premises on more than two occasions. 601 The picture appeared in even sharper relief somewhat later in the cross‑examination: "Are you saying that three or four weeks ago you did not know that you would be required to give evidence in this Court? - Correct. When did you first come to learn that? - It was … on a Wednesday afternoon that I … received a phone call … from Mr Garrett to say … that could you come in to Mr Nigel Cotman's Chambers for us to have a chat and I walked in on Wednesday, 5‑ish and Mr Cotman said to me - No, I'm sorry, it could have been Tuesday rather than Wednesday - either - I think it was Tuesday and Mr Cotman said to me that we need you to go into the witness box and you will be in tomorrow morning. Do you say that that is the first occasion on which you knew that you would be required to give evidence in this Court? - Correct. That is just not right is it, Mr Noah? - It is very right." 602 I shall refer only to one other particular matter, the "birthday" meeting. Mr Noah gave an account of it which in some respects supports Mr Hadid's, though notably not as to the date of the meeting. Mr Noah said that it occurred on Dr Burt's birthday, 26 October; Mr Hadid insisted that it took place considerably later. 603 Mr Noah's evidence in chief about that matter was elicited with some difficulty. I have already set it out at par 533, but for convenience, I shall set it out again: "Could you tell his Honour what was the substance of what was said between those people on that occasion? - Mr Hadid was querying Dr Burt in relation to his position in relation to the 30 per cent free carried interest and he referred to Turnbulls saying that Turnbulls agreed with that free carried interest. Dr Burt['s] response was, he was critical of Turnbulls' approach and critical of Turnbulls' previous dealings with their clients. Did he say anything concerning the free carried interest as you recall it? - He did say that 30 per cent could be achievable. … What else did he say, do you recall? - To the best of my memory I believe he said the words to the effect that it is reliant on various elements, one of which - and people - one of which is - being Lenfest. Did he say anything further on the subject of Lenfest that you recall? - He said words to the effect to Mr Hadid, That you have to work it out with Lenfest and inform me of the position of your united positions, so to speak." 604 Mr Noah, it will be noticed, has Mr Hadid attributing to TPL the view that 30 per cent free carried interest was attainable. No one else suggested that TPL ever said that, and Mr Hadid's consistent evidence was that TPL, resisting Mr Hadid's arguments to the contrary, always maintained that the maximum attainable free carry was 20 per cent. In cross‑examination, matters became rather more confused. Mr Noah said that there was a meeting in late September or early October in Bain's offices, attended by Mr Hadid, Mr Noah, Dr Burt and Mr Johnston. He recalled that the subject discussed was free carry. "What was said about that? - And about the projections. I believe it was at that meeting when Mr Johnston was there and it was mentioned in that meeting that his comment of the numbers were not bullish enough. Who said that? - Mr Rowan Johnston and I believe that it was in that meeting that Dr Burt, and Mr Hadid was asking Dr Burt about the 30 per cent free carry and determined that Turnbull had agreed to the 30 per cent free carry and Dr Burt was critical of, he said a comment about Turnbulls and the way they dealt with their clients." 605 This, Mr Noah said, took place before the birthday meeting: Mr Johnston was not present at the birthday meeting. 606 Mr Noah was able to give evidence, I thought convincingly, on a subject within his expertise, that is, technical aspects of computer programs and modelling. Otherwise, however, I conclude that his evidence of conversations and events is, at best, unreliable.

(v) Mr Cooper 607 Mr Cooper gave evidence confidently; he recounted, substantially verbatim and in considerable detail, a number of significant conversations. There is no doubt that he appreciated the importance of the evidence he was giving: he acknowledged as much and he is, after all, a solicitor. He made notes of some matters; but he did not adopt a consistent practice of making detailed notes of the significant conversations in which he participated. He had prepared an outline of evidence and had, of course, been required, at the time he prepared it, to recall what had happened; but on most important matters his evidence was the product, apparently, of recollection aided by the preparation of his outline and by the opportunity to re‑read it, and to read other documents, but otherwise unassisted. 608 Perhaps one of the best examples of the detail with which he was able to give evidence of significant conversations is his account of the discussions at the Regent Hotel on 16 November. I have set out parts of that evidence in par 323 and par 324. But the intervening passage best illustrates, perhaps, the precise and detailed nature of the account: "Hadid said to me, 'Well, what do you think?' And I said, 'Well, John Elliott has a sound point when he says that you have certain protections in the Trade Practices Act relating to misleading or deceptive conduct and there are various other statutory and common law provisions which will prevent there being any substantial deception occurring here. I understand the dilemma [they are in], it is a commercial decision for you to make, Albert, but these are - I want you to clearly understand - extraordinarily wide releases and warranties for a share sale agreement of this kind.' Heller then left the room with Burt, Burt came back a while later, drew me aside and said, 'Martin, you've got to get Albert to be sensible about this, it's up to you and I to get this deal done, you're his most sensible adviser, you've got to persuade him not to make a sticking point over something which is just you know a drafting matter that lawyers have and if Don's got in his head he mustn't give way on it and he doesn't know Australian law and you've got to help me to get this deal through. He then left and he said, 'I'm going back to try and persuade Heller.' I was told - sorry, shortly after my arrival at the suite Dr Burt said, 'We have two rooms and Don Heller is in the other room', and he also asked me if I'd like some afternoon tea I think. I then got up from the table that John Elliott and I were sitting at, walked across the room and took Albert by the elbow so that we could have a confidential conversation. I said, 'Albert, this looks like this might be a sticking point ….' " 609 Then followed what is set out in par 324. Of course, Mr Cooper is not to be taken as purporting to recall the precise words used, but he was purporting to put in direct speech the substance of the conversation as he recalled it. And, perhaps even more than the conversation, his recollection of offers of afternoon tea and of movements into, out of and across the room, so long after the event, is striking. Mr Cooper's evidence made it clear that he was, and is, a busy man, not one who had both the leisure and the inclination, during the period between the events and the trial, to recall the events to mind and meditate on them; and his interest in the proceedings was only that of a witness. 610 It will be recalled (par 323) that Mr Cooper gave evidence that upon being told by Mr Hadid that Mr Cooper thought LCI was trying "to sell the company on": "Heller laughed and said 'No, it's not for that reason Albert, it's because you're a difficult fellow and we really want to be protected and you've got that bunch of shareholders behind you and we don't know who they are and we don't know anything about them and we want no further troubles with them and that's why I've been advised to get the broadest possible releases and warranties so that we never have to deal with any of those people in the future.' " 611 On the day after he gave that evidence the following cross‑examination took place: "Did Mr Hadid, during the course of this discussion, say something to this effect, 'Martin Cooper thinks you're trying to sell the company on', did he say something to Heller to that effect? - I didn't hear him say that - sorry, I don't recall hearing him say that. Did Mr Heller say something to this effect, 'No, it's not for that reason?' - I don't recall Mr Heller saying that. Did he say, 'It's because you're a difficult fellow and we really want to be protected and you've got that bunch of shareholders behind you'? - I don't recall that being said. Did he say something to this effect, 'We don't know who they are and we don't know anything about them and we want no further troubles with them'? - I don't recall that being said. Did he say - did Mr Hadid say, 'That's why I've been advised to get the broadest possible releases and warranties so that we never have to deal with any of these people in the future' - anything to that effect said? - I don't recall that being said but I repeat they were in another room most of the time." 612 Mr Cooper was then shown the transcript of the previous day's evidence. He confirmed that that evidence was correct. His explanation of what had happened was that he was "undertaking a very difficult cross‑examination and I forgot that piece of evidence" and: "… simply that yesterday I'm going through the events in a very ordered manner and you can get a mental picture of the people in the room and the circumstances and so on. You're jumping me all over the place, you're taking me back to issues, forward to issues, and I simply, in error, failed to recall that when Heller came into the room that conversation took place." 613 It then emerged that, though his outline of evidence included an account of the meeting of 16 November, and that when preparing the outline he did his best to search his recollection as to what happened at the meeting and as to who made what statements in relation to the possibility that the licences might be on‑sold, the account in his outline did not include the conversation between Mr Hadid and Mr Heller: "Did you forget to put it in your outline? - I don't recall. If you did not consciously omit it and you did not forget it, why is it that it does not appear in this outline? - It may well have been that it was not something which was considered necessary to include in a summary of this kind. … This conversation that you say Hadid had with Heller is central to the issues in this case, is it not? - As I now understand it. Yes; and as you understood them when you prepared this outline, that is the case, is it not? - Yes." 614 Mr Cooper's evidence of the conversation which he and Mr Hadid had with Mr Elliott on 18 November is an example of a clear and precise recollection, firmly maintained, but on particular points substantially and demonstrably wrong. The episode is referred to in par 353 and succeeding paragraphs. An almost absurd example of the precision of Mr Cooper's stated recollection was that, having given evidence in chief that Mr Hadid had interrupted and said "I'm going to sue your butt", he then gave evidence, having had his attention drawn to the way that remark was rendered in his note, that the note was a precisely accurate record: "I interrupted Hadid and I apologise. I gave evidence a minute ago that the word 'butt' was used but it wasn't and I apologise I was wrong when I said that." 615 It is not easy to accept that, nearly five years after the event, Mr Cooper could have so clear a recollection that he interrupted Mr Hadid before he uttered the word "butt" and could confidently say that the three dots in the note represented an interruption, not the omission of an indelicate word. 616 More importantly, Mr Cooper, when cross‑examined, maintained that he placed the call to Mr Elliott; that he made the call from his office in Potts Point, that Mr Hadid was in the Potts Point office when the call was made and that Mr Hadid made suggestions as to the content of the file note. He had a clear recollection of those matters. Mr Cooper was then, once again, shown his file note. When his attention was drawn to the sentence "Albert Hadid was telephoned by John Elliott" he agreed that that indicated that Mr Elliott made the call; but his earlier evidence was wrong only: "In the sense that I phoned Clayton Utz and I said in my evidence that I was connected to Mr Elliott. Now, it may well have been that he called straight back, I really don't recall." 617 When his attention was drawn to the statement in the note that Martin Cooper was "joined on the line" and it was put to him that that tended to suggest that Mr Elliott telephoned Mr Hadid in his office and that Mr Hadid joined Mr Cooper on the line, he replied: "It's not my recollection and I would be surprised if John Elliott rang Mr Hadid at his office." 618 It was put to Mr Cooper that the note suggested that Mr Elliott telephoned Mr Hadid while Mr Hadid was in his Stanmore office and that Mr Hadid joined Mr Cooper into the call while Mr Cooper was in his Potts Point office; Mr Cooper accepted that that interpretation was open but maintained that it was not what had happened. After some further questions and answers on the topic, that part of the cross‑examination concluded as follows: "What I am suggesting to you, Mr Cooper, is that this file note records that what happened is that Elliott telephoned Hadid and that Hadid in some way joined you into the telephone call by bringing you onto the line? - It's certainly possible to interpret that but it would be a nonsense if that was true. That is the natural interpretation of what is recorded, is it not? - It is an interpretation and it would be a nonsense if it was true. It is the natural interpretation of what is recorded, is it not? - I don't agree with you. And if it is right, your evidence that Mr Hadid was in your office assisting you in the compilation of your file note is just a figment of your imagination? - No, that's not a figment of my imagination." 619 The file note is set out in full in par 355. Plainly it (as does Mr Hadid's evidence) supports Mr Elliott's evidence as to the way in which the call was made, as do the telephone records of Clayton Utz. On that combination of evidence, the only possible finding is that Mr Elliott, in response to a telephone message from Mr Hadid, telephoned Mr Hadid while Mr Hadid was in the Stanmore office. That, perhaps, is as far as the evidence permits me confidently to go. Certainly Mr Cooper's note by no means clearly suggests that he and Mr Hadid were together; and the telephone records indicate that the call was made to Stanmore, not Potts Point. Neither Mr Elliott nor Mr Parshall, of course, could know, unless they were told, whether Mr Hadid and Mr Cooper were together in one place. Curiously enough, Mr Elliott's file note includes the statement "Albert told me that he was with Martin Cooper and Martin asked why I was calling Albert" and Mr Elliott accepted, in cross‑examination, that he did not know whether or not Mr Hadid and Mr Cooper were together when he rang. There is, of course, the hypothetical possibility, though it was supported neither by Mr Hadid's evidence nor that of Mr Cooper, that Mr Hadid and Mr Cooper were together at Stanmore. Be that as it may, the confident and detailed evidence given by Mr Cooper must be wrong. If Mr Cooper was indeed at Potts Point, then Mr Hadid could not have participated (as Mr Hadid said he did not) in the preparation of the file note. If Mr Cooper was at Stanmore, then he did not dictate his file note in the manner in which he said he did. One way or another the following evidence cannot be right: "When you concluded that call, did you do something? - I immediately picked up the dictaphone machine which sits on my desk beside the phone, in Hadid's presence dictated a file note of that conversation with exactly the words I had used as accurately as I could. I then said to Hadid, 'Have I accurately reflected the conversation?' He said, 'No, you did not - you have dictated the words 'Elliott asked had you seen the release' and he did not say that.' So I went back over the tape and I deleted that phrase and he also corrected one other minor matter which I cannot now recall but it was of the ilk of whether I said, 'Good afternoon' or 'Hello', or something of that nature. I took the tape to my executive assistant and asked her to type it immediately and to bring two copies of the draft into my office, which she did, in about ten minutes and I gave one to Hadid and said, 'Now read this very carefully, it is essential that we get this conversation word for word.' He read it through and said, 'That's what I recall', and I then initialled a copy and put one in the file. I gave two copies to Hadid and he left the office shortly thereafter." 620 Then there is the highly contentious meeting of 11 November at Sly & Weigall's offices. It is discussed at par 271 and the following paragraphs. The substance of an important aspect of Mr Cooper's account is set out in par 276. Mr Cooper made a contemporaneous note of one aspect of that meeting. It records three remarks attributed to Mr Heller, one relating to a concern that "if we take A the scoundrels at PMT will get B", the second relating to agreement to be obtained from an underwriter to the free carry and the third referring, apparently, to a proposal that licence B be taken up "at time of passing up A." In cross‑examination of Mr Cooper, it emerged that his outline of evidence, though it described in some detail the conversation at the meeting on 11 November, did not include anything corresponding with the passage of his evidence in chief quoted in par 276. Mr Cooper accepted that he knew when he prepared the outline that representations concerning Australis were significant in this proceeding; but he "forgot to put it in." However, his response to the suggestion that Dr Gadir did not make a comment about Australis attributed to him was "He absolutely made that statement" and "Mr Heller made the response that I attribute to him." Mr Cooper added: "… in the process of refreshing my memory over the last five - four to five weeks about this matter, the details of that conversation have come into cognition in my mind. What was it that brought them into cognition in your mind? - Trying to recall those long ago events as I sat one Sunday afternoon reading the statements of various people, re‑reading my statement and trying to remember what happened." 621 I readily accept that recollection, even recollection of events which occurred long ago, may be prompted by reading documents about the events and by reflection. What is remarkable, however, in the absence of recollection at the earlier time when the outline was prepared (and Mr Cooper conceded that he took considerable care in its preparation) is its revival in such a precise form as to date, place and content and so clearly as to permit the degree of certainty expressed by Mr Cooper in his evidence. 622 There are other matters as well which must impair confidence in the accuracy of Mr Cooper's evidence. He accepted that he played a significant role in drafting the initial letter of complaint to LCI. But in circumstances where the very act complained of was a transfer to Australis of the company entitled to licence B, the letter makes no reference to any representation which might have been taken to suggest that no deal with Australis was in prospect. Finally, there is the evidence about the particular representations said to have been made on 16 November. I have recorded it at par 321 and the succeeding paragraphs. Mr Cooper said, without prompting, that the possible on‑sale of licence B (or the company entitled to it) "was a matter of central concern to me." Mr Hadid (according to Mr Cooper) shared his concern, but Mr Cooper could not say whether it was a central concern for Mr Hadid. Mr Cooper gave evidence that he did not trust Mr Heller. Nevertheless, he was content to rely (and that his client should rely) on oral statements, not recorded in writing in any form and in circumstances where the agreement under negotiation included an "entire agreement" clause purporting explicitly to exclude reliance on any prior representations. 623 In my view, the sum of those matters must lead to the conclusion that Mr Cooper's evidence cannot be accepted as reliable.

(vi) Other witnesses called by Mr Hadid 624 Submissions were made that Mr Wright should not be accepted as a reliable witness; it was also suggested that, in some respects at least, Mr Blanks' evidence was unreliable. As with Dr Gadir, however, it is preferable to defer consideration of those submissions. I have dealt with submissions directed to Ms Scott's credit in the context of the evidence regarding free carry. No submissions were advanced attacking the credit of Mr Porter, Mr Purves or Ms Keating.

(vii) Response to attacks on credit of Mr Hadid and witnesses called by him 625 I have already referred to a brief and formal submission that, where there are conflicts of evidence, the evidence given by witnesses called by the applicant should be preferred. Submissions were also made - I have referred to some of them - as to particular aspects of Mr Hadid's evidence and submissions by counsel for the respondents about them. It was submitted that surrounding circumstances and other evidence, together with the inherent probabilities, supported the substance of at least several aspects of Mr Hadid's account of the late August and early September conversations with Mr Lenfest. I have dealt with particular submissions made about the arrangements with Mr Elkhatib, the Nomura, New York episode and the 13 October letter from Bain. On the question of Mr Egan's notes and his evidence about conversations recorded in them, senior counsel for Mr Hadid submitted that the substantial correspondence between the three sets of notes of the 10 September meeting at Bain's offices suggested that Mr Egan's account of that meeting might safely be relied upon, as might Mr Hadid's evidence about it. Submissions were made about the credibility of Ms Scott's account of her telephone conversation with Dr Burt on 20 or 21 November (par 371). Senior counsel for Mr Hadid, finally, made vigorous submissions in response to a contention of senior counsel for Bain and Dr Burt that the evidence in Mr Hadid's case represented a "collaborative concoction" by Mr Hadid and the witnesses whom he called. It is noteworthy, however, that apart from those matters, no submissions were made in response to the very serious, sustained and particular attacks by counsel for the respondents on the credit of Mr Hadid and a number of those whom he called. Indeed, as I have recorded, Mr Hadid's case appeared to shift radically when closing submissions were made. While no allegations were abandoned, his primary case, on which closing submissions of his senior counsel concentrated, was one based on non‑disclosure of the events in St Louis and their sequel; and, for the purposes of that case, it was said that I might assume, to a very large extent, the accuracy of evidence given for the respondents and I need not resolve conflicts of evidence. That approach enables me the more confidently to reach the conclusions I have indicated.

(i) Mr Lenfest 626 Three matters, relating to important factual issues, were pressed in relation to Mr Lenfest's credit, together with several "miscellaneous matters." Those in the former category had to do with the representation, said by Mr Lenfest to have been made to him by Mr Hadid on 27 August "that MDS was not a competitor because they were restricted to narrow casting and cannot be in broadband, pay TV until as I recall 1 July 1997." The second related to Mr Lenfest's evidence that Mr Hadid, during the same conversation said: "That if we put up the deposits, that they were looking for a US operator to be involved and that if they had a US operator involved and if we put up the 5 per cent deposits that Nomura would be able to complete the financing required and that our deposits would be returned." and that, in the conversation in which both Mr Hadid and Andrew Price participated, Andrew Price said: "Mr Lenfest, I represent Nomura in Australia, I will confirm to you that Nomura will be in a position to complete the financing and your deposits will be returned." The third relates to the circumstances in which it was agreed that Mr Hadid would be given a drama commissioning agency.

(A) MDS 627 It may be said immediately that Mr Hadid knew that, under the Broadcasting Services Act, MDS broadcasting might commence after 31 December 1994 even if no satellite services had commenced. Mr Hadid equally must have known that that fact was readily discoverable and that LCI would in due course discover it. It may therefore be accepted that it would be very surprising if Mr Hadid in fact made the representation attributed to him. Mr Lenfest, it was said, lied when he gave evidence attributing that representation to Mr Hadid, and consistently was compelled to give evidence, equally untrue, that he did not read the information memorandum faxed to him by Mr Hadid shortly before they spoke for the first time. That was so because, if Mr Lenfest had read the document, he would have seen several references to the transmissions of the satellite service's signal, additionally, via MDS; and this would have alerted Mr Lenfest to the possibility that MDS broadcast transmissions might have been able to commence before July 1997. Certainly it is true that Mr Lenfest's evidence about whether the document remained unopened, whether he looked at it or whether he glanced through it fluctuated slightly. He conceded that he must have glanced at it sufficiently to observe that it incorporated projections. When senior counsel for Mr Hadid returned to the topic some days later, he drew Mr Lenfest's attention to the paragraph in an affidavit which he had filed in which he said: "I did not read the information memorandum until after this conversation." The cross‑examination continued: "Now I remind you that the information memorandum in question is the lengthy document faxed to you on the occasion of your first contact with Mr Hadid. My question to you is this, is it the case that you never read the information memorandum or that you read it after you had had some early conversation with Mr Hadid? - I never read the information about the MDS or the fact that it was prior - it related to the Hi‑Vision offer until these proceedings. Do I understand that you read some parts of the information memorandum? - And I didn't read the projections. Did not read the projections? - No, I didn't. I've been thinking about what I did see. I did look at the biographical information on Gadir and Hadid, but I didn't go into any detail, I didn't have time. Could I point out to you that in your sworn affidavit you asserted that you had read the information memorandum. In your evidence to my learned friend, or perhaps to me, but certainly in the course of your evidence, you stated that you had not ever read the information memorandum. Your present evidence is, is it, that you read parts? - I think I meant by that that I never read all of it because most of the information you were referring to I never did read." 628 That might be of some weight if there were no other evidence that Mr Lenfest in fact believed, following the conversation, that MDS could not compete before July 1997. There is, however, an important piece of evidence which indicates that those in the LCI camp may well have believed that MDS could compete only from 1 July 1997 but had later come to understand that that belief might be wrong. In a list headed "master to do" prepared by Mr Heller, according to his evidence, shortly before his second visit to Australia, Mr Heller listed as one of his items (under a heading "Turnbull"), "Discuss MDS." When asked what that was a reference to, he said: "Prior to the visit I had asked Martin Przybylski to obtain that information that we spoke about a moment ago, and this was on the list to follow up with Martin to get information on the MDS." The evidence of "a moment ago" was this: "After my first visit I didn't place any emphasis whatsoever on MDS and, in fact, didn't even mention MDS in my trip report because I considered it inconsequential. During September I believe I saw a number of documents that made reference to MDS which caused me to believe that what I was told that MDS couldn't compete with the satellite until July 1997, might not be totally accurate. I contacted Martin Przybylski and asked him to go specifically to the Act and research that point and provide me with what the Act said about the ability of MDS to broadcast. And I asked him specifically to go into the Act and show me what the Act said." 629 On 30 September 1993, Mr Przybylski faxed to Mr Heller, at the Ritz‑Carlton Hotel, a copy of s 96 of the Broadcasting Services Act with a handwritten commentary indicating that MDS could compete after 31 December 1994. Mr Przybylski's covering note read: "I've checked the point you raised re MDS. I'm afraid the news is bad. I enclose a copy of the relevant section." 630 There is no reason to suppose that that, or the request for advice, was other than genuine. What it indicates is, of course, that Mr Heller might be expected to regard as "bad news" the discovery that MDS could compete from 31 December 1994. There is no suggestion that Mr Heller was, at that time, concocting a case against Mr Hadid. Then there is the advice given by TPL to Mr Plant, summarised in a fax to Mr Lenfest, on 26 October. It was suggested that Mr Lenfest might consider raising with Mr Hadid the issue: "… that he apparently (unbeknownst to us) advised you and Don Heller that MMDS would not be able to deliver pay television services until July 1997." 631 In other words (if the submissions on behalf of Mr Hadid are correct) Mr Plant gave Mr Turnbull untrue information so that Mr Turnbull could advise Mr Lenfest to threaten legal action against Mr Hadid on a basis which Mr Lenfest (and equally, of course, Mr Hadid) would have known was false. There is, I think, only one conclusion that can be reached. I find that Mr Lenfest, following his late August conversations with Mr Hadid, believed that MDS could not compete until July 1997. It does not necessarily follow that Mr Hadid made the representation attributed to him. That is a question which arises on LCI's cross‑claim, and I shall defer further consideration of it. What does follow, however, is that this attack on Mr Lenfest's credit fails; and, that being so, the evidence about the extent to which he read, or looked at, the information memorandum has, in my view, very little significance. What it illustrates, I think, is confusion rather than prevarication.

(B) The "underwriting" representation 632 This is a considerably more difficult issue. It arises from the first conversation between Mr Hadid and Mr Lenfest, in which Andrew Price participated, and concerns, principally, what Andrew Price said to Mr Lenfest but also what Mr Hadid said. Andrew Price did not give evidence; there was evidence, however, that during 1995 he spoke with Mr Hadid's solicitors. 633 Mr Hadid gave evidence that he first met Andrew Price a few days before his initial conversation with Mr Lenfest. Andrew Price, as well as Wasserstein Perella, had played some part in the Hi Vision bids. What he said to Mr Hadid (according to Mr Hadid) was encouraging: "And what was the substance of that discussion? - What he said was, Albert if you can find the deposits, I will underwrite the balance of the licences and he said, we are very keen to underwrite. I think he mentioned then that he is talking to Bains and he is happy to work with Turnbulls. They are the things we discussed … Was it something that you found to be quite exciting? - Yes sir, I did. … Was anything else said on this occasion about Nomura's willingness to underwrite? - He said we will do it with Bains. He said if you can find the deposits, you know, I would be happy to underwrite the balance of licences with Bains. I recall that." 634 Mr Hadid did not recall anyone else being present when Andrew Price said those things to him. He said them twice, once at Nomura's offices and a second time on the telephone. Shortly, however, a note of caution intruded: "What caused it to change? - I called Mr Price and asked him could I please have what he said to me in writing, because I thought then I can fax that to all the interested parties. I said Could you please [write] to me in fact if I find the deposits you would underwrite the licences - the balance of the licences - with Bains. And there was a discussion about that and he said he would need some time. He said 'Well I need some time to do that' and then I realised that Andrew wasn't really able to deliver what he was really talking about." 635 Mr Hadid formed the view that Andrew Price's enthusiasm had outrun his ability to deliver. Nevertheless, he enlisted Andrew Price's aid during his conversation with Mr Lenfest (Andrew Price was, however, a second choice: Mr Hadid first attempted to contact Ms O'Connor and only telephoned Andrew Price when that attempt failed: a fax sent by Mr Hadid to Ms O'Connor the following morning is consistent with his evidence that that was so). Mr Lenfest's version of what occurred was that Mr Hadid said to him that, if LCI provided the deposits and a "US operator" were involved, Nomura would be able to complete the financing and the deposits would be returned. Shortly afterwards, Andrew Price joined the conversation and said: "Mr Lenfest, I represent Nomura in Australia, I will confirm to you that Nomura will be in a position to complete the financing and your deposits will be returned." Andrew Price agreed to confirm that in writing. 636 Mr Hadid's evidence in chief is set out in par 44. According to Mr Hadid, both his and Andrew Price's statements were a good deal more cautious than Mr Lenfest would have them. Mr Hadid's accounts given in cross‑examination varied somewhat from the account given in chief, but his evidence was consistently that Andrew Price did not commit Nomura to an underwriting or to a promise that Nomura would complete the financing and that deposits would be returned. Mr Hadid accepted that Andrew Price agreed to send a letter to Mr Lenfest; the letter, however, was to be about the Australian pay TV industry generally, not about underwriting. 637 Andrew Price prepared a note of conversations with Mr Hadid, of the discussion which he and Mr Hadid had with Ms Combs before the conversation with Mr Lenfest, of the conversation with Mr Lenfest and of later events. The section of the note dealing with the conversation with Mr Lenfest is as follows: "• Lenfest had only just received the 40 page fax from Albert and had not had a chance to go through it in detail. However, he expressed great interest in the opportunity. • I explained about Nomura's involvement with Wasserstein Perella and Hi Vision and how close they had come in securing the deposit. I also explained that we were aware of strong investor interest from media companies and institutions. • Accordingly we would be prepared to participate in an underwriting of the balance of the funds required for a license by an experienced United States cable TV operator. • Albert asked him if he was prepared to consider providing the deposit (US$7.2m) required on Monday for a 15% stake in one license, 2% in the other license, joint control of the operating company and some means of being able to get his money back. • Lenfest explained that he did not have the cash available on Friday afternoon. He mentioned he had a substantial bank line of credit available and good relationships with a number of banks including Provident National (?), Toronto Dominion, LTCB and others. • He explained that he was leaving the city at around 6.00 pm for the weekend and asked us to fax him a proposal on the most attractive terms possible. • I mentioned the possibility of Wasserstein Perella providing bridging finance for him which he was interested in pursuing either with them or someone else. • Albert said he would send him a fax as soon as possible." In cross‑examination, Mr Hadid accepted that the third point "summarises substantially perhaps" what Andrew Price said. 638 The note does not record a promise to write a letter. I think it is clear, however, and I find, that Andrew Price did promise a letter. Mr Hadid's evidence was that Andrew Price was among those who were at the Stanmore office during the morning of 28 August. There is a handwritten fax in evidence from Andrew Price to Mr Lenfest on a UCOM facsimile form, but undated. It says: "Sorry for the delay - both UCOM's and my letter will be faxed within 10 minutes. We don't have your home telephone number - could you please call us." 639 More significantly, a letter was in fact prepared on Nomura letterhead, dated 28 August and signed by Andrew Price. It was addressed to Mr Lenfest. It is unnecessary to set it out in full. It included a statement that: "Nomura Australia is confident that the Australian capital markets will be able to provide the funds required to comply with the federal Government's requirements for 65% local content as a percentage of the total funds required to establish and operate a national satellite pay television service." That was said to be based on successful public offerings by other media companies, confirmation by a number of "major investors" that they were willing to commit funds and certain other events. The letter proceeded: "On the basis of these discussions and our knowledge of the Australian marketplace, Nomura Australia Limited is willing to consider an underwriting position for the balance of the funds required from Australian investors once the deposit monies have been raised and the licence allocated to acceptable parties. We would envisage working jointly with another Australian merchant bank stockbroker. In this regard we have had initial discussions with Bain and Company (part of the Deutsche Bank group) about the possibility of jointly arranging and underwriting the funds. Nomura Australia Limited has the support of our international network in this regard especially Nomura International plc in London, Nomura Securities Co Ltd in Tokyo and Wasserstein Perella in New York." 640 Mr Lenfest's evidence was that he did not receive that letter. There is no evidence that it was actually sent. There is, however, evidence of Mr Hadid that, on 28 August, he saw a letter on the letterhead of Nomura Australia addressed to Mr Lenfest; he accepted that the letter which I have quoted "looks like" the letter which he saw. He gave the following evidence: "But Mr Price showed you a letter which he said, did he, that he proposed to send to Lenfest? - He did, yes. Did he give the letter to you? - … I'm not sure, I can't recall, so I don't think but he might have. Did he give the letter to you for the purpose of its being dispatched to Mr Lenfest? - I saw the letter but I don't … believe he said to me, 'Albert, send this letter to Mr Lenfest.' I mean I don't know. … Did you send it to Mr Lenfest? - No, I didn't. Do you know whether Mr Price sent it to Lenfest? - I know from Mr Lenfest's conversation with me that he hadn't." 641 That is a reference to a conversation between Mr Lenfest and Mr Hadid during Mr Hadid's visit to the United States in mid‑September. Both agree that there was a conversation in which Mr Lenfest mentioned that he had never received the letter promised by Andrew Price. Mr Lenfest gave evidence, which Mr Hadid denied, that Mr Hadid had said that he had been given the letter but had not sent it on because it was in the wrong form. 642 On 31 August Andrew Price wrote a letter to Mr Hadid congratulating him on securing the funds to pay the deposits and referring to Nomura's enthusiastic support of the possibilities for pay TV in Australia and its work with Hi Vision. He continued: "As a result, we were in a good position to be able to assist both yourself and Turnbull and Partners in order to try and ensure the success of the venture and in particular to help give some confidence to your partner that the balance of the funds can be raised." 643 Andrew Price went on to inquire whether Mr Hadid might be willing, despite the lack of a formal agreement, to pay "costs incurred to date on this assignment and … a small success fee in recognition of our contribution." It may be noted in passing that the terms of that letter are more than faintly echoed in Mr Hadid's evidence about what Andrew Price said to Mr Lenfest, set out in par 44. For whatever it may be worth, it seems that Andrew Price did not have authority to commit Nomura to an underwriting, to a promise that it would be "in a position to complete the financing" or, indeed, to the proposition which he attributes to himself in his note of the conversation with Mr Lenfest. On 1 September he wrote to his superiors reporting that: "Nomura has been asked if it is willing to participate in underwriting the funds required to acquire the two licences from the Government and to establish Pay Television in Australia." 644 After setting out various background matters and some suggested terms of an underwriting, he concluded, under the heading "Action Required": "An indication of Nomura International's willingness to work on this unique opportunity. The details of the financial structure of the licence holders is still to be clarified. However, at this preliminary stage it is important to know whether in principal [sic] we can become involved in the underwriting of the funds required." 645 There is no evidence that any such indication was ever given. 646 Mr Lenfest was cross‑examined at some length about these events. He accepted that the letter was something which he had not only required but a matter to which he attributed importance; he accepted that the letter signed by Andrew Price dated 28 August was totally at variance with what he claimed to have been told by both Mr Hadid and Andrew Price, but maintained that he had not received the letter. He was asked several questions about his reaction to its non‑receipt. His evidence on that topic appears from the following exchange: "Could I just understand; what is the explanation for your non‑activity in relation to the letter on Monday when you got there and found that it was not there? Is it that you had signed up with Mr Hadid and simply determined that you would go ahead with the deal, take a chance, as it were or is it that you completely forgot about the fact that Mr Price had promised you a letter which hadn't apparently arrived? - During the course of negotiations it was an oversight. On Monday the letters were signed and we had agreed to convert return of deposits [into] equity. So, it didn't seem as pressing at that point. Well, you see, you say that at the time you were discussing the matter with Mr Hadid you had forgotten, that is on the Saturday, you had forgotten, had you … that you were to receive a letter? - Yes. The promise, of course, was that a letter would arrive within ten minutes. May I ask what your state of mind was when Mr Hadid's letter arrived but the other did not during that period of time that you were still at the office prior to leaving on Friday afternoon? - It was an oversight. That was around 5 o'clock. I left shortly thereafter to go home and then drive to the shore and I just didn't pursue it. May I take it that the matter never resurfaced in your mind during the time that you were talking to Mr Hadid on the Saturday? - That's true." 647 Wasserstein Perella had been informed by Andrew Price that the deposits had been paid with funds provided by LCI. On Monday, 30 August Mr Biondi, an officer of Wasserstein Perella, wrote to Mr Lenfest a congratulatory and promotional letter. The tenor of the letter, and the fundraising exercise in which Wasserstein Perella expressed a wish to assist, were not what would have been expected if funding to complete the acquisition of the licences was already in place or underwritten. The impression thus conveyed to Mr Lenfest was confirmed in a telephone conversation between Mr Lenfest and Mr Biondi on 1 September. In any case, by 2 September Mr Lenfest was clearly disabused of any notion that there were arrangements on foot which would fund the acquisition of the licences and return LCI's deposits. On that day he wrote to Dr Malone, mentioning a number of possible United States investors in the licences and seeking to enlist Dr Malone "to help me interface with Rupert and Turner and Liberty." The letter began: "I need your help on this one! Have entered an Australian wild west maze. Have to move quickly or possibly lose deposit of $7.2 million (US). Either crazy move or real opportunity. Will depend on how handled. Non‑Australian's [sic] can own up to 35% of either A or B license with each individual company limited to 20%. Balance I am told can be raised through Australian public offering - (according to Nomura and Banes [sic] and Turnbull). Would avoid need for Packer involvement." 648 Mr Lenfest's evidence was that he finally understood that no underwriting was in place when Mr Heller and Mr Plant told him, during their first visit to Sydney, that none was. He then, he said, telephoned Mr Hadid (on 8 September) and complained that he had been misled. Mr Hadid's response, according to Mr Lenfest, was rather indirect: merely that he would offer every support and assistance. 649 Mr Heller's evidence was that he had been told by Ms Combs that Bain and Nomura had agreed to do an underwriting. He said that he passed that information on to Mr Lenfest. Mr Lenfest's recollection was that he may have been told about Nomura but he could not recall being told about Bain. Neither Mr Lenfest nor Mr Heller recalled that Mr Lenfest told Mr Heller of the conversation with Andrew Price. Nor could Mr Lenfest recall telling Mr Plant about it. Mr Plant, however, recalled being told by Mr Lenfest that Nomura had agreed to underwrite. Neither Mr Heller nor Mr Plant believed, given the somewhat inchoate state of the transaction, that a committed underwriting could be in place. Certainly there is nothing in any of their evidence, in any note by Mr Heller or in the reports written following their first visit by Mr Heller and Mr Plant, which suggests that they arrived in Australia expecting to find an underwriting already agreed or that they were surprised to discover that that was not so. It is also, perhaps, of some significance that the TPL letter of 26 October to Mr Lenfest (par 219), while it discussed the possibility of legal action on the basis that a false representation had been made about MDS competition, did not canvass the possibility that the "underwriting" representations by Mr Hadid and Andrew Price might also give rise to a claim: all that was suggested was that the promise, in the letter of 29 August, to return the deposits or issue equity, might be enforced (or, at least, that a threat might be made to enforce it). Of course, that letter resulted from a conference with Mr Plant, not Mr Lenfest. 650 Numerous aspects of those events are extremely odd and it is difficult to make findings about them with any degree of confidence. If Mr Lenfest was given a clear assurance that funds would be available from which his deposits would be repaid and he regarded that as an important assurance, it is surprising that that would have simply slipped his mind during the weekend negotiations and that it did not occur to him to wonder about it until after the deposits had already been paid. Other matters which were discussed and then did not appear in the first version of the 29 August letter did occur to him and were taken into account; but the availability of funds from (or arranged by) Nomura did not. Again, if he thought the Nomura promise to be a matter of some importance, it is surprising that he did not make particular, and memorable, mention of it in his discussions with Mr Heller and Mr Plant before they left for Australia and, particularly, did not specifically ask them to find out what Nomura's position was. By the time he spoke to Mr Heller and Mr Plant, of course, not only had he received no letter from Andrew Price but he had other reason to think, or at least suspect, that there was no underwriting. It is surprising also that when Mr Lenfest suspected, and then clearly knew, that there was no underwriting and - as he said - he considered that he had been deceived, he made what apparently was only a mild protest which Mr Hadid was able easily to deflect, followed by an equally mild conversation about the missing letter in mid‑September. 651 On the other hand, Mr Hadid would hardly have invited Andrew Price's participation unless he had reason to think it would be substantially encouraging; and Mr Hadid had, on his own evidence, reason to think that Andrew Price might speak more expansively than he would write. Andrew Price's note of the critical part of the conversation ("accordingly we would be prepared to participate in an underwriting of the balance of the funds …"), though it does not fully support Mr Lenfest's account (which had Andrew Price saying that Nomura would assume full responsibility for finding the balance of the funds), does reflect a substantial degree of commitment: considerably more than the version given by Mr Hadid. It is highly unlikely that the note was more positive than the utterance; the reverse is considerably more probable even though, as the later correspondence demonstrates, the statement recorded in the note may well have exceeded Andrew Price's authority. Furthermore, I think the submission must be accepted that Andrew Price is to be regarded as in Mr Hadid's "camp" and that therefore any inference, favourable to Mr Lenfest, about his participation in the conversation may be drawn more confidently as a result of his unexplained absence as a witness. That applies equally to the letter. The letter dated 28 August offers a degree of commitment considerably less than both Mr Lenfest's version of the conversation and Andrew Price's own note of it. On the evidence, and in the absence of any evidence from Andrew Price, it is appropriate to find, and I do, that the letter was neither sent nor received. Given Andrew Price's presence at Stanmore on the morning of 28 August and given Mr Hadid's evidence about seeing the letter, the likelihood, I think, is that it was not sent because, in Mr Hadid's view, it was not good enough; the only alternative explanation is oversight, and that, I think, is highly improbable. 652 I may anticipate my discussion of the LCI cross‑claim by saying that, on that evidence, I am not satisfied that the "underwriting" representations, as alleged, were made. I am not, however, prepared to reach any conclusion, simply on the basis of this episode, adverse to Mr Lenfest's credit. What was said was, I think, less non‑committal than Mr Hadid suggested; it may well have been - I think probably was - less definite and precise than the recollection of which Mr Lenfest gave evidence. That, I think, is as far as I need to go, and as far as I can go with any confidence.

(C) Drama commissioning agency 653 This is a topic of some importance. It was said to bear on Mr Lenfest's credit though, as will be seen, his direct involvement in what happened was slight indeed. It formed the basis of substantial attacks on the credit of Mr Heller and Dr Burt. Submissions about it by senior counsel for Mr Hadid formed a major part of the foundation of a more general submission that the "mediation" at the Regent Hotel was a sham. In essence, the submission was that LCI was well aware of Mr Hadid's ambitions as a film maker and of the strength of his wish to act as agent for the prospective satellite pay TV operation in the commissioning or acquisition of films which would enable it to meet the Australian drama quota. It is said that, knowing those things, LCI had, before the Regent Hotel negotiations began, decided that it would give Mr Hadid a drama commissioning agency; both Mr Heller and Dr Burt knew that that decision had been made; they proceeded nevertheless with a charade, involving a pretence that LCI was unwilling to grant the drama commissioning agency followed by a "negotiation" at the end of which LCI pretended reluctantly to concede. LCI's feigned reluctance was, it was said, a device to induce Mr Hadid to agree to a lesser price for the shares in New World than he would otherwise have been prepared to accept. 654 It is necessary to deal briefly with some background. There is no evidence that any strong wish of Mr Hadid to have a drama commissioning agency emerged with any clarity until late October 1993. Mr Lenfest accepted that he looked at the biographies incorporated in the information faxed to him before his first conversation with Mr Hadid. Mr Hadid's biography included: "Mr Hadid's interest in film, television and video is long lasting, stemming from his involvement in the making and presentation of films at Sydney University. Albert also lead [sic] training sessions in film script writing, production and direction and was commissioned to produce documentary films." During the second conversation between Mr Hadid and Mr Lenfest, in which Dr Gadir was also a participant, Mr Hadid according to Dr Gadir (par 67) "made a particular point of his interest in local film production in Australia and said … 'UCOM would like to be involved in that and especially myself personally, I would like to be involved substantially in that local content and this should become part of our agreement' ." He claimed that Mr Lenfest said that he "had no problem" with that. Dr Gadir was alone in giving evidence of such an exchange, and Mr Lenfest denied it. Certainly it was not reflected in the agreement of 29 August. Then, according to Mr Hadid (Mr Lenfest denied it), Mr Hadid on 3 September 1993 told Mr Lenfest that he became involved in pay TV "[because] a long time ago I had a dream when I was at university to become a film maker … so I always had a dream one day hopefully I'll make a big difference to the Australian film making industry and what attracted me … is the local content that is imposed by the Australian government in these [pay] TV licences" - to which, according to Mr Hadid (Mr Lenfest again denied it), Mr Lenfest responded with a somewhat expansive promise about the help he would give to Mr Hadid in distributing his films in the United States. Mr Heller gave evidence that on 4 September the 10 per cent local content requirements were one of the topics he discussed with Dr Gadir and Mr Mackay; but there was no suggestion that it was then said that the making or acquisition of films, in order to meet the requirement, was a matter in which Mr Hadid was particularly interested. Again, there is no doubt that the local content requirements were discussed at the meeting at Bain's offices on 10 September. All the note takers mentioned it. Again, no evidence was given that Mr Hadid referred to his "dream", but Mr Johnston, asked in cross‑examination whether he remembered discussion about local content issues, replied: "Specificially; Albert was very focused on local content." 655 The matter did not resurface until 28 October. On 25 or 26 October Mr Lenfest put to Mr Hadid a proposal, which he confirmed by the fax dated 26 October set out in par 221. Mr Hadid's counter‑proposal of 28 October (par 225) incorporated, as one of the "issues which will need discussion", "an involvement for our companies in the Australian content of programming the Pay channels." There was no evidence that that was elucidated in any discussion between that time and 10 November and the proposal is not mentioned in any correspondence between UCOM and LCI during that period (the course of the negotiations is discussed in pars 252 to 259). But, within LCI, it had not wholly disappeared from view. On two copies of Mr Hadid's letter of 28 October Mr Heller wrote separate notes against the paragraph suggesting discussion of an involvement in Australian content: on one he wrote "new issue" and on the other "big issue w/Albert." There is no evidence, however, of when he wrote the second of those notes or what he had in mind when he did so. But by 4 November Mr Heller plainly had given the matter some thought and, apparently, had decided that there might be merit in offering Mr Hadid something in relation to Australian content. So much is evident from his suggestion to Mr Lenfest (par 252): "Give him a bone re film content mentioned in 28th letter but only verbal on that point. The cleaner the better." 656 There is no doubt that the drama commissioning agency became a serious issue during the course of Mr Heller's third visit, beginning on 10 November. I have recounted at par 269 the conversation of which Mr Hadid gave evidence and the acknowledgment attributed by Mr Egan to Mr Heller, at a meeting on 12 November, that he had indeed agreed, considerably earlier, that Mr Hadid would have "the exclusive rights to the Australian drama production or sourcing for the licences" (par 283). Both the terms of the conversation recounted by Mr Hadid and Mr Egan's attribution were denied by Mr Heller and I accept his denial. There is no evidence of earlier conversations in which any such agreement was reached with Mr Heller; there is no sign of any such agreement in any of the written material; Mr Heller's reaction to the proposal in the letter of 28 October was that it was a "new issue"; and Mr Blanks reacted similarly (with a note "(new issue)") on Mr Hadid's "draft for discussion only" sent to Mr Heller on 11 November (par 271). Mr Egan's attribution finds no support in his contemporaneous note. 657 It is clear, however, that the question of Australian content, and a drama commissioning agency, was discussed on 12 November at the meeting between Mr Heller, Mr Hadid and Mr Egan. There is Mr Egan's note; Mr Heller's note records: "Albert questioned film producing. I said it could not be the way he structured. Would listen to proposal." Mr Heller's evidence (consistent with both notes) was that at the meeting: "… Albert indicated that it was his long time dream to be involved in film making in Australia, to prop up the Australian film industry and to be part of it and was proposing that in whatever arrangement we came to he had a position with respect to drama or film producing. Whatever he was specifically saying to me didn't make commercial sense which is why I indicated, as I've said here in the file note, that I said it couldn't be the way he had it structured." The next "draft for discussion only", presented by Mr Hadid on 13 November (par 285), made Mr Hadid's proposal explicit: "Albert Hadid will be the commissioning agent for acquiring to fulfil the ten percent (10%) local content required of the drama programming." And the "backgrounder", presented at the same time, made it clear that Mr Hadid attached great importance to that aspect of the proposal: "In regard to local content, we are prepared to give you the right to appoint a director to my company which will commission the work on the local content. I am confident I can and will achieve a good working relationship with any programmer you appoint and still deliver quality Australian product at commercially favourable rates to your satisfaction. The appropriate safeguards can be built in. You are aware that without this involvement I would not have achieved any of my personal objectives and the result would be a very empty achievement which I dread to think about." Mr Heller's evidence was that on 13 November he told Mr Hadid and Mr Cooper, among other things, that LCI was "prepared to deal" with the first three items of the proposal in Mr Hadid's draft, the third of which was the drama commissioning agency. 658 Mr Heller's report sent to Mr Lenfest that evening is consistent with his account of the conversation. He reported also that he had indicated to Mr Hadid that the drama commissioning agency was one of two items "… we could not commit to as we may not be in control of the company …." His appended comparison of the current positions of LCI and Mr Hadid (as reflected in the exchanges of correspondence and documents) included the note, plainly referring to Mr Hadid's third item: "Programming - could screw up programming contracts." By that he meant, as he explained in his evidence, that "… by entering into a programming agreement with Mr Hadid, you could screw up your programming contracts with the Hollywood people because of Mr Hadid's lack of commercial experience in film producing." 659 There, as between Mr Heller and Mr Hadid and more generally as between LCI and UCOM, the matter rested when the negotiation commenced at the Regent Hotel in the evening of 15 November. Mr Heller had said at his morning meeting with departmental representatives in Canberra that LCI's efforts to bring in investors had been unsuccessful because, among other things, of "the non‑professionalism of the group or more appropriately their inexperience along with a desire to fulfil personal agendas rather than providing pay TV ie Albert on film and being a director of Pay TV." 660 In summary, I find that, as between LCI and UCOM, the drama commissioning agency proposal emerged clearly only at the end of October and during the November discussions. By 15 November Mr Heller understood that the proposal was that Mr Hadid, or one of his companies, would be appointed by the licensee as its agent to acquire the required Australian drama. He understood that this was a matter which Mr Hadid regarded as important. He was prepared, for himself, to consider it and he reported as much to Mr Lenfest; he had qualms about the proposal, however, because he feared that its adoption would create difficulties with the Hollywood studios. So much emerges from what Mr Heller wrote and there is no reason to think that it does not accurately reflect his attitude at the time. 661 Dr Burt's evidence, given in the context of the Regent Hotel negotiation, was that he had previously discussed with Mr Hadid his movie aspirations. Dr Burt's evidence, like Mr Heller's, was that the negotiations at the Regent Hotel took as their starting point Mr Hadid's 13 November discussion draft. Dr Burt gave this evidence: "We moved on to the next point and I said, point three, this is your long held dream, Albert, to join a commissioning agency, and he said, yes, he said, this is absolutely integral to the deal. No way I'll be doing a deal without a commissioning agency." 662 Mr Hadid claimed that he would have talked to Dr Burt many times about his ambition to be a film maker. The evidence is silent as to the occasions on which discussions of that kind took place. I accept, however, that, by whatever means he acquired it, Dr Burt had by 15 November a clear understanding that Mr Hadid had ambitions to be a film maker and regarded the drama commissioning agency as one of the most important points to be negotiated. 663 There is no evidence of any conversation, before the Regent Hotel negotiation, between Dr Burt and Mr Heller (or any other LCI representative) about Mr Hadid's ambition or about his proposal that he have a drama commissioning agency. Particularly, neither Mr Heller nor Dr Burt gave evidence of any such discussion during the days immediately preceding the negotiations; nor was it put to either of them that they had such a discussion. 664 There are considerable differences between the three accounts of the negotiation at the Regent Hotel, but there is also considerable common ground. It is common ground that once the mediation agreement had been signed Dr Burt met Mr Hadid, ascertained and discussed his position and then spoke to Mr Heller, obtained and discussed his reaction, then returned to Mr Hadid and so on until agreement was reached. There is no doubt that Mr Lenfest was consulted by Mr Heller, particularly towards the end of the process, and Dr Burt may have been involved in some of those consultations as well. All participants agree that the process continued until early the following morning, 16 November. Equally, there is no dispute that the starting point for the discussions was the list of six points in Mr Hadid's notes of 13 November. Mr Hadid did not take notes of the course of the negotiation. Dr Burt made some notes, though none throw any particular light on the discussion of the drama commissioning agency. Mr Hadid and Dr Burt agree (though there is some divergence as to the precise order of events) that Mr Hadid said, and Dr Burt accepted, that the drama commissioning agency was of great importance to him. Dr Burt and Mr Heller are in agreement that at first Mr Heller refused to concede the drama commissioning agency; Dr Burt and Mr Hadid agree that when that refusal was communicated to Mr Hadid he responded to the effect that the drama commissioning agency was essential and that Dr Burt undertook to "go in to bat" for him on that point. Dr Burt and Mr Heller agree that Dr Burt ultimately persuaded Mr Heller that he must concede the drama commissioning agency. Mr Heller took notes on which he made a running record of the earlier rounds of the negotiations on each point and, so far as they go, the notes support his account of the negotiation. His notes also make it clear that he was keeping track of the difference, in financial effect, between exercising the Meridian option and doing a deal with Mr Hadid. 665 The principal complicating factor (to which I referred in par 315) is that there is a significant difference between the evidence of Mr Heller and that of Dr Burt about the way in which they ascertained what the terms of a drama commissioning agency might be. Each said that it occurred to him during the course of the discussions that he did not know what a drama commissioning agency involved. Mr Heller's evidence was that, when he was pressed to concede the agency, he decided that he ought to find out. He telephoned Mr Cosser, who was in Paris; Mr Cosser dictated to him over the telephone outline terms of an agency; Mr Heller wrote them down and they were ultimately incorporated as an annexure to the share sale agreement executed the following day. Mr Heller's handwritten version of the terms is in evidence and it does in fact correspond with the terms and conditions annexed to the signed agreement. Dr Burt's evidence was that he, when the negotiations were substantially advanced, telephoned Mr Cosser and asked for outline terms. Mr Cosser faxed some terms to him. He gave a copy to Mr Heller, who substantially copied them in his own hand. Mr Cosser's fax is in evidence. It is, however, stamped as having been sent from Paris between 10:15 and 10:16 on 15 November. If that time stamp is correct and if "10:15" means 10:15 am, then it would have arrived not towards the closing stages of the negotiation but at about 8.16 pm. The mystery is compounded by the circumstance that Mr Heller's account from the Regent Hotel indicates that a telephone call was made from his room to Mr Cosser's number in Paris during the course of the evening of 15 November; but, though the account does not state the time at which the call was made, its position in the sequence of calls recorded suggests that it may well have been made earlier rather than later in the evening. Additionally, Mr Heller's account from the Intercontinental Hotel, for the previous evening, records a lengthy call to Mr Cosser's number. Mr Heller accepted that he must have telephoned Mr Cosser on the night of 14 November, though his evidence was that he could not recall doing so. He also claimed not have seen Mr Cosser's handwritten version of the agency terms at any time before this proceeding was commenced. 666 Relying on the difference between the two accounts, the time stamp on Mr Cosser's fax, the similarity between the terms in the fax and the terms as written out by Mr Heller and the circumstance that Mr Heller had telephoned Mr Cosser on 14 November but claimed not to remember doing so, senior counsel for Mr Hadid submitted that what purported to be a process in which Dr Burt vigorously took the part of Mr Hadid and overcame Mr Heller's reluctance to concede a drama commissioning agency agreement was in fact a sham. Mr Heller's earlier call to Mr Cosser combined with the arrival, earlier than claimed by Dr Burt, of Mr Cosser's fax indicated that Mr Heller and Dr Burt wished, before the negotiation commenced, to obtain appropriate terms for a drama commissioning agency; Mr Heller, with whatever authority he needed from LCI, had already decided to concede the agency and Dr Burt knew that he had; Dr Burt, contrary to what he said to Mr Hadid, did not need to exercise any persuasive powers upon Mr Heller. They agreed that the true position would be concealed from Mr Hadid and that Dr Burt would pretend to attempt on his behalf to overcome Mr Heller's opposition, for the purpose of inducing Mr Hadid to part with the New World shares for a lesser sum than he would otherwise have done. Mr Heller copied Mr Cosser's fax in order to conceal from Mr Hadid where the terms had come from. 667 That submission, in my view, faces a number of difficulties. Principal among them is that it was not put either to Mr Heller or to Dr Burt. I have already mentioned that it was not suggested to either of them that they had discussed the drama commissioning agency proposal before the evening of 15 November and neither gave evidence of such a discussion. In fact, no element of the hypothesis on which the submission was based was put to Dr Burt; his attention was not even drawn to the time stamp on Mr Cosser's fax. Mr Heller's attention was drawn to the existence of Mr Cosser's fax, which he said he did not see before or during the negotiation; he was also asked about his conversation with Mr Cosser on 14 November, which he said he could not remember. But it was not put to Mr Heller that he had from the outset been prepared and authorised to concede the drama commissioning agency, or suggested to him that he had so informed Dr Burt. Whatever the limits of the rule in Browne v Dunn (1894) 6 R 67, there is an obvious unfairness, in my view, in giving effect to an hypothesis, on which those involved were given no opportunity to comment, put for the first time in closing submissions and not previously foreshadowed. This is, in my view, a case clearly falling within the third aspect of the rule in Browne v Dunn referred to by Hunt J in Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation [1983] 1 NSWLR 1 at 23. 668 The evidence of Dr Burt and that of Mr Heller on the topic cannot both be wholly correct. But that, by itself, does not lead far: incomplete recollection, given the pace of the events and the lapse of time, is hardly a matter for surprise. But Mr Heller's evidence that he did not see Mr Cosser's fax to Dr Burt is not, I think, disproved by the similarity between the two versions. The substance of the two sets of terms is much the same, but there are differences - for example in the order in which the terms are stated and in some of the language used - which are, I think, difficult to explain by reference to a theory that Mr Heller was merely copying but making what he saw to be a few minor improvements along the way. One example will be sufficient. Mr Cosser's version has a condition (6) as follows: "6) SAFEGUARDS: ‑ RIGHT TO AUDIT ‑ SET PRICES IN ADVANCE ‑ POSSIBLE BOARD SEAT ON AGENT'S COMPANY ‑ STANDARD PERFORMANCE CLAUSES" Mr Heller's version has a version of that as condition (10): "10) Other: standard commercial rights will apply including audit rights, price controls in advance and position on board seat [sic] of agent company if requested." The documents are consistent with an hypothesis that Mr Cosser supplied substantially the same thing twice, once by telephone to Mr Heller and once by fax to Dr Burt. But that, like the hypothesis of senior counsel for Mr Hadid, was one on which neither Mr Heller nor Dr Burt had an opportunity to comment. As became evident during oral argument on this topic, it is possible to speculate almost endlessly. For example, Mr Heller knew, and it is likely that Dr Burt at least suspected, that a drama commissioning agency was a topic that would be raised in negotiations. It would not be at all surprising if either or both of them thought that it would be a good idea to find out what such an agency might entail; either might have thought that Mr Cosser would be a good source of information. It is possible that Mr Heller's memory (and, for that matter, Dr Burt's) is at fault and that he spoke to Mr Cosser about a drama commissioning agency earlier than he recalls. Then again, the stamp put on the fax by Mr Cosser's fax machine might have been correct or incorrect. How is one to choose between the possibilities which are open? Why is the hypothesis propounded on behalf of Mr Hadid - involving, as Dr Burt's counsel pointed out, serious charges of impropriety - appropriate to be reflected in a finding made even on a simple balance of probabilities? 669 After all, it was not suggested that the reluctance expressed by Mr Heller, and recorded by him in his contemporaneous notes and messages, was not genuine. It was not put to him that his reluctance had dissipated, nor was any suggestion made as to why it should be taken to have done so. And there was no suggestion that Mr Heller's note of the progress of the negotiation represented, in any respect, a record of pre‑arranged moves. In other respects - for example, resistance to getting a right to appoint a director of the licensee company - Mr Heller's preference plainly was to limit LCI's need to deal with Mr Hadid in the future. It is not in the least surprising that Mr Heller's continuing preference was that Mr Hadid should not have a drama commissioning agency. In short, a necessary foundation of the submission made on behalf of Mr Hadid, that the hypothesis on which it was based should have been put to Mr Heller and Dr Burt, was lacking and, in any event, there is otherwise no sufficient foundation for it in the evidence. There is no sufficient basis for a finding that the negotiation of the drama commissioning agency was a sham. It follows that what happened, on 15 and 16 November, in relation to the drama commissioning agency should not be taken as reflecting poorly on the credit of Mr Heller or Dr Burt - or, a fortiori, that of Mr Lenfest. 670 Other questions arise in relation to the Regent Hotel negotiation. I shall deal with them later in these reasons. The drama commissioning agency aspect only was relied upon specifically in relation to credit.

(D) "Miscellaneous" matters 671 Senior counsel for Mr Hadid relied upon a number of other matters for his attack on Mr Lenfest's credit. I shall deal with them in turn, commencing with the more significant of them. • Was Mr Lenfest prepared to offer Mr Hadid $15,000,000? 672 Dr Burt gave evidence that during a lengthy conversation with Mr Hadid, late in the course of the Regent Hotel negotiation and after Mr Heller had at first rejected the proposal that Mr Hadid have a drama commissioning agency, Mr Hadid finally stated his minimum requirement in an exchange which Dr Burt recounted as follows: "…eventually Mr Hadid said to me that 'look, in the interest of getting a deal done, I get the drama commissioning agency, I'd take 15 million Australian dollars.' I said 'are you sure?' He said 'Yes.' I said 'You'd be happy with 15?' He said 'Yes' reluctantly, 'I'd like more, this is worth so much more than this, these guys are going to make billions but I want to get on with the A and I'd take 15." Dr Burt, according to his evidence, then spoke to Mr Heller who agreed to the drama commissioning agency but said that LCI would pay only $7,500,000. Burt saw Mr Hadid again and, after some discussion: "He said, 'Well', after a long period of time he said, 'Well, I would take 12 and a half million, my absolute rock bottom, but I'd prefer 13.' I said, 'Okay, if I get that, will you do the deal?', and he said, 'Yes.'" After discussion on the telephone with Mr Lenfest, Mr Heller agreed to $13,000,000. Thus final agreement was reached. 673 Mr Hadid's version is somewhat different. He recounted the following conversation with Dr Burt: "I said 'Wayne, what is your honest advice, what would be the best price we could ask for?' and he said 'I'd say, if you ask me, $12.5 million' and I said 'you're saying $12.5 is the best?' and he said 'It is under the circumstances.' I said 'Look, give me 12.5 but I would like 13.'" He proceeded to remind Dr Burt of other matters: "Then I said 'Look Wayne, all we need to do is we need to negotiate the Drama Commissioning Agency, we need to negotiate the other elements which are franchising and leasing, I need to ensure we get those into place. …" Dr Burt, according to Mr Hadid, reported reluctance on the part of LCI to give Mr Hadid the drama commissioning agency; ultimately, however, it was agreed, as was the price of $13,000,000. 674 Mr Heller's evidence was considerably more brief and less detailed than Dr Burt's. He was referred to his notes: "Do you see down the bottom of document there's a reference to 15 Hadid? What's that a reference to? - At that point of time when they were requesting $15 million I was calculating what the cost of paying $15 million and proceeding with that as a consideration versus the consideration of walking away and going [sic] a deal with Brown. What was the $15 million asked for? - Sometime during the late evening on Monday the 15th. That was in response to my offer of the 6.5 plus 1. What was your response to the $15 million offer - Was not acceptable. I was willing to come to the 12.5 then subsequently with Mr Lenfest's instructions moved to the $13 million." 675 Mr Lenfest's account of his conversation with Mr Heller was as follows: "Heller said to me that Albert was being very difficult in trying to reach a purchase price for the shares of New World and I said Don - as I recall he said that the price was $13 million - and I said 'well, Don, don't go further because we have now learned that the bid will cascade to a lower bid and that Rodney Price has an option on it. So do what you think is fair but if it goes any further, come home." 676 Mr Lenfest later repeated that evidence: "… my instructions to Heller was anything above 13 million come home. We knew that the licence would cascade to a lower amount, to 104 million instead of 117." 677 It was not suggested to Mr Lenfest, in cross‑examination, that he authorised - or would have authorised - $15,000,000, or any sum greater than $13,000,000. He agreed that he had authorised the drama commissioning agency; he denied that it was within Mr Heller's authority, without Mr Lenfest's approval, to offer "other benefits of a kind not cash." 678 On 15 November, apparently shortly before midnight, Mr Elliott received a copy of Mr Heller's handwritten version of the terms of the drama commissioning agency. At about midnight - Mr Elliott and Dr Burt are in agreement about this - Dr Burt gave Mr Elliott instructions for the preparation of a draft document. Mr Elliott's notes record, among other things: "Sale immediately $1.00 Further aggregate payment on licence being granted - to go into escrow - [on what basis] (not for the shares to Albert on [sic] $15m. Goodness knows tax consequences." Mr Elliott prepared a draft sale agreement in accordance with the instructions. It included a provision for payment to the shareholders of $15,000,000. Attached to it was a printed version of Mr Heller's drama commissioning agency terms. Mr Heller had a copy of that document. He made some notes and wrote some suggested alterations on it. He did not alter the provision by which, in accordance with Dr Burt's instructions, the shareholders would receive $15,000,000. A copy of that version of the document was faxed - on Mr Heller's instructions, as he accepted - to Mr Cosser. Somewhat later, no doubt when final agreement had been reached, a further version of the document was prepared which expressed the amount payable as $13,000,000. That document was sent to Mr Lenfest; there is no evidence that he received any earlier version. 679 Dr Burt's evidence was that his instructions to Mr Elliott were given in circumstances where he thought he had discovered Mr Hadid's real position and where he thought that agreement on that position was likely. He maintained, however, that there had been no such agreement; the matter had not been settled; and he had not been given instructions by Mr Heller, who was prepared to agree to $15,000,000, to "chisel another $2,000,000" from Mr Hadid. 680 Mr Heller similarly denied that he was prepared to agree to $15,000,000: "Well, is the position which had been reached by midnight or shortly thereafter that you had on hand an offer from Mr Hadid of $15 million which were prepared to accept if you could not do better? - Not to my recollection. It was an offer that was put to us, a document was prepared but I don't recall being willing to accept $15 million … You see, could it be that the position by that time was that you sent Dr Burt back with instructions that you would take the 15 but do his best to reduce the sum involved? - No, not at all. I was at the other end of the spectrum. I was at the point of 12.5 and didn't want to go above that and only [on] Mr Lenfest's instructions did we go to 13." Again, Mr Heller denied that his instructions to send the earlier draft to Mr Cosser were given in circumstances where he was prepared to accept $15,000,000. 681 Although it was contrary to Mr Hadid's evidence, cross‑examination of the witnesses called by the respondents, particularly Dr Burt, proceeded on the basis that the proposal that $15,000,000 be paid for the shares in New World came from Mr Hadid at an advanced stage in the negotiation and was conveyed to Mr Heller by Dr Burt. That was the evidence of both Dr Burt and Mr Heller and it is consistent with Mr Heller's notes. I find that that is the way in which that sum of money was introduced into the negotiation and that it was part of a position that had two elements, the other being the drama commissioning agency. The only reason to suppose that LCI was prepared to pay $15,000,000 is the existence of the first draft of the sale agreement, on which Mr Heller had written notes but without changing the amount and which, on his instructions, had been sent to Mr Cosser. But I accept the evidence of Mr Elliott, which supports that of Dr Burt and is in turn consistent with Mr Elliott's note, that the instruction to prepare the document came not from Mr Heller but from Dr Burt. Dr Burt offered and maintained an explanation which cannot, I think be dismissed as inherently improbable and Mr Heller maintained that he did not accept a price greater than $13,000,000 and accepted that price only on the instructions of Mr Lenfest. The evidence that Mr Heller discussed the position with Mr Lenfest, towards the later part of the negotiation, was not disputed. Nor could there be any doubt that the decision was Mr Lenfest's to make. And, while Mr Lenfest was questioned about Mr Heller's authority to offer collateral benefits, there was no challenge, in cross‑examination, to his evidence that he authorised Mr Heller to offer no more than $13,000,000 and instructed him, if that was not accepted, to "come home." In those circumstances, I do not accept the invitation to find that LCI was prepared to pay $15,000,000 or to base any conclusion adverse to Mr Lenfest's credit on his denial that that was so. • Mr Lenfest's assertion that his first knowledge of Project Midsummer was gained at Pottstown on 28 October 1993 682 I have described the evidence at par 216 and par 217. The submission was that I should prefer Dr Burt's evidence and should treat Mr Lenfest's denial as a matter relevant to an assessment of his credit. There are no contemporaneous notes of any of the relevant discussions, though Dr Burt's diary for 26 October contains a pencil note "3.30 Steve Plant" beside which there is written in ink "Ritz‑Carlton Hotel" and underneath, also in ink, "Albert" (Dr Burt gave evidence that he spoke to Mr Hadid on the telephone, and then met him, shortly after his meeting with Mr Plant). Dr Burt believed that Mr Johnston was with him when, as he said, he met Mr Plant (Mr Johnston's evidence was that he was not). He recalled having with him a document listing benefits of the proposed Project Midsummer and he was able to give a lengthy and detailed account of what was said. 683 It was submitted on behalf of Bain and Dr Burt that Dr Burt's account was to be accepted. It was unlikely that Dr Burt would delay speaking to Mr Plant until either late on 26 October or on the morning of 27 October. On the other hand, Mr Plant, though prepared to concede the possibility that he met Dr Burt on 26 October (he did not recall such a meeting) was quite clear in his evidence that his first introduction to the Project Midsummer proposal happened at the meeting on 27 October. Equally, Mr Lenfest and Mr Heller were clear in their evidence that they heard about the proposal for the first time when they met Mr Plant at Pottstown. It would be somewhat strange if Mr Lenfest, Mr Plant and Mr Heller all had the same, mistaken recollection about when Mr Plant first mentioned the prospect of Project Midsummer to either Mr Lenfest or Mr Heller. Equally, there is no apparent reason why any (let alone all) of them would think it advantageous to lie about it. Mr Lenfest's proposal to Mr Hadid, confirmed in his fax of 26 October, had its origin in Mr Plant's discussions with Mr Turnbull at a time when undoubtedly the prospect of Project Midsummer had not been revealed to LCI. On any view, when Mr Heller spoke to Mr Hadid on 27 October - and did not mention Australis - all that he could have known was that Dr Burt had suggested an outline of a possible transaction which had not been considered by either of the proposed parties to it. There is no doubt, of course, that later negotiations between LCI and Mr Hadid took place in circumstances where LCI was aware, but Mr Hadid was not, of Project Midsummer. I am inclined to think that the combined recollections of Mr Lenfest, Mr Heller and Mr Plant are correct and that of Dr Burt incorrect; but the matter has, in my view, no bearing on the credit of any of them. • "His denial of significant involvement in settling the … press releases" 684 The reference is to the press releases announcing the 29 August agreement. 685 This, in my view, is a matter of no significance at all. Mr Lenfest volunteered, in his evidence in chief, that he had commented on a draft of the press release. He said, and Mr Heller in substance agreed, that Mr Heller had the principal carriage of the matter. A number of the drafts of the release are in evidence, including the draft on which Mr Lenfest recorded his comments. There is no reason to doubt the evidence of either Mr Lenfest or Mr Heller on this topic. • Mr Lenfest's evidence of payment of the licence A deposit for Century with no documentation 686 I have described between par 376 and par 384 the history of Century's acquisition of an interest in (ultimately, full ownership of) licence A. It is undoubtedly a somewhat tortuous and curious history. One of the more curious aspects of it is Mr Lenfest's (or LCI's) provision of the deposit of $4,000,000 on the basis, according to Mr Lenfest, that it was a loan to Century, without any documentation. Mr Lenfest had, however, caused LCI, at the end of August, to invest a substantially larger sum in a venture controlled by Australians of whom he had no prior knowledge, armed on any view with only the most sketchy of information and on the basis of a simple letter agreement. It is perhaps rather less surprising that he should informally lend $4,000,000 to a substantial United States cable television company which he knew well. A good deal of the evidence about the transactions by which, ultimately, Century acquired licence A was confused, notably Mr Plant's evidence and that of Mr Lenfest. Mr Lenfest, clearly, had no recollection of the detail. The following exchange is typical: "Perhaps you can tell us what your recollection is? - I advanced those funds at the request of one of - either Heller or Plant, but I assumed it was for the benefit of Century putting the deposit in but they told me that Century needed a board meeting and there would be delay in getting the deposit in and would I advance the funds and Century not Hadid would repay. My question was, knowing that it would used by Mr Hadid … ? - I didn't know that … for the purpose of financing the deposit? - that's not my recollection." 687 But there can, I think, be no doubt on the evidence that Mr Lenfest in fact put the money up. Nor is there any serious doubt that it was applied in payment, following the settlement on 3 December, of the deposit on licence A. There is no evidence that suggests that the payment did not come for that purpose via Century. However vague or confused some of the evidence may have been and however odd some aspects of the transaction may appear, the fact undoubtedly seems to be that Mr Lenfest indeed advanced $4,000,000 without documentation and I can see no reason to doubt that he advanced it to Century. That, after all, seems rather more probable than any suggestion that he might, in reality, have advanced it to Mr Hadid (perhaps in some disguised form) or to yet another Australian company of which he had no knowledge. In short, I cannot draw any conclusion from this episode adverse to Mr Lenfest's credit. • Mr Lenfest's denial that he assumed any initial or substantial role in obtaining finance 688 This point has to do with the way in which bank finance was arranged, ultimately for the acquisition of licence B (par 230). It is sufficient to say about this that I have considered the evidence to which senior counsel for Mr Hadid referred and in my view it does not bear the character attributed to it. Mr Lenfest's consistent position was, as I understood it, that he had some involvement initially and a greater involvement, as well as a more detailed knowledge of the course of negotiations, in late October. • Other matters 689 There were three matters. 690 The first related to Mr Lenfest's evidence about the possibility that he took notes of the telephone conversation he had with Mr Hadid while he was at Ocean City. The point, in my view, has no substance. Mr Lenfest did not recall making notes; he accepted that he might well have done so; he maintained that, if he did, the notes no longer existed. 691 The second point was described as "the unusual way he gave evidence in chief on an important conversation with Hadid." This had to do with evidence about a conversation, while Mr Lenfest was at Ocean City, in which Mr Hadid introduced Ms O'Connor, with whom Mr Lenfest subsequently spoke, followed by a later conversation the same day with Mr Hadid and Dr Gadir. All that is "unusual" about the evidence (and I am not sure that it merits that description) is that Mr Lenfest and counsel were for a time at cross purposes as to which of the two conversations was under discussion, and what was said during each conversation. 692 The third matter related to Mr Lenfest's knowledge of Mr Packer. The criticism was that Mr Lenfest gave evidence that he had never heard of Mr Packer until Mr Hadid mentioned him, whereas Mr Packer's name had come up in the conversation with Ms Combs and Mr Packer received "substantial mention" in Mr Lenfest's handwritten note of 2 September to Dr Malone (par 647). The former point - that Mr Lenfest had heard Mr Packer's name in the conversation with Ms Combs - is correct, but hardly significant, given the close proximity in time of the two telephone calls. In the letter of 2 September Mr Lenfest assumed that Dr Malone would know who "Packer" was. He wrote of possible "non‑Australian" investment up to the maximum amount allowed, supplemented by a public offering in Australia, and commented "Would avoid need for Packer involvement." Later in the letter he commented, "Big question is whether we can avoid equity/control of Packer by going for Australian public offering of 65% of A + B." Mr Lenfest's evidence was that that was based on what Mr Hadid told him. There is no obvious reason to doubt the correctness of that. Nor do I find it possible to see any reason why Mr Lenfest, who accepted that he knew who Mr Rupert Murdoch was, would have thought it significantly in his interests to deny knowledge of Mr Packer. The evidence makes it quite clear that Mr Lenfest's prior knowledge of the Australian media (whether or not he had heard of Mr Packer), and media regulation, was minimal. I see no reason to disbelieve Mr Lenfest's denial.

(E) Conclusion as to Mr Lenfest 693 In summary, I do not accept any of the particular submissions made in support of the attack on Mr Lenfest's credit. It does not follow, of course, that he was not in some respects confused (in some cases, as I have indicated, he undoubtedly was) or that his memory was always reliable; or, for that matter, that he never recalled matters in a light more favourable to LCI than the probable reality (the evidence about the supposed Nomura underwriting is, I think, an example of that phenomenon). But I see no reason to think that Mr Lenfest was not an honest witness.

(A) The Meridian option 694 Senior counsel for Mr Hadid submitted that the dealings between Dr Burt, Mr Price and Mr Neil Brown on 13 and 14 November (par 290 to par 299), and the evidence relating to it, reflected poorly on the credit of Dr Burt and Mr Price and, perhaps, of Mr Heller. It is by no means obvious why they should be thought to do so. The evidence about the transaction is clear, in essential respects consistent and supported by contemporaneous documentary evidence. Apart from the formal documents drawn and signed to give effect to the transactions agreed during the second meeting between Mr Neil Brown and the Australis representatives, the fax sent by Mr Heller to Mr Lenfest at about 7.30 pm on 13 November is particularly important. It corroborates the evidence that there had been a meeting between Mr Neil Brown and the Australis representatives (and involving Dr Burt) which had concluded at some time before 7.30 pm. It suggests - perhaps Mr Heller's informant was enthusiastically sanguine - that agreement had been reached, whereas on the evidence of the participants it had not (the complexity of the transaction ultimately reflected in the documentation sufficiently corroborates that evidence), though outline terms had been discussed, including Mr Neil Brown's requirement that a sum of $50,000 be paid immediately. Mr Heller's fax indicates, of course, that a formal agreement had not yet been signed. 695 I have already indicated that I accept Mr Heller's evidence that the information on which his fax to Mr Lenfest was based came to him from Dr Burt. Again, the terms of Mr Heller's fax are important. They point, in my view, irresistibly to the conclusion that Dr Burt, not Mr Price or anyone else, was Mr Heller's informant: "Wayne Burt has introduced a new and positive element. He met with Neil Brown a QC and respected former government official …." The fax is important for an additional reason. Its terms, in my view, make it plain that what Mr Heller was reporting was news. The fax suggests, in my view clearly, that Mr Heller had been told something of which he had previously known nothing and of which he expected Mr Lenfest to have no previous knowledge. That is not easy to reconcile with the submission, made by senior counsel for Mr Hadid, that it was "so inherently improbable as to be unbelievable" that Mr Price (or someone on his behalf) had not previously discussed the proposal with Mr Lenfest (or someone who reported to him). Mr Heller's fax does not have the appearance of a report of the outcome of a venture which had been discussed in advance with, or authorised by, LCI. It reads as a report of something new and positive of which he has been told after the event. 696 Thus, I accept Mr Heller's evidence as to how he came to learn of the transaction; I accept Mr Price's evidence that he did not tell Mr Heller about it; I find that Dr Burt was incorrect in recalling that he first informed Mr Heller about the Meridian transaction the following day. No reason has been demonstrated why I should otherwise reject any of the evidence given about the events leading to the transaction. 697 There was also a submission to the effect that the transaction itself reflected on the credibility of those who participated in it because, as I understood it, the transaction was to be regarded as, in the circumstances, inherently disreputable. The effect of the transaction was to give Australis directly, and LCI, as the intended and only likely source of funds, indirectly, a second opportunity to acquire licence B in circumstances where, on any view, negotiations with Mr Hadid had stalled; and the opportunity would arise, of course, only if, by the due date - still some time in the future - New World was not in a position to pay the balance outstanding on its bid. The legal propriety of the transaction may depend on the view taken of other matters relevant to Mr Hadid's claims against the respondents: for example, whether the 29 August agreement included the implied terms contended for by Mr Hadid; whether LCI owed fiduciary duties to Mr Hadid; what duties, if any, Dr Burt or Bain owed to Mr Hadid; and what knowledge Mr Price had about the relationships between LCI and Mr Hadid and between Dr Burt (and Bain) and Mr Hadid. And the Meridian transaction might be relevant to the allegation of conspiracy, depending upon the view taken of the St Louis meetings and what followed. But I do not think that the Meridian transaction itself throws any particular light on the credit of any of the participants.

(B) Other matters relating to Mr Heller • "Mr Heller's assertion to the ASC that he had no logs of meetings whereas there were logs he relied upon in the Court … . His other 'inaccurate' answers to the ASC" 698 The reference is to a letter Mr Heller wrote to the Australian Securities Commission, and evidence he gave about it, in the course of an inquiry by the Commissioner, during 1994, into dealings in Australis securities at the time of the events with which this case is concerned. The Commission recognised that LCI and its officers could not be compelled to provide information to it but arranged with Mr Heller that he would provide some information voluntarily. The information in question was provided by Mr Heller in a letter to the Commission dated 9 September 1994 in response to a series of questions set out in an annexure to a letter from the Commission dated 19 August. Mr Heller's evidence was that his letter was written in consultation with LCI's general counsel. The complaint about "logs" arises from an answer given by Mr Heller in his letter to a question about meetings during his second trip to Australia. The answer commences: "During the course of the second trip to Australia, as well as the first trip, there were a series of meetings held with parties introduced by UCOM. Most of the meetings were arranged by Mr Albert Hadid. A log of these meetings was not maintained." In fact there were "logs" in the form of lists of things to be done and of people met and to be met; "logs" of that kind are in evidence. Mr Heller, in cross‑examination, after briefly parrying questions on the subject, was prepared to accept that the answer given to the ASC was inaccurate. It should be said, however, that the letter had been written to the Commission on the basis of a series of carefully expressed propositions, the fourth and fifth of which were as follows: "4. We accept no responsibility or liability for any errors or omissions on our part including liability in negligence. This response is voluntarily given in a spirit of cooperation with the Australian regulatory authorities. However, you must recognize that the subject period of inquiry was a very frantic period. There were many meetings and a large number of people involved in the PAY‑TV license transaction. Over the days leading up to the signing of the deal with Australis we were working around the clock as were other participants and the advisors, both in Sydney and overseas. In such a cauldron, meetings become a blur. There are bound to be meetings referred to in the response where we may have missed recalling that a particular person was in attendance at or at part of a meeting. It was impossible and unnecessary to keep a record of such things at the time. We are not to be criticized by you if my recollection and that of Steve Plant … is in any respect inaccurate. 5. Each part of the response is given on the basis in 4. above and is qualified to the extent that it is a 'top‑of‑the‑head' recollection. We have not conducted any audit or review or made inquiries to test our recollections." And, of course, Mr Heller wrote the letter on advice. Additionally, and perhaps most importantly, the logs were, as senior counsel for LCI pointed out, innocuous. There is no obvious reason why Mr Heller, if he had recalled their existence, would have wished to conceal them. I do not think that the matter of the logs has any real significance. 699 There is another aspect of the letter to the Commission, however, which does concern me. It is included in the reference given in the written submissions of senior counsel for Mr Hadid, but was not, unfortunately perhaps, the subject of any commentary in oral submissions. It concerns a series of questions and answers about the meetings at St Louis. I shall set out each question asked by the Commission, followed by the answer given by Mr Heller in his response. "4.1 In relation to each meeting please provide details of the times and dates of each meeting. There were two meetings held, one on or about the second of November and a second meeting the following day. 4.2 Who was in attendance at each meeting and where those meetings were held. Attending each meeting was Dr. Wayne Burt, Steve Cosser, Rodney Price, Gerry Lenfest, Steve Plant and Don Heller. 4.3 Who arranged for each meeting to take place. To the best of my recollection, the meetings were arranged by Dr. Wayne Burt. 4.4 What was discussed at each meeting. During the meetings we explored the possibility of joining the satellite and the MMDS distribution into a common focus as Lenfest had discovered MMDS was an immediate competitor of the satellite operation and not one that would have to wait until 1997. The discussion centered upon the possibility of us joining forces if Lenfest were able to secure grant of the B satellite license. 4.5 Were any documents provided or exchanged at each meeting, if so provide copies or details of the contents, authors of those documents and from whom and to whom those documents were given. This meeting was a discussion to see if there was common ground to develop pay television together. 4.6 What were the views of Lenfest concerning advancing the purchase of a satellite licence: (a) before each meeting; (b) after each meeting. Before this meeting took place it was the position of Lenfest that it would be very difficult to develop the satellite license without a strategic alliance with the MMDS provider for Sydney and Melbourne and possibly other parts of Australia. We held the same view after the meeting. 4.7 Were the views affected by each meeting. The views of Lenfest were consistent both before and after the meeting. 4.8 What was Lenfest's opinion of Australis' views concerning involvement in the purchase of the satellite licence at the time of the meeting. The view of Lenfest regarding Australis' involvement in the development of the license at the time of the meeting, was to develop the business we would need a strategic partner. We viewed Australis as a potential strategic partner, and they expressed an interest in discussing further a partnership should we be able to obtain the B license. 4.9 Was it the view of Lenfest that as a result of each meeting an agreement albeit with certain conditions being met had been formed between Australis and Lenfest. No, it was not the view of Lenfest that an agreement was reached at this meeting. The only understanding we walked away with was the possibility of forming a strategic alliance was possible if we obtained grant of the B license." 700 Mr Heller was cross‑examined on that series of questions and answers, particularly the answer to question 4.5, at some length. Mr Heller's attention was drawn to the letter which he had prepared overnight, after the first meeting at St Louis, a copy of which was signed by Mr Price the following day. The cross‑examination included the following passages: "Well, … it plainly answered the description of that which the ASC were asking to see? - Yes. And, indeed, you might fairly have thought, I suggest, that it was the very type of document which the ASC was anxious to get hold of? - That's correct. And there is no response to that at all in your response of item 4.5, if you would look at it … . The implication is, it was nothing more than a discussion and no documents were tabled or exchanged, is that not the implication of your response? - I don't recall what I was trying to imply at the time, but at the time this document was prepared I was of the view that the document that I wrote in St Louis did not exist any more. Why? - Because all of the document, I thought, with the exception of the Price document that, the one that Price had signed, I had given that, I guess I had given that because I took the documents at the end of the meeting, I had given to our general counsel. All the other documents I thought I had thrown away. … No, just answer my question first? - If you want the answer, I'll give you the answer. … it was my view at that time that the document that I had drawn up had been disposed of, so far as making a diligent search there was not, I didn't make the search for something I didn't believe existed any more. All right. You are telling us, then, that the document which was signed by Mr Price you believed had been destroyed? - Or I believed that all of the copies in my possession, which were all the copies with the exception of the Price signature document, I believed that I threw away. I gave the document with Price's signature to our general counsel. You mean in connection with the response to this letter? - I gave it to him when we got back to the States in November. Well, …? - So a year later I didn't go to see if he still had that document. … Well, Mr Heller, you knew perfectly well that the document signed by Mr Price had been given by you to your counsel for the very purpose of keeping it safe, correct? - At the time I think that's fair, yes. Well, then, was it the same general counsel with whom you were discussing the matter? - Yes. Right. Well then you, I suppose, discussed with him, did you, the very document on which we are presently focusing our attention? - I don't recall if we discussed what documents were available." It was suggested to Mr Heller that the answer to question 4.5 was "nothing more nor less than a deliberate lie, a deliberate obfuscation." Mr Heller replied: "I don't have any response to that type of allegation." 701 Mr Heller did not suggest that, when he discussed the Commission's questions with LCI's general counsel, he had forgotten about the letter which he had prepared and which Mr Price had signed. No doubt he had not. It may be supposed that among the episodes in the series of events which stood out in the memories of the participants was the gathering in St Louis. The answer to question 4.5 must, I think, in the circumstances be regarded as disingenuous. It is not a direct lie. But it could hardly be suggested that the question was misunderstood. Considerable care was taken, it is evident, in the composition of the letter; and Mr Heller agreed that he spent some time over it with the general counsel. It cannot be supposed that Mr Heller did not realise that he was not answering what was asked of him. The clear inference is that, without telling a lie, he gave an answer which might divert the Commission from any further inquiry into a matter of possible embarrassment: as the terms of the letter, coupled with Mr Price's signature on it, might well be thought potentially to be. The inference is strengthened, I think, by the playing down - I do not think it is excessively uncharitable so to regard it - of the extent of the meeting of minds reached at St Louis. No doubt the answers to questions 4.8 and 4.9 are not false; but, had the Commission been able to observe it, it might have found the juxtaposition of those answers and Mr Heller's letter somewhat surprising. Presumably, however - the evidence is silent - the Commission probed no further. 702 What does the episode reveal that is relevant for the purposes of this case? Certainly it shows that Mr Heller, when with the aid of general counsel he was providing information on a voluntary basis to the Commission, was prepared to be significantly less than frank and, I think, to answer questions in a way which was calculated to avoid the necessity of disclosing that which might give rise to embarrassment or at least to a need to offer more complex explanations. But, in the end, I am not prepared to attach a great deal of significance to it for present purposes. The documents concerned were retained and were, of course, discovered. Mr Heller, albeit with one or two attempted parries and some quibbles over terminology, was prepared to accept matters put to him, in the cross‑examination, by senior counsel for Mr Hadid. It was noteworthy that the degree of discomfiture shown by Mr Heller on this topic did not, to my observation, reappear over many days of cross‑examination. Of course, in a case where a great deal depends upon opposing evidence about largely unrecorded conversations, the evidence of all participants as to each significant conversation must be scrutinised with care. But the replies to the Commission's questions, while no doubt not particularly creditable, do not in my view provide a basis for regarding Mr Heller's evidence as generally lacking in reliability. • "His professed inability to recall major events - eg his 34 minute telephone discussion with Mr Cosser on Sunday, 14th November" 703 The conversation with Mr Cosser was the only example given of that inability. Few other instances stand out (the Pottstown meeting on Mr Plant's return may be one), but complete, or completely accurate, recollection so long after the event, and given the multitude of meetings and conversations packed into a very short time, must be a virtual impossibility. Mr Heller recognised that the hotel room account indicated that he did indeed make the call to Mr Cosser. The evidence - including but by no means limited to the hotel bills - shows that Mr Heller made a great number of telephone calls in a short period, many of them international calls and many of them lengthy. It is not particularly surprising that he should forget some of the calls; nor would it be surprising if, for example, he recalled as happening on a particular day a conversation which in fact happened on the previous day. What I have already said about the drama commissioning agency will indicate why I do not accept that the fact that Mr Heller telephoned Mr Cosser on 14 November is significant in relation to his credit. • "Denial of any scene or anger at Clayton Utz on discovery of Burt's nationality" 704 This refers to the episode described in pars 339 to 344. In fact Mr Heller did not deny that he felt, or expressed, frustration or anger: he was not asked. He denied (consistently with all witnesses except Mr Hadid) that there was any banging of doors and shouting; he denied also that he said that if anything went wrong he was going to sue Clayton Utz. That is all. The matter, for the purpose of assessing Mr Heller's credit and for most other purposes, is of no importance whatever. • Did Mr Heller play down the extent of the knowledge of Project Midsummer within LCI before the St Louis meetings? 705 The submission that Mr Heller did so was based on Mr Heller's professed lack of recall of what precisely he was told at the Pottstown meeting and of discussion preceding the St Louis meeting, contrasted with a document which Mr Heller prepared, probably on Saturday, 30 October. The document described a proposal for a "joint venture … between the parties to deliver pay TV programming to Australia." Mr Heller's handwritten draft indicates that his first thought was to describe it as a proposal for a joint venture between Australis and cornerstone investors. The document includes a list of issues concerning financing which "Bain and Co (Wayne Burt) will address", discusses the basis on which "the joint venture" will establish an operating company and lists a series of "next steps", as follows: "1. Agree to terms and conditions of venture. 2. Prepare letter of understanding. 3. Prepare formal agreement. 4. Resolve Pay television licence ownership. 5. Fund licences." Mr Heller then listed a further series of eight "issues." 706 The document is not unlike other documents which Mr Heller prepared, to which I have already referred. He said that it was based upon what he already knew - and had included in other documents - and what he had been told by Mr Plant at Pottstown and subsequently. I see no reason to doubt that, nor do I see any inconsistency. Apart from the deleted reference to Australis, what the document conspicuously does not contain is any of the particular elements of the proposal as developed by Dr Burt. What it conspicuously does contain is a clear suggestion that financing - particularly, no doubt, underwriting - was Dr Burt's territory, which undoubtedly was one of the matters clearly conveyed to Mr Plant on 27 October and, no doubt, faithfully conveyed by him to Mr Heller. • Did Mr Heller's role include developing business opportunities? 707 The suggestion was that there was a conflict, revealed in cross‑examination, between an affidavit Mr Heller had sworn and his oral evidence. A re‑reading of the evidence confirms my view that the point is without substance. The evidence is clear that business development was, or some aspects of it were, part of Mr Heller's role, and equally clear that his initial call to Ms Combs was made for a quite different purpose (par 34). • Mr Heller's denial that he met Mr Wright during the first trip to Australia 708 Whether Mr Heller met Mr Wright for the first time during his first visit to Australia or second visit is, in itself, entirely inconsequential. It matters only if it is accepted that at a meeting attended by Mr Wright on 5 or 6 September Mr Heller was handed the "Project Koala" list of potential investors, so that Mr Heller's evidence that he received that document for the first time on 29 September and his denial of meeting Mr Wright during his first visit are false. Mr Hadid, Dr Gadir, Mr Noah, Mr Egan and Mr Wright all gave evidence that the Project Koala document was handed over at a meeting at which Mr Wright was present. Mr Hadid and Mr Egan gave evidence that it happened on 5 September; Dr Gadir that it happened on 5 or 6 September; Mr Wright that it happened on 6 September (at one point in his evidence Mr Egan said this also). Mr Plant gave evidence that he had no recollection of ever having seen the Project Koala document; in answer to the proposition that he attended a meeting on Sunday, 5 September at Mr Egan's office attended by Mr Egan, Mr Ritchie, Mr Hadid and Dr Gadir, the meeting later being expanded to include Mr Noah and Mr Wright, Mr Plant responded "Yes, I believe that is correct." 709 There are, however, difficulties with the evidence that there was a meeting on 5 or 6 September, attended by Mr Wright, at which the Project Koala document was handed over. Mr Heller's detailed report of his first visit to Australia is quite comprehensive. It lists the people he met; particularly, it lists members of the UCOM team whom Mr Heller had met; the list does not include either Mr Wright or Mr Noah. Nor is there any reference to the Project Koala document, which (I shall return to this later in these reasons) would be somewhat surprising if indeed LCI had assumed primary responsibility for finding investors and had been given, and had engaged in discussion of, a list of a number of potential investors. The difficulty is compounded by inferences which may be drawn - I shall return to this also - from notations on the document and from evidence about "brainstorming" in relation to potential investors immediately before the second visit of Mr Heller and Mr Plant. Again, Mr Egan's notes of the 6 September meeting include no reference to the Project Koala document or discussion of its content. 710 There are particular difficulties also with Mr Wright's own evidence. He at first said that he flew to Sydney for the meeting on 6 September; he then corrected that evidence to say that he drove, leaving the Gold Coast on Saturday, 4 September; he claimed to have stayed only for a day or two, leaving on 9 September and arriving at the Gold Coast on Saturday, 11 September where, upon arrival, he wrote a letter to Mr Hadid with a copy for Mr Heller and then travelled to Brisbane to attend a party. The difficulty with that evidence is that there are diary entries of Mr O'Brien concerning a meeting with Mr Wright in Sydney on 11 September and there is a fax from Mr O'Brien to Mr Hadid listing that as one of a series of meetings which he had had in connection with UCOM's business. Mr O'Brien was not called. Mr Wright, when shown Mr O'Brien's documents, denied that he had met Mr O'Brien on 11 September. 711 Mr Wright's letter dated 11 September, addressed to Mr Hadid, is brief. It reads as follows: "Further to my discussions with yourself and Lenfest representatives in Sydney last week I wish to confirm my interest in involvement in the PAY TV industry in Australia. Please keep me in mind, as discussed, I have extensive knowledge of the industry with a special focus on technology Infrastructure and research and development. I will be seeking backing to form a consortium of like minded individuals and companies such as Shinawatra and I.V.C. corporation out of Thailand to purchase part of one of the licences A or B. I understand you are prepared to give immediate consideration for any proposal I put to you. I look forward to a mutually agreeable and profitable relationship in the future." 712 Mr Wright's evidence was that he posted a copy of that letter to Mr Heller en route to the party on 11 September. Mr Heller's evidence was that he received it only when Mr Hadid faxed him a copy on 25 September and Mr Hadid's fax of that date to Mr Heller supports that evidence. The letter does, however, refer to discussions with "yourself and Lenfest representatives" and it would be odd indeed of Mr Wright to refer to discussions with people whom, as the recipients of his letter would undoubtedly realise, he had not met. Mr O'Brien's records, though Mr Wright denied meeting him, support a conclusion that Mr Wright was in Sydney at about the time of Mr Heller's first visit. The probability is, I think, that they met; but the totality of the evidence - particularly the absence of any reference in Mr Heller's report - requires, in my view, a finding that Mr Wright did not participate with Mr Heller in a substantial discussion on a subject matter of importance in relation to LCI's participation in pay TV in Australia. That being so, no conclusion adverse to Mr Heller's credit is to be drawn from his denial that he met Mr Wright during his first visit.

(C) Conclusion as to Mr Heller 713 Nothing urged against Mr Heller's credit persuades me that I should reach a conclusion different from that which I have reached in relation to Mr Lenfest. I reach the same conclusion.

(iii) Mr Plant 714 Mr Plant was not a note taker. He wrote, as has been seen, reports and memoranda about various aspects of the transactions but his evidence principally was given from recollection of events which occurred nearly five years previously. On some matters, unsurprisingly, his recollection proved mistaken: thus, for example, he readily accepted, when shown banking documents, that his recollection of the date at which discussions commenced with the Toronto‑Dominion Bank for an extension of LCI's facilities had been mistaken. Similarly, he accepted that he had mistakenly asserted that an increase of LCI's facilities by $85,000,000 would involve an increase from 5.5 to 6.25 in the ratio of borrowings to estimated cash flow. Both those matters were relied on by senior counsel for Mr Hadid in relation to Mr Plant's credit. There was another, perhaps more striking, example which occurred in Mr Plant's evidence about the timing of the initial involvement of Century in the bid for licence A and the payment of the deposit, in early December, on that licence. That episode demonstrated, in my view, another characteristic of aspects of Mr Plant's evidence: he was inclined to accept too readily what appeared to be the implications of a document presented to him and to accept that earlier evidence, contrary to that appearance, was wrong. Mr Plant was misled by an exhibit sticker on the second, unacknowledged, action plan (par 385) into thinking that it was dated 21 November 1993 and, on that basis, he accepted that by 21 November 1993 Century's investment in licence A was already contemplated. That led to the following evidence in re‑examination: "Mr Plant, you gave some evidence that you thought this document was brought into existence at about mid‑November, what were the matters that you took into account in giving that evidence? - The date of 11/21. Do you have any independent recollection of when it was that this document was brought into existence? - I must say to you that even though being cautioned by your Honour to read things before responding, I just [picked] that date because I saw it as and I interpreted that to be the date. My question is: do you have any independent recollection, apart from the sticker, of the date of which this document was brought into existence? - Yes, sometime in December, upon having read what is in this document. [I interpolate that even that evidence, in fact, is clearly not a recollection about the document at all, but an inference drawn from reading it, disregarding the sticker.] What is there in the document that causes you to make that last observation? - To negotiate and define Century's role in licence A which is item number 6, that clearly occurred not in November but sometime in December." The reference to a previous caution was to an occasion when, in the course of cross‑examination, I had suggested to Mr Plant that he ought to take the time he needed to understand what he was being asked and to answer it accurately. 715 Those characteristics of Mr Plant's evidence require, I think, that it be treated with some caution, but to say that is not to say that he is to be treated as a witness who set out to mislead the Court. I do not think there is any basis to suppose that he did so. Implicit in that is a rejection of the particular matters on which senior counsel for Mr Hadid relied. The first two of those matters were what was said to be Mr Plant's exaggeration of the borrowing ratio which would be required if the facility were to be increased and what was said also to be his "initial concealment of activity to obtain the finance in mid‑October." I have already referred to both of those matters. I see no reason to think that either was not a genuine failure of recollection. 716 The third matter relied on was a submission that Mr Plant "underplayed" his meeting with Dr Burt and Mr Cosser in the Regent Hotel on 27 October (par 216 and par 217). It is true that Dr Burt gave a characteristically detailed account of the meeting and Mr Plant a characteristically brief and broad one. But I do not think there was any deliberate downplaying, and I cannot see why it should have been thought advantageous to play down the matter. On any view, what was put to Mr Plant was simply a proposal to which Australis had not agreed - which it had not considered - and as to which it (through Mr Cosser) was expressing some scepticism; and a proposal which also required both consideration by LCI and, if it were to advance, discussion between LCI and Australis. And that, of course, is what happened. 717 The next matter was the genesis of the assumptions on which, in accordance with the letter of instructions from TPL, Bain was to give its non‑binding indication (which it gave in its letter of 13 October). In evidence in chief Mr Plant, having been asked whether, shortly before the instructions were given, he had a conversation with Ms O'Connor, answered "My recollection is that this was her input." When asked whether he saw in the letter of instructions a series of proposals (or assumptions) he volunteered "This is Cass' thinking." In fact, as it emerged in cross‑examination, it was not the thinking of Ms O'Connor but that of Mr Heller and Mr Plant who had a conversation, of which each made a note, about instructions which Mr Plant was to give directly to Dr Burt; and which, not being able to speak to Dr Burt, he gave to Ms O'Connor who, in turn, instructed Bain. The particular assumption referred to on behalf of Mr Hadid was the assumption relating to a free carried interest of 15 per cent. But it was only an assumption. Mr Plant accepted readily in cross‑examination that the instructions resulted from his conversation with Ms O'Connor following his earlier discussion with Mr Heller. Rather than deliberately false evidence, the answers given in chief seem to me plainly another example of the characteristics of Mr Plant's evidence to which I have already referred. 718 The outline of the final submission as to Mr Plant's credit was expressed as follows: "Plant's conduct with Turnbulls on 26 October in generating threats for Lenfest to send to Hadid. This conduct was made the more reprehensible as at this time Lenfest was proposing to sacrifice any interests of both Turnbulls and Hadid." It is undoubtedly true that on 26 October Mr Turnbull gave Mr Plant, and wrote to Mr Lenfest confirming it, some legal advice on the contractual relationship between LCI and UCOM. The advice was accompanied by points suggested for inclusion in a letter to Mr Hadid, the last of them being a threat of legal action. The documents are set out in par 218 and par 219. What Mr Lenfest did, having received them, is described in par 220 and par 221. Substantially, he adopted Mr Turnbull's suggestion but without any threat of legal action. It must be recalled that, on any view of the evidence, the meeting between Mr Plant and TPL took place, and the advice and draft were despatched, before any hint of Project Midsummer had been given to Mr Plant. It is perfectly clear (par 207) that Mr Plant had by then formed some strong views, one of which was that it was essential to LCI's interests to negotiate a position with Mr Hadid "wherein we control the entire process." I do not understand why in those circumstances what Mr Plant did on 26 October is to be regarded as particularly reprehensible. Whatever may have been the position following the St Louis meetings - and, of course, I shall have to return to that - I can see no basis for the assertion that LCI was on 26 October preparing to sacrifice the interests of Mr Hadid; nor can I see any basis in the evidence for the suggestion that, on 26 October, LCI was preparing to sacrifice the interests of TPL. Certainly following St Louis, and in accordance with the expressed views of Mr Price, TPL's services were dispensed with. But in his note to Mr Heller of 25 October, all Mr Plant had to say about TPL was: "Turnbull continues to support us but seem always to be at odds with Albert. I will try to resolve but getting his group together is extremely difficult. I am meeting them at 1:45 today and will be nice but firm about certain issues." In short, once again the episode does not, in my view, bear adversely on Mr Plant's credit.

(iv) Witnesses called by Bain, Dr Burt and Mr Price; "missing witnesses" 719 Of the evidence of Mr Grimes it was said that his recall, except to the extent that he was directly assisted by his notes, was limited and unreliable. It is sufficient to say that Mr Grimes was not a principal player. Certainly his memory was limited; there is nothing surprising about that. The other witnesses whose credit was impugned were Dr Burt and Mr Price. I shall deal later with what was said about their evidence. It is convenient also to defer - to the extent that it requires further treatment - the question of the "missing witnesses." The fact that a person was not called is significant only where there are grounds in the evidence for an inference to be drawn from facts, of the true complexion of which that person is presumably able to speak: Jones v Dunkel (1959) 101 CLR 298 at 308 per Kitto J.

"Joint Venture Agreement" and "Solicitation Agreement": terms, express and implied; fiduciary obligations; duty of skill and care? 720 It will be recalled that Mr Hadid's claim is that LCI (and Mr Lenfest personally) assumed, between 29 August and 1 September 1993, obligations which extended beyond the bare terms of the written agreement of 29 August (par 73) and its addendum (par 76). The conversations surrounding the signing of those documents, it is said, gave rise to a joint venture agreement which included an express term obliging the parties to seek investors in either or both of the licences (par 397) and implied terms (par 398) imposing on the parties duties substantially of a fiduciary nature reflecting obligations which, Mr Hadid claims, arose also in equity. The contractual terms thus arising were altered, and additional duties of a fiduciary kind, as well as a duty of care, are claimed by Mr Hadid to have been added as a result of the "solicitation agreement" reached during the conversation between Mr Lenfest and Mr Hadid on 1 September (par 400). The essence of the solicitation agreement was that LCI and Mr Lenfest undertook a primary obligation to seek investors in the licences, Mr Hadid and UCOM assuming a duty to "support that endeavour." There arose from the joint venture agreement and the solicitation agreement, it is said, a duty of skill and care, on the part of LCI and Mr Lenfest, in carrying out their obligations and a duty to provide information about the results of their endeavours (par 401). 721 The fiduciary duties pleaded against LCI and Mr Lenfest are claimed to have arisen, and to have arisen only, out of the joint venture agreement and the solicitation agreement. Equally, no source of a duty of care, other than the agreements and their performance, or of a duty to provide information, is pleaded. The first question to be answered, therefore, is what was the contract which resulted from the dealings between the parties, oral and written, between 29 August and 1 September?

(a) Was there a "solicitation agreement"? 722 If Mr Lenfest's evidence about the conversations is accepted, the only express contractual terms between the parties were those set out in the two documents. A finding that there were additional express terms would require the acceptance, at least in part, of Mr Hadid's evidence and, possibly, that of Dr Gadir. According to Mr Hadid, during the first conversation Mr Lenfest said that he would not rely on Mr Hadid's local contacts alone: Mr Lenfest could raise the money in the United States and had solid relationships with financiers who would do it. Further, while Mr Lenfest was happy to go along with the proposal that funds be raised in Australia, he assured Mr Hadid that "if the need comes, we won't need them to raise the finance, I can do it without them." During the second conversation, according to Mr Hadid, Mr Lenfest said, when asked by Mr Hadid whether he would consider paying for the licences, that he would reserve it as an option but preferred to "look into the market as to other US investors." According to Dr Gadir - in his evidence given in cross‑examination - Mr Lenfest was even more expansive: "Well basically we are going into a partnership where we will find the financing, we will find the partners, we will put together the deal." Also of some significance might be Mr Hadid's attribution to Mr Lenfest of the suggestion, in the first conversation, that advantages would accrue from Mr Hadid's association with LCI, and LCI's association with Liberty and TCI; and, in that context, the statement which, according to Mr Hadid, Mr Lenfest made that "we're going to be on the same team together and our joint venture means they will not treat you as … enemies …." Similarly, significance might attach to Mr Lenfest's reference in the second conversation (as recounted by Mr Hadid) to a "joint venture" and to the similar, and again somewhat more expansive, evidence given by Dr Gadir about a "joint venture" or "partnership." There was then Mr Lenfest's introduction, as recounted by Mr Hadid, to the conversation (par 74) immediately after he had received the final version of the 29 August agreement, in which Mr Lenfest asked Mr Hadid to prepare and send what became the addendum: "… now we're joint venturers. I am getting very excited about this joint venture. I want you to know all these big guys now will keep away from you and we will work together. I will give you all the support and guidance that you will possibly need, Albert. Just leave that to me." 723 Mr Hadid's account of the conversation of 1 September is set out in par 79. The essential elements, according to that version, are that Mr Heller and Mr Plant were coming to Australia to "support" UCOM; LCI wished to take the lead in "structuring the information and finding the investors"; the remarks attributed to Mr Lenfest to the effect that there was a joint venture, that both parties should do their best for their mutual benefits and "as partners" keep each other totally informed and that "what I'd like you to do is to agree with me for you to act in this position and supporting - for us to look for the investors and take that position"; and Mr Hadid's agreement with those propositions subject to the proviso that UCOM maintained "control." 724 The only express term alleged to be incorporated in the joint venture agreement, other than those in the documents, is an undertaking that both parties would seek investors in either or both of the licences in order to achieve the repayment of the deposits and the commercial exploitation of the licences. Except so far as it may bear on the implication of additional terms or on the character of the agreement as one giving rise to fiduciary obligations, that term is, perhaps, from Mr Hadid's point of view, not particularly important: it was, on his case, superseded by the solicitation agreement, which provided that LCI and Mr Lenfest would use their best endeavours to find investors, that Mr Hadid and UCOM would support those endeavours, that Mr Heller and Mr Plant had authority to act on behalf of LCI and Mr Lenfest and that the parties would keep each other informed of developments. 725 The principal factual question to be decided is, thus, whether on 1 September Mr Lenfest undertook primary responsibility for finding investors in the licences. There can be no doubt that one of Mr Lenfest's principal concerns was that the deposits which, by 1 September, he had paid should not be lost. That required that the amounts payable on issue of the licences be funded. It is not at all surprising that he was concerned to know, and particularly to find out through the visit of Mr Heller and Mr Plant, what assurances and prospects of funding existed. But Mr Hadid, to Mr Lenfest's knowledge, had been involved for months in the bidding process and had had discussions with financiers and advisers. Mr Lenfest's knowledge of the process and the environment, on the other hand, was rudimentary. Mr Lenfest undoubtedly could be impulsive; but it would be extremely surprising if, during the conversations before 1 September, he was sufficiently confident to say that he would find the financing required and only slightly less so if on 1 September he thought it appropriate to undertake primary responsibility to find the financing. But those propositions must be tested against what the parties did after 1 September. 726 The matters particularly relied on by senior counsel for Mr Hadid, in final submissions, were principally these: by 1 September Mr Lenfest must have known that no underwriting was in place; he had spoken to Mr Biondi and received his letter (par 647); he knew, as a result of his conversations with Mr Hadid, that substantial foreign ownership was permitted; he must have known also that Ms Combs had told Mr Heller that the participation of a United States cable company was needed; his letter to Dr Malone of 2 September demonstrated an expectation that LCI would play a significant role in seeking United States investors and a perceived need for it to do so; and Mr Lenfest gave evidence of a "plan", in existence during September, by which LCI would seek United States investors. 727 Certainly a good part of the inquiries made by Mr Heller and Mr Plant during their first visit to Australia concerned the possibility of raising funds in Australia and ways of doing so. Mr Egan made suggestions to them about potential underwriters and financial advisers; they interviewed several leading institutions. Both reported (par 109) on what Mr Heller described as a "consistent message" that participation by United States cable operators was "required" (Mr Heller) or "almost a condition precedent" (Mr Plant). They met Bain and were told that the presence of United States cornerstone investors was an essential precondition of a successful underwriting in Australia. One of Mr Plant's recommendations to Mr Lenfest was that LCI should "[take] total control of all financial negotiations." Following submission of the reports, LCI was active in seeking United States investors: it took the lead in the discussions with Time Warner during the visit to the United States of Mr Hadid and Mr Blanks and later approached other potential United States investors. 728 There is then evidence of Mr Hadid and a number of witnesses whom he called as to statements said to have been made during the first visit of Mr Heller and Mr Plant, and subsequently, as to the principal role to be played by LCI in arranging financing. For example, Dr Gadir gave evidence that on 5 September, the first occasion on which he met Mr Heller, Mr Heller said: "In the market place you guys have to take a back seat essentially at the moment. Let us run. Let us find any necessary partners. Do the right thing as far as finding the parties, especially in the United States, for the licence and if you have any contacts that you want to approach we should - you know, you should give us details of who you want to talk to and either we talk to them or we say to you go ahead and talk to them, we will take the front running on this." 729 His evidence was that it was then made clear by Mr Heller that UCOM were not to look for investors without the prior consent of LCI. Mr Hadid gave evidence that on 5 September, immediately following discussions about the Project Koala list, Mr Heller, asked whether he would like UCOM or Mr Wright to follow up any of the contacts, said: "No, we will be alright, leave it - leave it - leave it - leave it with us, we will take care of it." Mr Porter said that during the luncheon on 6 September Mr Plant informed him that he had been hired by Mr Lenfest "to come down and be part of this operation" and added: "I'm now the financial adviser for this operation. So, any fundraising activities or any financial activities should be addressed to Lenfest through me." There followed, Mr Porter said, discussion with Mr Plant and Mr Heller of a number of organisations seen as potential investors. Ms Keating, similarly, gave evidence that Mr Plant claimed to have been appointed by LCI to look after "all financial aspects of the fundraising for the balance of the funds on the licences"; and the purpose of his visit was to meet investors and underwriters. Mr Plant denied those remarks attributed to him by Mr Porter and Ms Keating; his evidence was that in fact he had, at the time, no mandate. 730 I have already mentioned Mr Egan's evidence (par 579). He claimed that Mr Heller, after the discussion of the Project Koala list, said that as Lenfest was in charge of the financing, following up the list "for any further financing issues" would be LCI's responsibility. 731 Mr Hadid then gave evidence (par 111) of an assurance by Mr Lenfest, immediately following the visit of Mr Heller and Mr Plant, that the money would be raised, that all Mr Hadid had to do was to continue to support LCI "and we'll make sure we look for the partners": and then Mr Lenfest sent to Mr Hadid the Cable World article about LCI's successful bank syndication (par 113). Mr Turnbull by 13 September had the impression that Mr Lenfest had assumed considerable influence. He wrote to Mr Blanks, on that day: "I understand Gerry Lenfest is still considering whether he wants to end UCOM's relationship with us and in the meantime it has been decided to leave TPL out of the process." 732 That evidence overlaps to some extent with evidence given by Mr Hadid and witnesses called by him as to statements said to have been made by Mr Lenfest, Mr Heller and Mr Plant to the effect that LCI could, would, or would if necessary, fund the licences itself. Mr Purves gave evidence that at a meeting on 6 September attended by Mr James, Mr John Brown, Mr Hadid, Mr Blanks, Mr Heller and Mr Plant: "Mr Plant said that he was the vice‑president to P and C Bank, New York, the lead banker for Lenfest, and not to worry about the financing for the licenses, he had commitments and he had the money to invest on behalf of Lenfest." (I can say immediately that I do not accept, over Mr Plant's denial, this unsupported evidence that Mr Plant uttered that series of untrue statements.) There are then the conversation which Mr Hadid claims to have had with Mr Lenfest on 8 September; the conversations in the United States on 14 and 17 September (pars 147 to 149); and Mr Hadid's conversation, as he recounted it, with Mr Heller during the weekend of 9 and 10 October (par 179). There are the alleged licence A representations also: I shall consider them separately, later in these reasons. 733 On the other hand, if LCI or Mr Lenfest had undertaken the commitments alleged of them, one would expect to find a record of them in the contemporaneous documentation; but one does not. One does not find, for example, in the reports of Mr Heller or Mr Plant on their first visit any hint of an arrangement that LCI had taken practical control of the raising of funds, still less any complacency born of knowledge that LCI was in a position, and prepared, if necessary, to fund the licences itself. Indeed, Mr Plant's strong recommendation was that it was necessary that LCI should take control. Secondly, and perhaps even more significantly, there are the dealings with the ABA. On 3 September the ABA wrote to UCOM expressing concern that the common ownership of UCOM Australia and New World might well lead to a breach of s 110 of the Broadcasting Services Act. On 10 September Mr Blanks replied to the ABA. He drew attention to LCI's provision of the deposits: that investment, he said, "represents a serious commitment by that company to the establishment and operation of the Australian pay TV industry." He added that LCI's equity participation had not yet been finally determined; it was "the intention of the company [that is, apparently, UCOM] to obtain further equity participants in the company to enable the company to pay the balance of the licence fee and have sufficient working capital to meet its requirements"; the company had "already received firm offers from parties seeking to acquire the whole of the share capital of New World, and these offers are presently under consideration." 734 The ABA was by no means satisfied with Mr Blanks' letter. It sought evidence, in the form of affidavits or statutory declarations of: "1. Full details of all offers (firm or otherwise) from parties seeking to acquire any equity or financial participation in UCOM Australia Pty Ltd. 2. The ABA requires corroborative evidence of the details of all such offers. In particular, we note that in your letter you indicate that the Lenfest Group funded the deposits already paid. We require evidence from Mr Lenfest or senior executives of that company or any associated company of the terms upon which the deposits have been funded and the arrangements for payment of further funds and taking of equity in the company. 3. Any and all documents evidencing acceptance by UCOM Australia Pty Ltd of any such offers." 735 In response to those demands, Mr Blanks prepared a statutory declaration to be made by Mr Heller. Mr Heller made it and sent it to the ABA. Mr Blanks' evidence was that he probably discussed its terms with Mr Hadid. The declaration was brief. It said, in substance, that the terms on which funds had been provided by LCI were those set out in the letter and addendum of 29 August and that: "Arrangements for the provision of further funds and the taking of equity in UCOM Australia and/or New World Telecommunications have not yet been finalized. Discussions in this regard are presently taking place." 736 Mr Hadid himself made a statutory declaration and sent it to the ABA on 17 September. His principal purpose in doing so was to seek an extension of time within which to provide further information required by the ABA. In the declaration he informed the ABA that UCOM had "determined with the Lenfest Group" that priority should be given to finding key United States investors; that, commercially, was desirable to attract the necessary Australian investment; and a proposal was to be put to Time Warner. Mr Hadid continued: "8. I expect that discussions with these companies [Time Warner and other potential United States investors] will continue for the next two weeks, and that the identities of the key investors will be determined by the end of that time, although it is possible that a decision could be made earlier. 9. We have received oral advice from Bains and Nomura Securities that those firms would be prepared to underwrite the full financing of the licence holders upon the commitment of key US investors. I believe that other potential underwriters may wish to participate in the underwriting." Mr Blanks, again, prepared that declaration, on Mr Hadid's instructions. Then, on 6 October 1993, Mr Hadid, in a letter to the ABA, confirmed that the documents (the letters of 29 August) annexed to Mr Heller's declaration "[govern] the relationship between the Lenfest Group and UCOM parties": both parties had adopted the agreement contained in those letters, and conducted their affairs on the basis that it governed their relationship. The position taken in that letter is consistent with positions taken by Mr Hadid in correspondence, both earlier and later, with LCI. Thus, on 20 September 1993, in the context of the Time Warner proposal, Mr Hadid wrote to Mr Heller and Mr Plant: "As discussed our agreement of the 29th August, 1993 between Lenfest and (Focus and New World) is still the controlling agreement until we reach final formal agreements on the restructuring of UCOM Australia and New World." 737 Mr Hadid's letter of 13 October, in response to Mr Lenfest's letters of 11 and 12 October, assumes that the agreement between the parties is that of 29 August. Similarly, Mr Hadid's letter of 28 October to Mr Lenfest refers to "our original agreement" in a context which indicates, plainly, that what is meant is the documents exchanged on 29 August. Finally, in his letter of 5 November 1993 to Mr Heller, Mr Hadid commented, in relation to Mr Heller's letter of 1 November, that: "It also appears to represent an abandonment of the principles of consultation and equality which we agreed up until now underlay our relationship in favour of a literal interpretation of the 29 August agreement." 738 That correspondence was all directed to matters other than the question of whose responsibility it was, principally, to find investors. Nevertheless, it undoubtedly proceeds on the basis that the governing agreement was that constituted by the two letters of 29 August. 739 No contemporaneous document in evidence clearly points to the existence of the solicitation agreement. I have referred to Mr Turnbull's fax to Mr Blanks of 13 September 1993. Mr Porter's letter of 7 September 1993 to Messrs Heller, Plant and Hadid and its accompanying proposal clearly assume a significant interest on the part of LCI in the decision making as to obtaining investment or finance, and that is consistent with Mr Porter's evidence, and that of Ms Keating, about the luncheon which they attended. There is the article faxed by Mr Lenfest to Mr Hadid on 8 September about LCI's successful bank syndication, undoubtedly prompted by a conversation between them shortly beforehand. There is a fax to Mr Heller dated 8 October 1993, signed by Dr Gadir on Mr Hadid's behalf. After dealing with the dispute over the terms of TPL's engagement, the fax continued: "Stephen requested that we continue not to contact any new parties until we have seen the offer from T‑W/TCI. We agree not to establish contacts until next week. However, we obviously cannot keep the licence from the marketplace for much longer, as time is running out. You suggested that T‑W was talking about a low 5% - 10% free‑carry. I can tell you after discussing with my other Directors, that such an offer will not be taken by us too seriously." Following a conversation between Mr Heller and Mr Hadid, Mr Lenfest responded as follows: "Negotiations with other parties should proceed as follows and for the most part were agreed to by you in your Sunday, October 10 telephone conversation with Don Heller. 1. We will contact both Cox and Continental to assess their interest in joining us. 2. You will pursue the contact with Prime in Australia and Sinawatra [sic]. 3. We need to discuss the position to take with either Trojan or Marty Dougherty. 4. I am going to contact Rupert Murdoch directly. 5. Any direct contact with Packer should be done by either myself or Don Heller and/or Steve Plant on my behalf. The meeting you proposed by Martin Cooper should only be used to set a meeting with Packer. Additionally, any deal negotiated needs to have approval from both of us prior to its being finalized." 740 In fact, Mr Hadid and his associates continued to investigate possible sources of investment after 1 September; and LCI was not informed of all of their endeavours. Attempts were made to obtain funds from GEC Marconi Systems; those attempts persisted during September and October. There were negotiations with Prime Television. Mr Porter participated in those negotiations. Whatever impression he may have gained at the luncheon in September, on 8 October Mr Porter wrote to Mr Hadid setting out terms on which, in his understanding, "we have gone forward on a handshake agreement with you (in your capacity as CEO of UCOM) and opened negotiations, on behalf of UCOM, with Prime T.V.." There was the trip to Thailand and negotiations with Shinawatra; plainly, on the evidence, the management of those negotiations rested squarely in the UCOM camp. Mr Egan approached a number of other potential investors on behalf of UCOM, without any discussion with LCI. Mr Charbel Malkoun (Mr Malkoun), who before LCI came on the scene had been offered substantial rewards for any financing he might find for UCOM, continued his endeavours until November. On 24 September 1993 Mr Egan offered advice to Mr Hadid "regarding the choice of underwriter and financial adviser for the UCOM Group" and sought "to be involved in your discussions with all financial parties, including Bain & Co. and Nomura Australia." And, though Mr Egan's professed recollection was by no means clear or precise and the other participants who gave evidence professed no recollection of it at all, Mr Egan's notes and evidence and Mr O'Brien's notes make it clear that there were meetings on both 26 and 27 September, attended by Mr Hadid, Dr Gadir, Mr Wright, Mr Noah and Andrew Price. Mr Egan's record includes an agenda, as follows: "UCOM Agenda Lenfest Ŕ To gain lead Á To time wastage To raise requisite capital within timetable" On the third page of his notes Mr Egan made a list of things "to do" including: "Brainstorm on investors ‑ Australis, C7, C9 list of s/holders" 741 Mr O'Brien's note of the meeting on 26 September includes, as part of an agenda for the impending visit of Mr Heller and Mr Plant, "Must get Money." Mr O'Brien also made the following note: "Investors utilising all existing knowledge of UCOM Hi Vision Meeting IW AP Bert N SG J Egan Summary of all known possible investors in licences and OPCO." Mr Egan was shown what purported to be a list of major shareholders in Australis as at 23 September 1993, apparently printed on 24 September. At the foot of the first page of the list, Mr Egan had written "Shinawatra." He agreed that it was probable that he had asked Andrew Price to obtain that list. He could not recall it being circulated at the meeting of 27 September. Despite the participants' lack of recollection, it is in my view inescapable, and I find, that those listed in Mr Egan's evidence met on 26 and 27 September and had a discussion about investors of the kind reflected in Mr Egan's and Mr O'Brien's notes; and that for that purpose Mr Egan obtained a list of the major shareholders in Australis. 742 The position may, I think, be summarised as follows. Mr Heller and Mr Plant during their first visit took, and made it clear that they took, considerable interest in available means of financing the acquisition and operation of the licences. That is hardly surprising, given the need to find financing if LCI's deposits were not to be lost and that they soon found out, to the extent that they did not already know or suspect, that there was no underwriting. It was made clear to them that "cornerstone investors", in the form of substantial United States cable television companies, were a necessary prerequisite to an underwriting in Australia: indeed, Mr Heller was aware already that that might be the case; Ms Combs had said so. They - particularly Mr Heller - took a considerable interest in the business plan and, later, in its development through successive drafts. On their return, and later, Mr Heller prepared various versions of an offering memorandum; LCI initiated and led the approach to Time Warner and, later, approached other potential United States investors. But nothing in the evidence suggests that they took a particularly active approach in seeking out, or directing the search for, investors outside the United States. It was not, after all, until mid‑October that LCI sought a written, and non‑binding, indication from Bain and Nomura as to the feasibility of an underwriting. And efforts by UCOM to find investors proceeded, albeit unsuccessfully, in some cases without LCI's knowledge and, so far as the evidence goes, in all cases without LCI's interference or direction. In other words, the picture presented by the evidence is not one of LCI directing a search for investors assisted by UCOM from the "back seat." Nor is there any contemporaneous written indication that that was the arrangement. To the contrary, whenever the parties set out to state in writing what their agreement was, they referred to the letters of 29 August. 743 What, then, of the evidence of Mr Porter and Ms Keating? No submissions were made adverse to their credit and I see no reason to doubt that their evidence truly reflected their recollection. But even taking at face value the remarks they attributed to Mr Plant at the luncheon on 6 September, they really do no more than state in fairly vigorous terms a role claimed by Mr Plant on behalf of LCI, not a role undertaken by LCI vis‑ŕ‑vis UCOM. And Mr Porter's letter of 8 October suggests that he considered Mr Hadid to be in charge. I do not doubt that Mr Plant discussed, at the luncheon, the prospect of finding investors or that he sought further, written suggestions. Mr Plant clearly regarded those matters as important, and he was to recommend to Mr Lenfest that LCI take control of financing. But that by no means indicates that, by agreement between Mr Hadid and Mr Lenfest reached as early as 1 September, LCI had already done so. 744 In that context, the question whether Mr Heller and Mr Plant were given the Project Koala document during their first visit, or their second, may not in itself be of great significance. But the evidence about it reinforces, in my view, the conclusion that LCI had not, at the beginning of September, taken control of the process of seeking investors. I have already found (par 712) on the balance of probabilities that Mr Heller met Mr Wright during their first visit but that there was no discussion between them on a subject matter of importance in relation to LCI's participation in pay TV in Australia. It remains the case that Mr Hadid, Mr Noah, Mr Egan and Dr Gadir, as well as Mr Wright, gave evidence that the Project Koala list was handed over during the first visit, in circumstances where UCOM had recently obtained access to it (it was Hi Vision's document) from Mr Wright and Mr Noah. I have already discussed what I see as difficulties in accepting as reliable the uncorroborated evidence of Mr Hadid, Mr Wright, Mr Noah and Mr Egan. As will appear, I have similar reservations about Dr Gadir's evidence. Of those who gave evidence that the Project Koala list was handed over during the first visit of Mr Heller and Mr Plant, only Mr Egan was a note taker. He suggested, at different stages during his evidence, two dates on which the meeting occurred at which the list was handed over, 5 and 6 September. He had no notes of a meeting on 5 September. His notes of the meeting on 6 September do not refer to the list or to any discussion of the kind of which he gave evidence. 745 The combined propositions that LCI on 1 September undertook principal responsibility for finding investors and that the Project Koala list was handed over and discussed on 5 or 6 September encounter this difficulty at least: LCI's representatives knew that it was necessary for the protection of LCI's interests that funds be raised to acquire, or permit the acquisition of, the licences; they knew (if it is accepted that there was a solicitation agreement) that finding the funds was LCI's task; means by which funds might be raised were a matter on which Mr Heller and Mr Plant sought information and advice during their first visit; they were given, and had the benefit of a detailed discussion of, a list of those seen by the Hi Vision syndicate as likely prospects as investors; but in their reports to Mr Lenfest they did not mention those who provided the list, the list itself or the discussion; they merely took the list, heard the discussion and, for all that appears on the evidence, did nothing further about it; and, although Mr Hadid gave evidence that from time to time he expressed dissatisfaction with what he regarded as LCI's lack of diligence in following up particular matters, the circumstance that the Project Koala list and the discussion of it had sunk without trace gave rise to no particular remark from the UCOM side. 746 Various notes in various hands, some written before the end of August 1993 and some later, are written on the copy of the Project Koala document produced by LCI on discovery. Two of those notes, on which senior counsel for LCI placed some emphasis in argument, are at least consistent with Mr Heller's evidence that he received the document on 29 September and more difficult to explain if he received it during the first visit. One of the notes, "Australis investor" was written by Mr Noah against the name Sumitomo Australia. Although Mr Noah was not prepared to concede that he wrote the note before he gave the document to Mr Heller, it is highly probable that he did. Australis was listed on the Australian Stock Exchange on 17 September. It is unlikely to have been known publicly, before that date, that Sumitomo Australia was an Australis shareholder. Its name appears on the list of Australis shareholders obtained by Mr Egan, to which I have already referred. Then, against the name of Optus Communications, Mr Heller has written "Nat[ional] & spot for same price as spot." That somewhat cryptic note is a record of information that "transponder prices" charged by Optus would be the same for the "national beam" as for a "spot" or "high performance" beam necessary to transmit to Western Australia. In his report on his first visit, Mr Heller included a note of a conversation which he had had with Mr O'Brien and Dr Wayne Nowland (Dr Nowland) of Optus, recording, among other things, that the prices for the two "beams" were "likely to be similar." What is written on the Project Koala document is, as senior counsel submitted, more precise and definite. Mr O'Brien's diary for 28 September 1993 recorded a meeting with LCI concerning Optus costs and a call to Dr Nowland. Among a list of things headed "Wed to do" ("Wed" being 29 September 1993) Mr Heller listed "call Frank re transponder/Optus." It is by no means unlikely that it was that call - or possibly something said by Mr O'Brien during a meeting - which gave Mr Heller the more precise information. Certainly, there is no evidence that he had it during his first visit. 747 It is then necessary to consider briefly aspects of the evidence directly supporting a version of the conversation on 1 September which supports the proposition that it gave rise to the solicitation agreement. Dr Gadir did not participate in that conversation. He did, however, give evidence that in the earlier conversation in which he participated, in the early hours of 29 August, Mr Lenfest said, in substance, "we are going into a partnership where we will find the financing, we will find the partners, we will put together the deal." His evidence on the subject does not inspire confidence. He substantially accepted that the account of the conversation, which he had given in chief, did not appear in an outline of evidence which he had prepared. In his account in chief, he did not give the evidence which I have just quoted. He was, however, reluctant in the extreme to concede that: "You know perfectly well that it is not something that you said in your evidence‑in‑chief, do you not? - Not in so many words. Not in words to that effect, did you? - I may have said different words that have a similar effect. What I want to suggest to you, Dr Gadir, is that you know perfectly well that what you have just told us about is something which, in substance, was not referred to by you in the course of your evidence‑in‑chief, do you not? - I disagree with that. Well, we can check the transcript but you say, do you, that you believe that what you have just told us about is something that you told us about yesterday? - Not in so many words. In what words did you tell us about it yesterday? - Well, I've said Mr Lenfest congratulated us on coming into a partnership with him and said, 'Things will now happen. We will send executives down to Australia; we will do the necessary job to find the financing, to find partners, to do the deal', you know, 'to develop the relationship.'" 748 Dr Gadir did not say that, or anything like it, in his evidence in chief. Mr Egan's evidence concerned a conversation which he said occurred on 2 September 1993. I have described his evidence in par 81. I have already stated my views about the reliability of Mr Egan's evidence where it is unsupported by what his notes actually say. His account of the conversation is substantially different from Mr Hadid's, has Dr Gadir present and generally provides a context rather different from that given by anyone else. It is by no means certain that Mr Egan was at UCOM's premises on the evening of 2 September. On 2 September 1993 he wrote a letter to Mr Hadid making recommendations as to the appointment of advisers and underwriters which, he accepted, was most likely faxed to UCOM at 8.03 pm. He had previously accepted that it was possible that the conversation with Mr Lenfest had taken place at about 8.00 pm. More significantly, his evidence about his participation in the conversation is odd: it was that he said, in substance, "This is James Egan speaking" but nothing more. Then, in cross‑examination, he gave this evidence: "Well, did Mr Lenfest say in this discussion on 2 September words to the effect of, 'We are in control of the financing'? - I don't recall. You did not tell his Honour when I asked you to give your recollection of what was said earlier about Lenfest saying, "We are in control of financing", did you? - No, no. And that was because you did not recall him saying it? - That's correct. Have you ever said in any account of this conversation with Lenfest on 2 September that he said words to the effect that, 'Lenfest were in control of financing?' - I may have. Notwithstanding that you do not now recall that being said? - That's correct." 749 In short, Dr Gadir's evidence and that of Mr Egan are of no help to Mr Hadid on this aspect of the case. I have considered at some length the credit, generally, of Mr Hadid and Mr Lenfest. More importantly, the later events and documents to which I have referred lead me to conclude that Mr Hadid's account of the conversation on 1 (or 2) September should not be accepted and that Mr Lenfest's account of it is substantially correct. The same considerations lead me to reject the evidence of Mr Hadid, Dr Gadir and Mr Egan attributing to Mr Heller statements to the effect that UCOM should desist from its efforts to seek investors (or to seek them without LCI's authority). 750 I find, accordingly, that there was no solicitation agreement as alleged and that Mr Lenfest and LCI did not undertake the pleaded obligations referred to in par 400.

(b) Express oral terms of agreement of 29 August 1993 751 Was it, then, an express term of the contract between the parties, before 1 September, that they would seek investors in either or both of the licences in order to achieve the repayment of the deposits, the commercial exploitation of the licences subject to the free carried interest and the benefit of the proposed management agreement? A finding that there was such an express term would require the acceptance, at least in part, of elements of the first and second conversations between Mr Hadid and Mr Lenfest as recounted by Mr Hadid. 752 The elements of the first conversation which might, if accepted, give rise to the term are, principally at least, the following remarks attributed by Mr Hadid to Mr Lenfest: (immediately following the conversation with Andrew Price) "I wouldn't rely on one or two contacts anyway and I [would not] rely on your local contacts alone. I can raise the money here in the United States and I have a very strong relationship … with established financiers who will do it"; (in response to Mr Hadid's reference to restrictions on foreign ownership and to a need to raise money in Australia) "I am happy to do that but if the need comes, we won't need them to raise the finance, I can do it without them"; (after discussions of LCI's connections with Liberty and TCI and of the joint tender lodged by TCI, Time Warner and Comcast) "… we're going to be on the same team together and our joint venture means they will not treat you as … enemies and when you come to the United States … you will meet [John Malone]. He'll be very helpful and he could also help us with News Limited and so on"; "I would expect that when we raise the money I can get my deposits back or buy shares at my option …"; and "let's say the deal is done." In the second conversation, there was Mr Lenfest's response, according to Mr Hadid, to the question whether he would consider "paying for the licences": "As an option at the moment yes I will keep it as something that we will consider if we have to come to it but what I'd like to do is look into the market as to other United States investors and keep our option as to how much equity we'll have in the licence." 753 Finally, there are the various references to a joint venture or partnership. In the second conversation, Mr Hadid gave evidence that Mr Lenfest said: "Now, if … you can't achieve … enough to give me 13 per cent then we can only do a deal if we both consent to it. Because you're in control of the joint venture, I would need that assurance for the risk that I'm taking." 754 I have already referred to some of the evidence given by Dr Gadir about the conversation. In his evidence in chief he said that Mr Hadid remarked to Mr Lenfest that UCOM looked forward to working together in partnership "and Mr Lenfest reciprocated on that point"; Mr Lenfest said "we are now in this together. It's a great opportunity for us"; and, should a free carry of 13.5 per cent not be available, "we'll have to sit down and agree and I assure you that we will work together in the spirit of partnership." 755 I have mentioned also Mr Hadid's account of Mr Lenfest's introduction to the third conversation: "… now we're joint venturers. I am getting very excited about this joint venture. I want you to know all these big guys now will keep away from you and we will work together. I will give you all the support and guidance that you will possibly need, Albert. Just leave that to me. … We will get this thing up and the Australian market will get what it has been looking for in pay television." 756 LCI did, of course, participate in the attempt to raise funds. There is no need to repeat my discussion of the evidence about that. Equally there is no doubt that LCI came to contemplate funding the acquisition of at least one of the licences itself and that is what, with the aid of the bank financing it raised, it ultimately did. The proposal of 12 October 1993 on which Bain was to base its non‑binding expression of interest included: "ix) That, if necessary, Lenfest would provide the funds in a debt/equity mix to pay the Licence Fee for Licence A by the due date, with a view to sell down, with your assistance, at a later date; …" But the question remains, were LCI's activities engaged in by way of performance of a contractual obligation entered into before 1 September? In addition to the activities subsequently undertaken by the parties, two particular matters assumed significance in submissions made on behalf of Mr Hadid. One was Andrew Price's participation in the first conversation and the other was a proposition that to say that LCI undertook no contractual role in relation to capitalisation likened LCI to a mere passive, institutional investor, which plainly it was not. I have already dealt extensively with the somewhat mysterious role of Andrew Price: see pars 632 to 652. My essential findings on that subject are that, while I am not satisfied that Andrew Price made the precise representation alleged by Mr Lenfest, he made a statement at least as positive as that which he recorded in his note of the conversation: that is, he gave Mr Lenfest substantial assurance, though short of a firm commitment that Nomura would ensure that funds were raised so that the deposits could be returned, that funds for "capitalisation" could be raised in the Australian market. Thus I do not accept Mr Hadid's evidence that Andrew Price was considerably less encouraging. It follows that the matter cannot be decided on the simple basis that, it being clear that there was no underwriting, it must have been plain to Mr Lenfest that his participation in fundraising activities was a necessary or appropriate part of the arrangements under which he was to fund the deposits and, on capitalisation, receive a share of free carry and a management role. It is to be remembered, too, that Mr Heller's evidence, supported by his note, was that Ms Combs had said that Nomura and Bain were involved as underwriters. 757 As for the second matter, certainly it is at least an oversimplification to suggest that, if LCI had no contractual role in raising capital, it was a mere passive investor. It was not. It was to have the principal management role in the operation of a pay TV business. That alone might be expected to prompt a speedy investigation of the prospects of such a business in an environment of which Mr Lenfest knew very little and a close interest in such matters as business plans. 758 If LCI's participation in seeking investors was part of the contractual arrangements negotiated, nevertheless the letters exchanged, prepared with legal assistance for the purpose of recording what had been agreed, said nothing about it. But there are other matters which, in my view, cast serious doubt on Mr Hadid's account of the three conversations. According to Mr Hadid, Mr Lenfest said "I'll think through what licence we're interested in but I am happy to do a deal with you" and "let's say the deal is done. Why don't you … put what we discussed over in a contract and send it to me but keep it simple, don't send me a major contract, just send me something like a simple letter." The letter which Mr Hadid sent is set out in par 55. It is headed "UCOM PROPOSAL." It is cast in the form of a proposal for consideration, not confirmation of a deal which had been done. The words "the deal is done" are reflected in Mr Hadid's fax to Ms O'Connor sent at 6.43 am on 28 August: "We have had a very exciting prospect, if I was to judge by what was said, then the deal is done?" That, in my view, reads more like Mr Hadid's assessment of a prospect rather than a quotation of what Mr Lenfest actually said, even the slightly modified version spoken by Mr Lenfest, according to Mr Hadid, at the end of the conversation: "… we can say the deal will be done and I'll talk to you tomorrow after I have had a chance to read the information and … consider the deal points we discussed." 759 Other aspects of the conversation, as given by Mr Hadid, seem, at least, odd. Mr Lenfest had no personal acquaintance with Sydney, let alone other Australian cities. There is no reason to doubt his evidence about that. It seems highly unlikely that he would have said, dogmatically, "… we know about cable and MDS, cable is years away and MDS … has problems with your city terrains." And while it is apparent that Mr Lenfest underwent, during the few days at the end of August and in the beginning of September, a rapid education as to the place occupied by Messrs Packer and Murdoch in the Australian media firmament, I do not think it likely that on 28 August he would have said, with equal dogmatism, "… but the thing you've got, one has to watch out for is Packer and Murdoch are very greedy, one has to get those licences up very quickly …." And, while it might not be surprising if Mr Lenfest and Mr Hadid had discussed some role for LCI in the raising of funds, what is very surprising is the remark attributed to Mr Lenfest: "I can raise the money here in the US and I have a very strong relationship, solid relationship with established financiers who will do it." In addition to Mr Lenfest's relative ignorance of the proposed business and the Australian environment, the sums apparently being spoken of were the full amount required to acquire both licences and, presumably, to provide some working capital for the licence‑owning companies. The sum ultimately raised by LCI in November was $US85,000,000, insufficient by a large margin even to pay the cost of acquisition of the two licences, let alone provide any working capital (certainly the bank information memorandum contemplated that the facility might be used to fund the acquisition of both licences, but only in circumstances where "Lenfest and its Australian corporate partners" succeeded in obtaining sufficient funds from additional investors). The relevant part of the second conversation (disregarding the additional matters of which Dr Gadir gave evidence: I have indicated why I do not accept that evidence) is Mr Lenfest's comment, of which Mr Hadid gave evidence, that he would reserve as an option the possibility that LCI would pay for the licences but would first "look into the market as to other US investors." While, once again, a suggestion, by either party, that LCI might seek investors in the United States might not be surprising, its conjunction with a suggestion that, as an alternative or "reserve" possibility, LCI might pay for the licences itself is surprising indeed. And it emerged, in Mr Hadid's cross‑examination, that that remark by Mr Lenfest had not been mentioned in Mr Hadid's affidavit or outline of evidence. 760 In any event, if Mr Lenfest on behalf of LCI had accepted an obligation to participate in the process of seeking investors, it might be expected that that obligation would appear in the written agreement - the letters - drawn very shortly after the conversation. But it did not. The agreement obliged LCI to provide the sums necessary to pay the deposits, in return for which, on capitalisation, LCI was to receive the promised benefits. In other words, capitalisation was assumed to be something that would, or was likely to, happen, not something which LCI had any duty to bring about. Additionally, Mr Hadid was at least ambivalent, in cross‑examination, as to whether, during the conversations before 1 September, Mr Lenfest or LCI assumed any obligations other than those set out in the documents of 29 August. It is sufficient to quote one passage: "[The letter of 29 August] was intended, was it, as a confirmation of the terms of the commercial deal which had been discussed and agreed upon between Lenfest and yourself? - This was the - yes, sir, put in simple terms, yes, sir. And it was intended to record all the terms of the commercial deal which had been done between yourself and Lenfest? - To record what Mr Lenfest and I had agreed as the basis of our deal, yes, sir. It was intended to record all of the terms of the commercial deal done between yourself and Lenfest, is that right or wrong? - It was intended to record our agreement in a simple letter, sir, that's all it was. But the fact that it is meant to be simple does not mean that something has to be omitted from it, does it? - Well, it means that obviously it didn't go through the scrutiny to make sure it's a detailed letter, no. … Do you say that there are some matters that ought to have been included in the letter which are not to be found in it? - Well, I'm saying that in fact this letter is a simple letter which addresses what we agreed [.] Could you please focus on my question. Do you say that there are matters agreed upon between yourself and Lenfest which ought to have been included in this letter but which have been omitted from it? - I think in substance the letter agrees what we agreed to." 761 Later, Mr Hadid said that certain matters were missing, including "the option of his financing": "Why did you not put them in the letter? - [Be]cause they were still optional, I didn't consider at that point of time Mr Lenfest was you know, 100 per cent committed to the financing." 762 Mr Lenfest denied all the statements attributed to him by Mr Hadid about the possibility that LCI would itself finance the acquisition of the licences or would seek investors in the United States. Having regard to the evidence, particularly that to which I have referred, and to my more general findings on credit, I do not accept that Mr Lenfest made the statements attributed to him by Mr Hadid. Accordingly (there being no suggestion that, Mr Hadid's evidence being rejected, there was another basis in the evidence for a finding of additional express terms), I find that the express terms of the contract formed on 29 August were only those set out in the two documents of that date and specifically did not include the additional express term pleaded. 763 Before leaving the topic of express terms, I should refer to one matter which received a good deal of attention in evidence but which does not bear directly on any issue to be decided. The letter of 29 August provided that LCI was, on capitalisation, to receive a free carried interest not less than 13.5 per cent: see par 73. Mr Hadid and Dr Gadir both gave evidence that, in the conversation immediately preceding the composition of the letter, Mr Lenfest agreed that in certain circumstances he might receive less. Mr Hadid's version of what Mr Lenfest said, to which he claimed to have acceded, is set out in par 62. The crucial statement is: "You're in control, we both think 30 per cent is achievable, now, if we don't achieve 30 per cent then obviously I would have to accept less. Now, if … you can't achieve … enough to give me 13 [sic] per cent then we can only do a deal if we both consent to it. Because you're in control of the joint venture, I would need that assurance for the risk that I am taking … and … when the time comes we both have to accept the realities of the market." That might be read as merely stating the obvious. If the agreement was that LCI was to have a free carried interest of not less than 13.5 per cent and, as it turned out, "you" (that is, UCOM) could not achieve capitalisation on a basis which would give LCI that free carry, then if capitalisation were to occur at all the parties would need to reach agreement on some other basis. As put by Mr Hadid, Mr Lenfest was not agreeing in advance to the best that, in the event, Mr Hadid might be able to do. He was recognising, at least as a theoretical possibility, that 13.5 per cent might not be attainable, so that LCI's unpalatable choice would be between accepting less and losing its deposits. Dr Gadir put the matter rather differently; he had Mr Lenfest saying: "… we also need to cap or rather to limit the downside, what if we get below a certain percentage that we would have - let's say 13.5 per cent, at least, of the free carried to which Mr Hadid responded that that would be fine, however, UCOM perhaps should be also protected in case it goes below a certain amount and Mr Lenfest said words to the effect, well, Albert, you're in control basically … if we give you a deal that you don't want to take, you don't take it, and likewise on the other side. At the end of the day we'll have to sit down and agree and I assure you that we will work together in the spirit of partnership." 764 Mr Hadid's letter of 28 October to LCI (par 224) summarised the agreement of 29 August; after dealing with the provision that LCI would receive a free carried interest of not less than 13.5 per cent, Mr Hadid added: "(However you agreed that Lenfest will receive less than the above interest if the market cannot support the amount initially envisaged)." 765 This again is a slightly different version and, perhaps, not an unambiguous one (what is meant by "the amount initially envisaged?"). In any event, if there had been a qualification expressed in the conversation, other than a statement of the necessarily true and obvious, it seems to me almost inconceivable that the document would not have recorded it. I therefore accept Mr Lenfest's evidence that, when the 29 August documents were signed, the agreement which they record was not in that respect subject to a qualification. 766 My finding is, therefore, that the express agreement between the parties comprised the terms set out in the letter and addendum of 29 August 1993, and no others. Under that agreement LCI and Mr Lenfest assumed only the following obligations: they were to forward to the specified bank account, no later than noon on Monday, 30 August, a net $US7,200,000, that being the equivalent of the deposits for licences A and B payable by the close of business on 30 August; they were to exercise their rights under the agreement in conformity with applicable Australian law; and LCI was obliged, on capitalisation and if UCOM required it, to "convert" the deposits into further equity in the licence‑owning company. LCI was entitled to receive, on capitalisation, the agreed free carried interest in the owner of one of the licences (LCI might choose which) and 2 per cent of the equity in the holder of the other licence; LCI was to have the benefit of a "management contract to run the operating company"; and either the deposits were to be returned or they were to be converted into equity in the licence owner (or owners).

(c) Implied terms? 767 "Joint venture" is undoubtedly an elastic term. There is, I think, no misuse of language involved in describing the agreement of 29 August as one giving rise to a joint venture. UCOM had the successful bids; LCI contributed the funds required to pay the deposits. The intended outcome was that both LCI and UCOM would be substantial shareholders in the owner of one licence and shareholders also in the owner of the other; and LCI would have the right to manage, for a fee, an operating company for both licences, in which (apparently) both LCI and UCOM would have an interest. Nor, I think, is there any doubt that both parties saw themselves as having embarked on a joint or common undertaking. On his note returning his signed copy of the letter of 29 August, Mr Lenfest wrote "we're off." In his note forwarding a signed and initialled copy to Mr Lenfest, Mr Hadid repeated that comment and added "look forward to working with you"; and on his note sending the signed addendum to Mr Lenfest, Mr Hadid wrote "we have a major task ahead of us to complete our tasks. We look forward to your participation and guidance." In a draft of the press release announcing the arrangements between LCI and UCOM, approved by Mr Lenfest, the arrangement was described as a "joint venture." Although that term was eliminated from the final version approved by Mr Hadid, Mr Hadid used words such as "joint venture" and "partner" in a television interview which he gave shortly after the deposits were paid. The evidence of Mr Hadid and Dr Gadir was that Mr Lenfest was liberal in his use of joint venture and partnership terminology during the early conversations. Mr Lenfest denied using such terminology at all. What is striking, however, as senior counsel for LCI and Mr Lenfest pointed out, is the entire absence of such terminology from correspondence between UCOM and LCI from the initial letters until the mid‑November transactions; equally, written communications between Mr Lenfest, Mr Heller and Mr Plant do not use such language to describe LCI's relationship with UCOM or Mr Hadid. In those circumstances, while I would not be prepared - and it is not necessary - to find positively that the expression "joint venture" or "partner" never passed the lips of Mr Lenfest or Mr Hadid during the early conversations, I cannot accept that Mr Lenfest engaged in the liberal use of those expressions as recounted by Mr Hadid and Dr Gadir. In any case, a consideration of the implication of terms or of the question whether fiduciary obligations arose between the parties depends much more on the substance of what was agreed than upon the labels which either party attached to the arrangements between them. 768 The question whether any terms, additional to its express terms, were implied in the agreement of 29 August received very little attention in argument. Perhaps, given the particular implied terms alleged, that was not surprising. It is useful to recall what the alleged implied terms were. LCI and Lenfest were, it was alleged, to ensure that: "a) each party would act in the best interests of the Joint Venture; b) neither party would act to the detriment of the other in relation to the affairs of the Joint Venture; c) neither party would enter into agreements or arrangements or otherwise place itself in a position which conflicted with the expressed and/or implied terms of the Joint Venture Agreement either at all or without giving proper notice to the other parties; d) each party would disclose to the other party all circumstances, material and information relevant to the affairs of the Joint Venture including their own intentions and actions; e) each party would not place itself in a position to profit from the use of confidential information communicated to it by the other party under or by reason of the Joint Venture; and f) each party would not place itself in a position to make secret profits out of the affairs of the Joint Venture." If on 29 August 1993 the parties had been asked whether those terms were part of the agreement, it is not, I think, highly probable that each would have answered: "Of course; that is so clear that we did not bother to say it" (Hospital Products Ltd v United States Surgical Corporation (1985) 156 CLR 41 at 66 per Gibbs CJ). A more likely reaction would have been that the suggested terms were by no means clear; that they appeared somewhat sweeping; and that they might well be read as imposing obligations on the parties which neither intended. What, for example, might term (b) involve in circumstances where the structure of the operating company remained in important respects to be negotiated? What particular positive duties might be encompassed in a general obligation to act in the best interests of the joint venture? What might be involved in term (c), beyond the requirement not to breach the terms of the joint venture agreement? What obligations might term (d) have placed upon Mr Hadid and UCOM in relation to their lower bids for each licence? What obligations might term (e) impose beyond those which would arise as a matter of law upon the communication, in confidence, of any confidential information? What are the "affairs of the joint venture" to which term (f) might apply? 769 In my view, an application of any view of the tests stated in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 52 ALJR 20 and Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 (see Hospital Products at 121 per Deane J) leads to the conclusion that none of the alleged implied terms formed part of the contract entered into on 29 August 1993. That would equally be so, I think, given the width of the terms alleged, even if it were an express term of the contract that the parties would seek investors.

(d) Fiduciary duties; duty of skill and care? 770 Mr Hadid's argument in support of the proposition that fiduciary duties arose from the agreement of 29 August 1993 is summed up in the following paragraphs of his written submissions: "7. The inference of joint pursuit of the exploitation of the licence bids for the joint benefit of the parties, to be shared between them, gives rise to the relationship pleaded, of, at least, joint venturers. 8. In these circumstances Lenfest as a party to the venture can not pursue its own separate interests - it has to act in the interests of the venture. Each party is in a fiduciary relationship. The personal/separate interests of Lenfest are secondary [and must give] way to the interests of the venture. The circumstances are such that Hadid is entitled to expect that Lenfest would act in the joint interest of the UCOM/Lenfest to the exclusion of Lenfest's own several interest. See generally United Dominions Corp Ltd v Brian Pty Ltd 157 CLR 1 and Hospital Products Ltd v United States Surgical Corp 156 CLR 41." 771 Once again, the topic was scarcely elaborated in oral submissions, though in argument in reply senior counsel for Mr Hadid put some rather different propositions in relation to a duty to disclose and fiduciary obligations, to which I shall return. The written submissions propounded the conclusions which I have quoted on the basis of a number of aspects of the evidence which I have considered already. They included the activities of Mr Heller and Mr Plant during their first visit; the early letter to Dr Malone; the inquiries made by Mr Heller and Mr Plant during their first visit; the joint approach to Time Warner led by LCI and the joint written proposal to Time Warner; the joint appointment of Turnbulls; the joint appointment of Sly & Weigall as lawyers and the joint dealings with the ABA; the consultative consideration of the business plan; the frequent contact and exchange of information about developments; the letter from Bain of 13 October addressed to both UCOM and LCI; and comments such as the following in Mr Lenfest's letter to Mr Hadid of 11 October 1993: "As we proceed, I feel that it is most important for our mutual interests that any external communications (press, interested parties, etc). be agreed to in advance by UCOM and Lenfest. This approach will best serve reinforcement of a united and considered approach by our respective groups and demonstrate our joint commitment to the project." 772 Senior counsel for Mr Hadid accepted that there was some room for argument as to the extent to which fiduciary obligations arise in "non‑partnership" joint ventures but submitted that this was a partnership joint venture in which (necessarily) fiduciary relationships arose. A notable aspect of the written submissions is that they base the asserted fiduciary duties on inferences which, it is said, should be drawn from events and actions succeeding the formation of the contract. There is, thus, justification for the comment by senior counsel for LCI and Mr Lenfest that the fiduciary relationship contended for is not the fiduciary relationship pleaded. Indeed, the matter might be sufficiently dealt with by saying that, given my findings as to the terms of the contract, there is nothing in the obligations undertaken by LCI or Mr Lenfest which could give rise to fiduciary duties on their part. 773 But even if LCI was subject to a contractual obligation to participate in a search for investors it is by no means clear that it would, on that account, have been a fiduciary. A number of matters must be borne in mind. The first is the essential content of the fiduciary obligation: "A person will be a fiduciary in his relationship with another when and in so far as that other is entitled to expect that he will act in that other's interests or (as in a partnership) in their joint interests, to the exclusion of his own several interest." (P Finn, "Fiduciary Law and the Modern Commercial World" in E McKendrick, Commercial Aspects of Trusts and Fiduciary Obligations,1992, p 9.) Secondly, a contract can be, and frequently is, a source of fiduciary obligations. Nevertheless, in such a case: "The fiduciary relationship, if it is to exist at all, must accommodate itself to the terms of the contract so that it is consistent with, and conforms to, them. The fiduciary relationship cannot be superimposed upon the contract in such a way as to alter the operation which the contract was intended to have according to its true construction." (Hospital Products at 97 per Mason J.) Thirdly, Mason J identified, in Hospital Products at 96, 97 particular aspects of fiduciary relationships and obligations which are significant here (it is to be recalled that his Honour's judgment was a dissenting one: he held, contrary to the view of the majority, that limited fiduciary obligations arose in the context of the distributorship agreement in question): "The critical feature of these relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense. The relationship between the parties is therefore one which gives the fiduciary a special opportunity to exercise the power or discretion to the detriment of that other person who is accordingly vulnerable to abuse by the fiduciary of his position. The expressions 'for', 'on behalf of', and 'in the interests of' signify that the fiduciary acts in a 'representative' character in the exercise of his responsibility … It is partly because the fiduciary's exercise of the power or discretion can adversely affect the interests of the person to whom the duty is owed and because the latter is at the mercy of the former that the fiduciary comes under a duty to exercise his power or discretion in the interests of the person to whom it is owed …. Thus a mere sub‑contractor is not a fiduciary. Although his work may be described loosely as work which is to be carried out in the interests of the head contractor, the sub‑contractor cannot in any meaningful sense be said to exercise a power or discretion which places the head contractor in a position of vulnerability." 774 It is not easy to see how those descriptions of circumstances apt to give rise to fiduciary obligations applied to LCI or Mr Lenfest on 29 August 1993. They had an immediate obligation, which they discharged, to pay the deposits which were due. Let it be assumed that they also undertook an obligation, as alleged, to participate in finding investors. Plainly they had a strong personal interest in ensuring that investors were found. But what relevant power did either LCI or Mr Lenfest have the exercise of which would affect the interests of Mr Hadid or UCOM in a legal or practical sense? What power or discretion did LCI or Mr Lenfest have to the abuse of which Mr Hadid or UCOM was vulnerable? Mr Hadid and his fellow shareholders controlled New World and UCOM Australia to the exclusion of LCI and Mr Lenfest. In practical terms, Mr Hadid himself controlled them. Any arrangements for investment or fundraising would be made with those companies and were, therefore, subject to the control of Mr Hadid. Any equity would be issued by a company which Mr Hadid controlled or, perhaps, by some other company to which the shares which he and his fellow shareholders owned might be transferred: but whether or not that happened was a matter entirely within the power of Mr Hadid and the other shareholders, again to the exclusion of LCI and Mr Lenfest. 775 To suggest that by undertaking an obligation to find investors, in conjunction with UCOM, LCI and Mr Lenfest acquired a powerful discretion to the abuse of which Mr Hadid was vulnerable involves, I think, a considerable subversion of reality. Once that is seen, the fact that there was a significant degree of cooperation and a significant role assumed by LCI in finding investors makes no difference. And the circumstance that LCI had a right, on capitalisation, to acquire shares and to have the benefit of a management contract equally, of course, conferred upon it no relevant power or discretion to the exercise of which Mr Hadid was vulnerable. In short, why, if LCI and Mr Lenfest assumed the express contractual obligations alleged and acquired, in turn, the rights conferred on them by the agreement of 29 August, should they be taken additionally to have undertaken to act in some identifiable joint interest, within the scope (or some aspect of the scope) of those arrangements to the exclusion of their own separate interests? 776 The issue then is whether it is possible to characterise the arrangements between the parties as a joint venture, or a single venture partnership and, if so, whether that makes a difference. The submissions on behalf of Mr Hadid relied, naturally enough, on the decision of the High Court in United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1. There is no doubt that that case held that certain joint ventures are analogous to partnerships so that fiduciary duties of the kind which partners owe each other arise equally as between the joint venturers. The joint venture in question in Brian involved the development of land. The principal joint venturer was the legal owner of the land and (apparently) the land was, at least in part, its contribution to the venture. The other venturers contributed funds to the venture. To a large extent the funds contributed were borrowed from one of the venturers, UDC, which took a mortgage over the land. The development was to be completed, using the funds contributed and borrowed, and the venturers were to share, in the agreed proportions, any profits on realisation. There was, in fact, a substantial profit on realisation. UDC claimed, however, to be entitled as mortgagee to the whole of the proceeds of sale on the basis that, in addition to borrowings made for the purpose of the joint venture, its mortgage also secured, as a result of a "collateralisation clause", other debts owed to UDC by the venturer which held legal title to the land. The High Court held that the joint venture was the substantial equivalent of a partnership and that UDC, as a venturer, was precluded by its fiduciary duties to the other venturers from relying on its mortgage as security for debts other than those incurred for the purposes of the joint venture. 777 The analogy with partnership, in Brian, was clear. As Mason, Brennan and Deane JJ described it at 11: "In the present case, it is apparent that the relationship between the participants in the shopping centre venture was a fiduciary one at least from the time when the formal agreement was executed. Under the agreement, the participants were joint venturers in a commercial enterprise with a view to profit. Profits were to be shared. The joint venture property was held upon trust. The participants indemnified the managing participant … against losses. The policy of the joint enterprise was ultimately a matter for joint decision. Apart from the absence of any reference in the agreement to 'partnership' or 'partners', the relationship between the participants under the agreement exhibited all the indicia of, and plainly was, a partnership … . It is true that UDC came to the joint venture in the role of prospective financier and, in so far as borrowings from it by [the managing participant] on behalf of the partnership were concerned, occupied the role of a lender as well as that of partner. In so far as the property which was the subject of the joint venture was concerned however, the fact that UDC was a lender to [the managing participant] on behalf of the partnership did not absolve it from the ordinary fiduciary obligations of a partner." But other ventures might, of course, have different characteristics. Their Honours said, at 10: "The term 'joint venture' is not a technical one with a settled common law meaning. As a matter of ordinary language, it connotes an association of persons for the purposes of a particular trading, commercial, mining or other financial undertaking or endeavour with a view to mutual profit, with each participant usually (but not necessarily) contributing money, property or skill. Such a joint venture (or, under Scots' law, 'adventure') will often be a partnership. The term is, however, apposite to refer to a joint undertaking or activity carried out through a medium other than a partnership: such as a company, a trust, an agency or joint ownership." 778 Here, no doubt, it might be said that the UCOM shareholders had an opportunity, in the form of the conditional right to acquire the licences; they contributed that opportunity and LCI contributed cash to a venture intended to realise a profit for each party. It is because such a characterisation is available that I have already expressed the view that it is not a misuse of language to describe the arrangement as a joint venture. That characterisation is available just as much where LCI had no obligation to participate in the search for investors as it would be if LCI had had such an obligation (a person whose only obligation is to contribute capital to a partnership business may nonetheless be a partner). Indeed while superficially the addition of a shared obligation to find investors might add to the appearance of a joint undertaking (rather, perhaps, than something more analogous to a purchase) it is not easy to see, on a more precise analysis, what that shared obligation would add. 779 There are in any event significant differences between, on the one hand, the relationship between UCOM and LCI under the 29 August agreement and, on the other, a partnership (or a joint venture of the kind considered in Brian). Here, there was, in any usual sense, no division of profit (or product) in agreed shares or, on the completion or termination of the venture, a division of property for its proceeds in agreed shares. What LCI acquired, rather, was the right, in a particular event, to a particular interest in a business then to commence together with the right, for a fee, to manage the operation of that business. Nor was there partnership property or property held by (or in trust for) venturers as tenants in common in agreed proportions. Both the sharing of profits and the holding of property as joint venture property were regarded as important indicia in Brian. Nor, in the 29 August agreement, was there any provision for the making of decisions in relation to a venture. Plainly the agreement of 29 August did not render the parties partners in the strict sense. Nor, in my view, did it give rise (or would it have given rise if it included a shared obligation to find investors) to a relationship sufficiently analogous to partnership to give rise to the same fiduciary obligations which existed between the partners. 780 That is not to say that neither party became subject to any fiduciary obligation to the other. However, I see no basis for a conclusion that the wide duties pleaded arose (or would have arisen had there been a shared obligation to find investors). Nor, given the limited terms of the agreement as I have found them, was LCI under fiduciary obligations which extended to a negotiation to acquire from Mr Hadid, and the other shareholders, the shares in New World: there was no partnership or analogous relationship and, in the light of the principles discussed, no other basis on which such a duty could be found. 781 If LCI had undertaken, on 29 August 1993, an obligation to find, or assist in finding, investors it is, no doubt, conceivable, quite apart from the partnership analogy and the more general considerations referred to by Mason J in Hospital Products, that a more limited fiduciary duty arose analogous to that of an agent employed to seek properties of a particular kind for a principal (see P D Finn, Fiduciary Obligations, 1977, pp 234, 235). But no such limited duty was pleaded or suggested in argument. It is by no means clear that such a duty would have been infringed by LCI's acquisition of the shares in New World. In any event, having regard to my findings about the terms of the contract, the question does not arise. 782 Although this may be a matter of secondary importance, several aspects of Mr Hadid's own conduct are consistent with the conclusion that the relationship between the parties was not one analogous to partnership or one which gave rise to broad fiduciary obligations. Mr Hadid gave evidence that he regarded himself as having, at all times, official or ultimate control of the venture, particularly in the sense that any deal, for example any underwriting, would require his approval; and, ultimately, LCI's receipt of a free carry of not less than 13.5 per cent was dependent upon his assent, at least in circumstances where, if LCI received that free carry UCOM might receive little free carry or none. There was no suggestion that in exercising his power to give or withhold approval Mr Hadid regarded himself as bound to consider any interests other than his own and UCOM's. And Mr Lenfest's evidence was that Mr Hadid did not inform him of two important matters: first, that UCOM had a number of lower bids to which there might be a cascade if the New World and UCOM Australia bids were not taken up; secondly, that if the ABA took the view that New World or UCOM Australia was an unsuitable applicant, having regard to the cross‑ownership provisions, its deposit would be forfeited. Mr Hadid's evidence was that he could not recall informing Mr Lenfest of either of those matters, though he believed that he must have done so. I see no reason not to accept Mr Lenfest's evidence that Mr Hadid did not tell him. Nor, apparently, did Mr Hadid consider himself to be under any universal obligation of disclosure. A letter which he wrote to Mr Heller in late September included this passage: "For a short while today I felt you were questioning me. I will always strive to provide all information that it is reasonable you should have. You must appreciate that I will not always feel that disclosure is needed. …" Mr Plant gave evidence of a conversation with Mr Hadid in late October during which Mr Hadid suggested that if he could not get a free carry in excess of 20 to 25 per cent he would "let the process cascade down and secure another party to finance the down payment." Mr Plant reported that conversation in a note to Mr Heller (par 208). Mr Hadid denied that that was his position and said that that was something he would not have done. However, he accepted that he may well have told Mr Heller, in November, that Dr Gadir and Mr Blanks wished to allow the bids to cascade, so that LCI would lose its deposits, and Mr Heller gave evidence (again supported by a contemporary note) that Mr Hadid did say that to him. Mr Hadid may well have been sceptical of his prospect of raising further deposits if the existing bids were allowed to cascade; but the evidence strongly suggests that the UCOM camp, including Mr Hadid, regarded this as an option which was open to them, and one which might be exercised (as in reality it could only be exercised) having regard to no one's interests but those of UCOM and its shareholders. 783 That deals sufficiently, I think, with the fiduciary obligations pleaded by Mr Hadid against LCI and Mr Lenfest. Little need be said about the alleged duty of care and skill in relation to the seeking of investors. The existence of a duty of care arising under the law of negligence was scarcely mentioned during submissions. It was accepted, however, that if I were to hold that there was no solicitation agreement and that the joint venture agreement did not include either the oral express term or the implied terms pleaded, then Mr Hadid could not succeed separately on the basis of a duty of care and skill arising from the agreements and their performance. 784 My conclusions on this aspect of the case may, then, be summarised as follows: · there was no solicitation agreement as alleged. The only express terms of the agreement of 29 August 1993 were those contained in the letter and addendum of that date; · that agreement did not incorporate any of the alleged implied terms; · the agreement did not give rise to the fiduciary obligations alleged; · the alleged duty of care and skill did not arise.

Bain and Dr Burt: contract; fiduciary obligation; duty of care

(a) Contract 785 I have described the relevant paragraphs of the pleading, and quoted extensively from them, between par 406 and par 411. Once again, the submissions of senior counsel for Mr Hadid did not suggest, in any detail, a basis in the evidence for making particular findings which would support a conclusion that the alleged duties arose. 786 It was, however, made clear that contractual obligations were said to arise, on the part of Bain, both as pleaded in par 16 of the statement of claim and as pleaded in par 22(c). Paragraph 16 is as follows: "In consideration of the Applicant proposing to the participants of the Joint Venture Agreement that the services of Bain be employed as financial adviser to the Joint Venture and underwriter of any capital raising in connection with the exploitation of Licence A and/or Licence B, Bain agreed to act as adviser to the Applicant in relation to the financing of, and opportunities for, the commercial exploitation of the licences between about 1 September 1993 and 18 November 1993. Burt was involved in the conduct of Bain as pleaded below." 787 The particulars of par 16 assert that the agreement was partly express and oral, "by conversation between Burt and the Applicant on or about 30 or 31 August 1993 and 1 September 1993" and was "otherwise implied by the conduct of the parties on or from 1 September 1993." 788 There are several difficulties with that. One, which was pointed out in submissions on behalf of Bain and Dr Burt, is that it is at least extremely odd that the consideration for Mr Hadid's agreement to propose that Bain be employed to provide both advisory and underwriting services to the participants of the Joint Venture Agreement (that is, LCI, Mr Hadid and the other UCOM shareholders) should be a promise by Bain (through Dr Burt) to provide advisory services separately to Mr Hadid. A second difficulty is this: as has been seen, Dr Burt's evidence was that Mr Hadid on several occasions asked Bain, through Dr Burt, to undertake an advisory role and that on each occasion Dr Burt resolutely refused. On a number of those occasions Dr Burt made a contemporaneous note of the conversation in which his refusal is recorded. The first of those occasions, according to Dr Burt, was on 27 August 1993, after the meeting with TPL. The second was on 1 September. Dr Burt's note of that meeting recorded what he described as his reiteration that Bain was not an adviser (par 94). Mr Hadid's accounts of his discussions with Dr Burt in early September are, of course, radically different from those of Dr Burt and it is a fair general summary to say that Mr Hadid denied Dr Burt's account to the extent that it differed from his own. But Mr Hadid's evidence could not, I think, be taken to establish the formation, in conversation between him and Dr Burt, of the contract alleged. He gave, in cross‑examination, this evidence about a telephone conversation, recounted by Dr Burt, following the 27 August meeting: "The only reason I could think of making a call would - if I ever made one, which I can't recall making one, would be to thank him for being there and for apologising for not being there for the whole meeting. And for the second part there is no known way I would have asked him to be my adviser, I had Turnbulls. Why would I have needed Dr Burt? There's just no known way. It took me five months to convince Malcolm Turnbull and his office to become our advisers, Mr Hughes." 789 Pressed to identify a conversation in which Dr Burt agreed on behalf of Bain to act as Mr Hadid's adviser, he was unable to do so. That is a bald, but I think a fair, summary of lengthy and at times tortuous evidence. There is, however, a more general and pervasive difficulty. I have referred to the very brief and general submission of senior counsel for Mr Hadid to the effect that, if I should find it necessary to resolve conflicts in the evidence, I should prefer that of Mr Hadid and those called by him to that of the respondents and witnesses whom they called. But counsel for Mr Hadid attempted no analysis of the evidence concerning conversations to which Dr Burt or Mr Johnston was a party and suggested no reasons why I should prefer one version of any of those conversations to another. In a document in which counsel for Mr Hadid provide references to evidence said to support allegations in the various paragraphs of the pleading, a number of transcript references and documents are indicated as supporting the allegations in par 16. Although senior counsel for Mr Hadid accepted that I would not trawl through all the references in that document to evidence said to support a particular paragraph of the pleading when my attention was not directed, in oral (or other written) submissions, to those references, I have looked at the evidence said to support par 16. I am quite unable to see that any of it offers support for the existence of the particular contract pleaded (or, indeed, any particular contract). 790 The assertion in the particulars that the agreement is to be implied from conduct begs the question, what conduct? Although, again, no precise submissions were directed to this point, I take it that the conduct referred to is what was characterised as particular advice on various points given from time to time by Dr Burt to Mr Hadid. I shall consider that conduct of Dr Burt a little later in these reasons. It is sufficient to say at present that I do not see how any of it may be taken as indicating the existence of, much less giving rise to, the contract alleged in par 16. The inevitable conclusion is that the allegation in par 16 is not made out. 791 The other alleged contract arises, on the pleading, in this way: par 21 pleads that between about 13 October 1993 and 18 November 1993 Bain acted as adviser to the "participants of the Joint Venture" in relation to their attempts to sell shares in New World and/or UCOM Australia and in relation to the commercial exploitation of the licences (the only item in the particulars of that paragraph is the letter of 13 October - that is, the non‑binding indication sought by TPL - from Bain to Mr Hadid and LCI); par 22 then alleges that "[as] a result of paragraph 21 above" Bain owed to the participants of the Joint Venture Agreement, among other duties: "(c) a duty to provide advice, counsel and information to the Applicant pursuant to the agreement between Bain and the participants of the Joint Venture Agreement and as such it was implied from that agreement that Bain would ensure that it would do or not do, as the case may be, those things referred to in subparagraphs 22(i) to (v) inclusive." Paragraph 22(a) lists a series of what are described as fiduciary duties requiring Bain to do, or not to do, various things (they are listed in par 406). 792 In par 175 I have set out the letter of 13 October in full. It states Bain's "current views on several matters" and may be characterised as, among other things, offering advice. But there is no basis for a suggestion that it amounted to an agreement to act as adviser.

(b) Other duties 793 What, then, of the sources of duty alleged in par 17 and par 18 of the statement of claim? Paragraph 17 alleges the provision in writing by Mr Hadid to Bain of "particulars of all financial analyses and information concerning the licences" and oral communication by Mr Hadid to Bain of information as to: "a) the terms of the Applicant's and the UCOM consortium's dealings with Lenfest Communications and Gerry Lenfest (in particular the Joint Venture Agreement and the Solicitation Agreement); b) steps taken to finance or find investors in either or both of the licences; c) the identity of prospective investors in the licences; and d) all other information concerning the affairs of the Applicant and the Ucom Consortium as they were requested by Burt and/or [Mr Johnston]." Paragraph 18 alleges that Bain, by Dr Burt, held itself out as having special skill in providing financial and investment advice and knew, or ought to have known, that Mr Hadid relied upon Bain to provide full and frank advice and to exercise reasonable care in respect of the giving of advice "as to the opportunities for the exploitation of the licences so as to maximise the benefits flowing to the participants of the Joint Venture Agreement and the Applicant." It then alleges that Bain provided, or purported to provide, advice, counsel and information to Mr Hadid as to those matters. The particulars given are the letter from Bain to TPL of 30 August 1993, the letter from Bain to Mr Hadid of 16 September 1993 and the affidavit of Mr Hadid filed on 11 July 1995. That affidavit was not read. The parties proceeded on the footing, however, that it had, for present purposes, been replaced by Mr Hadid's oral evidence about his conversations with Dr Burt and Mr Johnston. 794 Those matters are, together with the contract alleged in par 16, said to have given rise to broad fiduciary duties owed by Bain (and, derivatively, Dr Burt) to Mr Hadid and a duty to exercise reasonable skill and care in providing advice to Mr Hadid. Paragraph 21 then, as I have mentioned, alleges that between 13 October and 18 November 1993 Bain acted as adviser "to the participants of the Joint Venture", the particulars given being the letter from Bain to Mr Hadid and LCI dated 13 October. I have already considered the contractual obligations said to arise; as well, the facts alleged in par 21 are said to have given rise to other duties owed to the "participants of the Joint Venture Agreement": both fiduciary obligations and a duty to exercise reasonable skill and care in providing advice.

(i) Provision of information to Bain 795 Although a great deal of evidence was directed to establishing that Mr Hadid gave Dr Burt both documents and oral information before the meeting at Bain's offices on 10 September 1993, the final submissions made on behalf of Mr Hadid did not - apart from some analysis as to what should be taken to have happened at the meeting on 10 September - propound any particular approach to the evidence on that question or propose any particular findings of fact. My narrative sufficiently demonstrates the considerable gulf between the evidence led by Mr Hadid and that of Dr Burt. Nevertheless, the question is significant in relation to the issues between the parties. Findings as to the role played by Bain and Dr Burt, particularly in the early stages, must be affected by the extent to which, and the time at which, they were given information, actively sought information and considered and worked on information that they were given. 796 What at least is clear is that UCOM sent Bain a draft confidentiality agreement immediately after the meeting on 10 September, a slightly amended version of that agreement was signed by Bain and returned to UCOM on 16 September, Mr Noah gave Mr Johnston and Mr Grimes a version of the UCOM business plan and model on Saturday, 18 September and in the course of discussions on that day Mr Grimes and Mr Johnston made notes on copies of the model (par 138). It is clear also, and uncontroversial, that following the meeting Mr Grimes spent some hours analysing and working on the model which he had received. Dr Burt's evidence, supported by that of Mr Johnston and, so far as his knowledge extended, Mr Grimes, was that Bain received no documents from UCOM before 18 September. Mr Hadid gave evidence that on a number of occasions before 10 September he gave Dr Burt documents and provided him with information, in large part upon Dr Burt's insistent request. Mr Hadid, Dr Gadir, Mr Egan and Mr Noah gave evidence to the effect that documents were handed to the Bain representatives, or at least tabled, during the meeting on 10 September. Mr Noah gave evidence of a meeting with Dr Burt on Saturday, 11 September; I have already given reasons for my finding that no such meeting took place. 797 Mr Hadid, it will be recalled (par 95), gave evidence that he met Dr Burt on 1 September at the Wentworth Hotel. Dr Burt expressed a strong desire to underwrite "the business" and confidence as to the prospects of an underwriting. He also, according to Mr Hadid, strongly urged, against Mr Hadid's repeated statements that they must await the arrival of LCI's representatives, that "due diligence" begin immediately on UCOM's figures: "I want to help you, you know, let's get together and work on at least the figures, start looking at the figures." Then at a second meeting at the Wentworth Hotel, the following day, Mr Hadid (according to his account) handed "summaries" to Dr Burt (par 96: "I said, 'Here are summaries of the business plans and the financials which I am happy to give you, but make sure no one else gets their hands on it.' ") Dr Burt again expressed keenness that "due diligence" should start immediately and that he would "like Bain's to help me" to do it. The conversation, according to Mr Hadid, proceeded to a discussion of the summarised figures and the terms of Mr Hadid's arrangement with LCI. Mr Hadid then gave evidence of two further meetings with Dr Burt before 10 September (par 115). At the earlier of the meetings Dr Burt, according to Mr Hadid, said: "Now I want all the business plans, all the information, … so Bains can start its due diligence on the figures." At the second meeting, which Mr Hadid said took place on 9 September, Mr Hadid "copied the documents and gave them to Dr Burt." It will be recalled that Dr Burt gave a very different account of the 1 September meeting from Mr Hadid's; he denied that he and Mr Hadid met on 2 September; he denied that he and Mr Hadid had the further meetings, before 10 September, of which Mr Hadid gave evidence; and he denied that he received any documents from Mr Hadid before 10 September. 798 The principal written submission on behalf of Mr Hadid on this aspect of the matter comprises what is described as an outline of "the admitted position of Burt, vis‑a‑vis Hadid/Ucom." It assumes (for the purposes of the argument) the correctness of Dr Burt's chronology of his meetings with Mr Hadid during September: among other things, that there was a meeting on 1 September but none on 2 September and that no further separate meeting between Dr Burt and Mr Hadid took place before the substantial meeting on 10 September. Nor was Dr Burt strongly pressed in cross‑examination on those matters. He was questioned about his assertion that he did not receive, and was not interested in receiving, detailed information in early September, and the following questions and answers encapsulate what he had to say about that: "Surely one of the obvious things to do would be to take on board such information as was available? - Not at that stage. My role was to pitch on a large number of transactions and if you look at my diary of that week I was and if I took on every piece of financial material that was available at an early stage I'd just get bogged down. That wasn't the way I operated. I operated at a more macro level. … And you have told us on many occasions of the importance of the pitch which you were offering, that is, on behalf of Bains? - Yes, we were keen to get in front of Lenfest, find out about them and put our credentials in front of them, yes. Well, Dr Burt, do you tell us that it never crossed your mind that it would be a highly useful thing to do to be able to impress the Lenfest people with your grip of matters financial? - No, it didn't because … Didn't cross your mind? - No, without meaning to sound arrogant I never ever bothered myself with those things. I'd seen enough of these transactions to know that that's time wasting and that the key here was to meet the principals, ask them and their advisers to give us the structure and not try and invent it ourselves. So I wasn't interested. … But surely the essence of dealing in this area is to take anything which may prove to be an advantage if there is no disadvantage. Isn't that a reasonable precept upon which to operate? - No, because … well, it's actually a disadvantage to - I was trying to make the distinction. If I was to read everyone's models of everyone who walked through my door, and a lot of people did, then I'd never get anywhere in the business I was in. I was there to generate big deals, not to read people's models at an early stage." 799 There are real difficulties with Mr Hadid's evidence. Initially, no attempt was made, in his evidence in chief, to identify the "summaries" which he claimed to have handed to Dr Burt on 2 September. A call for them by counsel for Bain and Dr Burt resulted, I think it is fair to say by way of summary, in no significant elucidation. Nor was there any clear description of what precisely it was that was copied and handed over later, but before the 10 September meeting. Some of the matters attributed by Mr Hadid to Dr Burt on 1 September are remarkable indeed. Mr Hadid's account is set out in par 95 and I need not repeat it: it is sufficient, perhaps, to refer particularly to Dr Burt's statement, according to Mr Hadid, about the possibility of buying "technology programming infrastructures operating skills" and Dr Burt's confidence (LCI being a bonus but not essential) that Bain could do an underwriting in "about 50 to 60 days." And Dr Burt's urging that due diligence commence, without waiting for LCI, sits (to put it mildly) oddly with the accounts given of the initial meeting with Mr Heller and Mr Plant on 6 September, and Bain's letter to LCI following that meeting. There are remarkable features also of Mr Hadid's account of the 2 September meeting, set out in par 96. Obvious examples are the conversation about TPL and free carry and the observation attributed to Dr Burt, "I'm a director of Bain's and therefore I'm a director of Deutsche Bank." Dr Burt's handwritten note of the 1 September meeting (and, of course, his oral evidence) suggests a meeting quite different from that described by Mr Hadid. And there is no evidence corroborating Mr Hadid's oral evidence that any documents were handed over before 10 September. In all those circumstances, it is appropriate to find, as I do, that: (a) neither Mr Hadid, nor anyone else on behalf of UCOM, delivered to Bain any documents relating to the bids for licences A and B before 10 September; (b) the meetings which, according to Mr Hadid, took place between him and Dr Burt on 2 September and on two later occasions before 10 September did not happen; and (c) the conversation between Dr Burt and Mr Hadid on 1 September was substantially as recounted by Dr Burt, Mr Hadid's account being rejected. 800 The first thing to be noticed about the meeting of 10 September is that it is common ground that it was arranged by Mr Hadid. Mr Hadid said so in his evidence in chief. Dr Burt's evidence, in cross‑examination, was that he could not remember how the meeting came to be scheduled, except that the initiative came from the UCOM side: "You see, if you hadn't had any communication with Mr Hadid how did the meeting of 10 September come to be scheduled? - I'm not sure. Well, it does rather suggest some contact, doesn't it? - It could have been - I can't speculate but, I mean, it may have been made in a quick phone call but it may have been made to Mr Johnston. I'm not sure. Well, it is inevitable, is it not, that there was some communication between Bain's, whoever, and somebody from the Hadid organisation? - Yes. It may have been on the 6th at the meeting [presumably the meeting with Mr Heller and Mr Plant]; I don't know; I can't recall how that meeting was scheduled."

In those circumstances the leading role attributed to Dr Burt by Mr Hadid, Dr Gadir, Mr Noah and, particularly, Mr Egan is somewhat surprising - especially Dr Burt's disquisition, at the beginning of the meeting, on a series of technical and regulatory matters. There is, I think, no reason to doubt the authenticity of Mr Egan's notes as a contemporaneous record of things said at the meeting and perhaps, to some extent, of some of his own thoughts. But the opening remarks which he attributed to Dr Burt seem far more likely to have come from Mr Hadid; and given the appearance of the same matters in Dr Burt's note (though in abbreviated form) the high probability is, in my view, that Mr Hadid spoke of the technical and regulatory matters, not Dr Burt. I have discussed this issue in par 572. Equally, Mr Egan's attribution to Dr Burt of the statement, recorded in his notes, "may provide Peter Cox to assist" seems to me very improbable; it is far more likely that that suggestion emanated from Mr Hadid, for whom Mr Cox had already done some work (Dr Burt's evidence was that he did not know Mr Cox). Indeed, it may well be - this would be largely consistent with Dr Burt's evidence - that Dr Burt's only substantial contributions were those which Mr Egan's notes specifically attribute to "Bain." 801 Equally improbable, it seems to me, is Dr Gadir's account of the opening of the meeting - which differs significantly from other accounts - which I have recorded in par 121. However keen Dr Burt may have been to do an underwriting, the evidence as a whole does not support the proposition that he wished immediately to embark upon a process of due diligence. Apart from Mr Noah's evidence of a meeting on Saturday, 11 September, there is no evidence that anyone within Bain did anything with, or in relation to, any UCOM (or for that matter Hi Vision) document before the meeting of 18 September. If indeed documents - and, on Mr Hadid's evidence in cross‑examination, disks - were handed over on or before 10 September, and if Dr Burt really were keen to begin a process of due diligence, one would not expect that to be the case. 802 According to Mr Hadid, Dr Burt offered advice, at the meeting, on three subjects: he advised that the licence companies have seven directors, two from UCOM, two from LCI, three others and a "notable chairman"; he advised that UCOM should "get a valuation done on the licences like Australis did"; and he advised "that you and Lenfest get on and secure the programmers." Mr Egan's evidence also was that Dr Burt addressed those matters, though not quite in those terms. Dr Burt denied that he did so. Mr Egan's notes provide no further basis for attributing that advice to Dr Burt. It might not, perhaps, have been altogether surprising had he offered some views at least on some of those matters. But, given the difficulties with the evidence of Mr Hadid and Mr Egan to which I have already referred and the lack of support in Mr Egan's notes, there is in my view no proper basis for a finding that Dr Burt offered advice on any of those matters at the meeting on 10 September. In that context, however, there is one other matter which should be noted before I deal specifically with the question whether the documents were handed over or exchanged on 10 September. It is that there is, as senior counsel for Bain and Dr Burt pointed out, a clear reflection in Mr Hadid's evidence of matters noted by Mr Egan. Mr Hadid had had possession of Mr Egan's documents since May or June 1994: Mr Egan gave evidence that he was asked by letter to give his documents to Mr Hadid: "everything", including his notes. Mr Cooper received and complied with a similar request. I do not doubt that Mr Hadid made himself familiar with that documentation; and I find the impression irresistible that, at least, it assisted or prompted his recollection of a number of events. 803 Would it be right, then, to find that, contrary to the evidence of Dr Burt, Mr Johnston and Mr Grimes, documents were handed over at the meeting of 10 September? I have already indicated why I do not accept a general submission made by senior counsel for Mr Hadid to the effect that, since time was short, there is every reason why Dr Burt would have sought documents early and Mr Hadid would have given them to him. Other aspects of the evidence, however, lead me to conclude that the proper finding is that no documents were handed over on 10 September. Mr Hadid, in his evidence in chief, did not identify any documents as handed over on 10 September, though he did so in cross‑examination. Dr Gadir gave general evidence of an "exchange" of documents, though later he gave evidence that documents were merely "presented" and identified, among those documents, and only in cross‑examination, the UCOM business plan. Mr Noah said that Bain was given Hi Vision documents (including a business plan and the Project Koala list), a UCOM financial plan and "some other documents in relation to theDOTAC issuing of the letters of notice of the licences." Mr Egan said that the UCOM financial model and business plan were given to representatives of Bain and Nomura at the beginning of the meeting. But it emerged in cross‑examination that this was a recollection which had occurred to him since he prepared his outline of evidence in which he had answered an outline prepared by Dr Burt: Dr Burt had denied that he received business plans or financial models on 10 September and Mr Egan had not contradicted that denial. There was also some somewhat unsatisfactory evidence, from both Mr Hadid and Mr Egan, about an exchange of documents. Mr Hadid's evidence was that it was arranged, on his suggestion, that Bain would return to UCOM all documents which it had received before 10 September and at the meeting in exchange for more recent versions. Mr Egan, during his evidence in chief, was referred to his note "Want copy of exactly what Bain & Nomura have: IM & financials." He explained it as follows: "There was a request by Albert Hadid. He said words to the effect that he wanted the return of all documents held by Bains and Nomura and they would distribute fresh documents." If that was what was said, the note was, perhaps, a somewhat odd way of recording it. Mr Egan conceded that it did not record a request by Mr Hadid. The note simply prompted his recollection. More significantly, however, there is no evidence that in fact any documents were ever returned. Mr Hadid accepted that he had no recollection of it happening. 804 In all those circumstances, my finding is that no documents were handed by any of the UCOM representatives to Dr Burt or any of the other Bain representatives at the meeting of 10 September 1993. That finding, together with the other findings already made, leads to the conclusion that the allegations in par 17 of the statement of claim are not made out. 805 It is appropriate to deal with one other matter before leaving the events of 10 September. It will be recalled that Mr Egan gave evidence that he attended a lunch immediately following the meeting at which Dr Burt emphasised that he wished to complete "his due diligence", that he was able to seek underwriting approval by a phone call to Deutsche Bank in Germany and that the approval process was a very short one (par 133). Dr Burt denied that there was such an occasion. Mr Hadid, Dr Gadir and Mr Noah, all said by Mr Egan to have been present, did not give any evidence about it. Mr Ritchie and Andrew Price, also said by Dr Burt to have been there, were not called. I find - though probably it does not greatly matter - that no such luncheon took place.

(ii) Bain and Dr Burt as advisers 806 There is evidence that, at least in some sense, Bain and Dr Burt gave advice to Mr Hadid or, perhaps, to UCOM and its shareholders through Mr Hadid. Recital C to the mediation agreement, drawn by Mr Elliott on Bain's instructions, stated that: "Burt and Bains have previously advised both UCOM and Lenfest in relation to matters connected with subscription television broadcasting licenses." (It is to be noted, however, that "UCOM" is defined in the mediation agreement to mean New World; there is no recital that Dr Burt or Bain had advised Mr Hadid.) Dr Burt, in cross‑examination concerning the transcript of an interview he had had with officers of the Australian Securities Commission (in relation to its inquiry into dealings in Australis securities), accepted that he had given "common sense advice" to Mr Hadid: "And is it the fact that you agreed to see what assistance you could be given that you had always given Hadid very straightforward advice and he had appeared to take it on board on previous occasions? - Yes, and I had no particular record or knowledge of whether he had ever acted on that to finish the sentence. It is true then that one of the factors which occasioned you to agree to Mr Heller's request for help in dealing with Mr Hadid was that you had given - sorry, always given Mr Hadid very straightforward advice and he had appeared to take it on board on previous occasions though you had no particular record or knowledge whether he had ever acted on it? - Yes, common sense advice in the way we're using it in terms of underwritings, yes." 807 And, earlier in the cross‑examination: "Well you saw, did you, that the advice that you had given in respect of the availability of local moneys [that is, at the meeting of 27 August] may have provided some part of the catalyst which encouraged the Lenfest organisation to take the risk on Australia? - No, I did not see that at all and I gave … advice on - not advice; I gave my views on institutional money, international and local. I wasn't limiting myself to local money. In fact the money I raised for Australis was international money. Well, you shy away from the word 'advice', I suggest; but, however that may be, do you see some distinction between offering your views on something and giving advice about something? - In a common sense way, no, but in a formal corporate advisory sense, yes. All right. In any event, presumably those views which you offered you offered as views of a person experienced, perhaps expert, in the area - correct? - Yes." 808 Dr Burt accepted that he gave Mr Hadid and UCOM "my opinions and views on various matters at various times primarily relating to market appetite for underwritings." He accepted also that, "in the common sense view", Bain's letter of 13 October contained financial and other advice given to Mr Hadid and Mr Plant. He believed that Mr Heller knew "that Albert had some respect for me because I'd been at various meetings with Mr Hadid and the Lenfest people" and that Mr Hadid listened to what Dr Burt said about the "market's view." 809 On the other hand, Dr Burt insisted that neither he nor Bain was ever Mr Hadid's adviser and that he informed Mr Hadid frequently that neither he nor Bain would accept an advisory role. Dr Burt's evidence was that Mr Hadid first asked him whether he would advise Mr Hadid (or UCOM) immediately after the initial meeting with TPL; Dr Burt claimed to have refused, saying that Bain was "not interested in advisory roles at the moment although we are interested in pitching for underwriting." Dr Burt gave evidence that he and Mr Hadid had a second, similar, conversation on the telephone shortly after that. Then, according to Dr Burt, the same suggestion and response were made during the meeting on 1 September: on this occasion Dr Burt made a note of the conversation: par 93 and par 94. Then, at the dinner at the Treasury Restaurant on 11 November, Dr Burt claimed to have made it clear that he was not offering advice but merely giving general information or views about the market (par 280) and his note of the discussion indicates that he did so. There is nothing surprising or, I think, controversial, about that. Dr Burt made it plain that he regarded corporate advice and underwriting as two distinct roles; it is clear on the evidence that Mr Egan took the same view. And among the tasks of a corporate adviser would, no doubt, be that of advising its client as to the terms of an issue of securities proposed to be underwritten and on the terms of the underwriting itself: both matters on which the interests of the client and those of the underwriter would be likely to diverge. The role which Dr Burt sought for Bain was that of an underwriter; Mr Hadid, in his evidence, accepted that that was so. It might be expected, I think, that Dr Burt would seek to make clear at the outset of discussions what role he was interested in and what role he was not prepared to accept. By 11 November, given the discussions in St Louis, and later, it is equally understandable that Dr Burt would have sought to make his role clear. 810 That, then, is the background for an analysis of the evidence about the discussions between Dr Burt (and to a lesser extent Mr Johnston) and Mr Hadid and also about Bain's dealings with LCI and its representatives. The analysis of the statement of claim, handed up as part of Mr Hadid's written submissions, refers, in relation to par 18, to a number of passages in the transcript of evidence and to a number of documents; the paper outlining what was described as the admitted position of Bain and Dr Burt vis‑a‑vis Mr Hadid and UCOM (which proceeds to make submissions about the existence of fiduciary duties on the part of Bain and Dr Burt) also refers to a number of passages in the transcript of evidence and to some documents, the transcript references being mainly to portions of the evidence given by Dr Burt and Mr Johnston in chief. It is notable, however, that there is virtually no overlap between the evidence referred to in the two documents. Nor (once again) was that matter addressed in any detail in oral submissions. The position might look very different - particularly as to the scope of any duties assumed by Bain and Dr Burt - if I were to accept the detailed evidence of Mr Hadid and witnesses whom he called (as the analysis of the pleading appears to propose) than if I were to accept, in substance, the accounts of Dr Burt and Mr Johnston (as the outline document appears to assume that I might). 811 The principal submission on behalf of Mr Hadid may, I think, be summarised in this way. If the evidence of Dr Burt and Mr Johnston and the documentary evidence (particularly the letters written by Bain) are taken into account, the appropriate conclusion is that, by the time Project Midsummer was conceived, Dr Burt had given advice to both LCI and Mr Hadid and UCOM; had expressed keenness to underwrite; had received confidential information about the proposed business, as to which he and Bain were subject to the restraints of the confidentiality agreement signed on 16 September; after returning to Australia on 8 November Dr Burt "received information about Hadid's settlement position with Lenfest"; and he was thus an "insider." He was, it was said, both an adviser and a sounding‑board in an area in which he had substantial expertise and Bain was a substantial and reputable institution. Those circumstances gave rise, it was said, to obligations to act in a way which was not contrary to the interests of Mr Hadid "as a principal in the UCOM/Lenfest venture." Dr Burt was obliged to act in the interests of that venture. He could, therefore, not seek to give effect to Project Midsummer without full disclosure to Mr Hadid and his informed consent. 812 A useful starting point, then, is a consideration of the letters written by Bain and the evidence of Dr Burt and Mr Johnston as to the opinions they expressed and the role they played. That evidence may be summarised as follows. · Dr Burt and Mr Johnston attended a meeting at TPL's office on Friday, 27 August 1993 at the request of Nomura. There was discussion of the prospect of an underwritten capital raising in which Bain might participate. Afterwards, TPL sent Dr Burt and Mr Johnston a somewhat general letter describing the position which UCOM was in. Mr Hadid asked Dr Burt to act as his (or UCOM's) adviser; Dr Burt refused. · On 30 August Ms O'Connor told Mr Johnston that the deposits had been paid. He and Dr Burt sent a letter outlining a potential programme for underwriting (par 90). · On 31 August Dr Burt telephoned Mr Hadid and congratulated him on achieving payment of the deposits; they agreed to meet at the Wentworth Hotel; they did so; nothing was said which added significantly to previous conversations, except that Dr Burt expressed keenness to meet the representatives of LCI. · On 1 September Dr Burt met Mr Hadid. Dr Burt spoke of the distinction between underwriting and advising; he emphasised that he would not accept an advisory role (though was "happy to keep talking to you on an informal basis, give you my views on the market.") He pointed out that he was talking to "everyone else in the pay TV game, or in fact anyone who comes along to Bain to talk about sensible underwriting proposals." He suggested that UCOM should "stick with" TPL. · On 6 September Mr Borda, Dr Burt and Mr Johnston met Mr Heller and Mr Plant, with Mr Hadid and at least two representatives of Nomura. The Bain representatives described their background and experience and expressed interest in acting as underwriters. Dr Burt and Mr Johnston on 8 September wrote to Mr Heller and Mr Plant the letter described in par 103. · During early September, Mr Johnston obtained from Corrs, solicitors, advice about the legislative scheme relating to pay TV; and Bain also received, probably from Nomura, a Dun and Bradstreet report on LCI. · At some time before 10 September, a UCOM representative contacted Dr Burt to arrange a meeting. · The meeting took place on 10 September. I have already discussed it in some detail. Dr Burt's evidence was that substantially his only contribution to the discussion was, once again, to outline Bain's capability as an underwriter. According to Mr Johnston, there was discussion about the extent of the free carried interest which might be sought; Mr Johnston said that until more was known there was no point in discussing that matter. · At about this time, perhaps shortly after 10 September, there were discussions between Dr Burt and Mr Hadid in which Dr Burt expressed the view that United States investors were the key to a successful fundraising (he had already said that, as part of his "pitch" at the meeting on 6 September). · The confidentiality agreement, sent to Mr Johnston on 10 September, was returned signed on 16 September. On 18 September Mr Johnston, Mr Grimes, probably one other Bain representative and Dr Burt (briefly) met Mr Noah (par 138). Mr Grimes subsequently copied on to Bain's computer system the information, including the UCOM model, on the disk which Mr Noah had given him. Mr Grimes did some work on the model; in circumstances which did not appear clearly from the evidence, the model was re‑run by Bain, using different variables. · Towards the end of September, Mr Johnston spoke with Mr Hadid on the telephone. They discussed free carry. Mr Johnston repeated what he claimed to have said at the meeting on 10 September and added that "everything is possible but until we see the model we do not know what can be achieved." At about this time Mr Hadid told Dr Burt that Mr Johnston had accepted that a 30 per cent free carried interest was achievable; Dr Burt, having checked with Mr Johnston, later told Mr Hadid that that was not correct. · On 28 September, Dr Burt and Mr Johnston met Mr Plant, Mr Egan, Dr Gadir and Ms O'Connor. The evidence about that meeting is discussed in pars 157 to 159. Dr Burt made a further "pitch" for an underwriting role. In the course of doing so, Dr Burt "most likely" said that "Bain Deutsche" employed a ranked media analyst and had 80,000 private clients. Although Dr Burt did not give evidence of this, Mr Johnston added that "we said that the timetable was going to be very, very tight …, probably … nothing would be achievable by Christmas." Dr Gadir asked Dr Burt whether Deutsche Bank had contacts with any of the "European media", particularly Bertelsmann and Canal Plus; Dr Burt agreed to find out. · In early October, Dr Burt and Mr Hadid discussed free carry. Dr Burt expressed the same views which he claimed to have expressed previously, and said that free carry was set by the market and the investors, rather than the promoters, and: "I would encourage you to ask for as much as you can possibly get, that's your right, and you should do that, put the best plan together and attempt to justify, but my experience and feeling is that 30 per cent sounds very high for something that is uncapitalised and that the money has to be raised to capitalise it and a tremendous amount of money has to be raised to then support it in terms of operating losses and equipment, so I don't think the institutions would wear a number like that, I think you should be pitching more in the lower areas, perhaps 10 per cent." · On 8 October, Dr Gadir sent Dr Burt a fax confirming "that you are free to talk to the Bertelsman company of Germany and/or Canal Plus of France. If any one of them is interested in the project we will be happy to discuss. ... Please let us know if there are other parties that to your knowledge are interested in some form of participation." · On 8 October, Dr Burt briefly met Mr Hadid at the Bligh Street office and then had a discussion with Dr Gadir and Mr Egan. Referring to what they regarded as a lack of communication with TPL, Dr Gadir and Mr Egan suggested that the appropriate course might be to "cascade these bids down and start again", to which Dr Burt responded that he regarded it as common sense that UCOM should continue talking to TPL and LCI. He then reiterated that the extent of free carry available depended on a number of factors but that 30 per cent sounded very high. The evidence about that meeting is described in par 172. · On 12 October, Ms O'Connor wrote to Mr Johnston and Dr Burt requesting a non‑binding expression of interest. The substance of the letter appears, as does Mr Johnston's account of a conversation with Ms O'Connor when he received it, in par 174. The letter written by Dr Burt and Mr Johnston in response, giving Bain's "current views" is set out in par 175. It speaks for itself. · Several days after 13 October, Mr Hadid told Dr Burt, in a telephone conversation, that he was frustrated with both TPL and LCI and suggested that he (Mr Hadid) might go his own way. Dr Burt advised him to keep talking to LCI and TPL. · On 22 October, Dr Burt and Mr Johnston met Mr Plant and Ms O'Connor (par 193). Mr Plant said that LCI would be able to finance one of the licences but not both. There was discussion about ways in which the financial strength of the Lenfest Group might be demonstrated. Mr Plant said that it had become apparent, because of the reaction of potential investors in the United States, that Mr Hadid could not have a prominent role in the licence holder. According to Mr Johnston (Dr Burt did not give evidence of this), Mr Plant asked whether Bain would be interested in working on a fundraising with LCI, to which Mr Johnston replied that some review would be required but he saw no reason why Bain should not do so. · On the same day, after the meeting, Dr Burt and Mr Hadid spoke on the telephone. Dr Burt expressed surprise that Ms O'Connor had been at the meeting. Mr Hadid "talked about his structures and where they're getting to." He said that he had no communication (presumably with either TPL or LCI) and was "inclined to go my own way on this." Dr Burt counselled that Mr Hadid should talk to LCI because LCI appeared to have the resources to finance one of the licences. And from Bain's perspective "we want to be talking to Lenfest directly because they're the people with the money and the contacts … as is normal in this business, we have to follow the money and we will be continuing to talk to them." · On 25 October, Dr Burt again met Mr Plant and Ms O'Connor. This was what Dr Burt described as a "somewhat rambling" meeting in which the main speaker appears to have been Mr Plant. Following that meeting Mr Plant sent a note to Mr Heller reporting, among other things, on his meetings with Dr Burt: see pars 206, 207 and 208. · On 26 and 27 October, Dr Burt introduced the Project Midsummer proposal to Mr Plant and Mr Heller. I have sufficiently described these events already. · The "birthday meeting" took place on 26 October. Mr Hadid requested the meeting. Mr Hadid complained that everything was falling apart; there was no communication with LCI; UCOM was frustrated; it looked as if LCI would lose its deposits. Mr Hadid continued: "They're just entirely unrealistic on the free‑carry. As you know we're arguing 30 per cent and they just won't wear it and we're just not prepared to accept that." Dr Burt once again suggested that they "get your actual structure and deal together" rather than hanging their hat on a particular figure. A little later, Mr Hadid again asked Dr Burt to act as his adviser, but Dr Burt refused to do so; Mr Hadid then asked Dr Burt to consider joining his team, which Dr Burt refused to do. · From 1 to 8 November, Dr Burt was overseas. The meetings in St Louis took place on 2 and 3 November and Dr Burt's conversation with Ms Combs on 4 November. It is unnecessary now to say more about those events. · On 8 November, Mr Hadid telephoned Dr Burt. He said that the situation was becoming impossible; UCOM was in danger of losing everything; he needed some "clear thinking on all of this." Mr Hadid sought a meeting. Dr Burt said that he could not advise Mr Hadid; he had had separate discussions with LCI and had been retained by LCI "on some aspects of capitalising the bid." Mr Hadid responded that he understood that but wished to "run past" Dr Burt a particular idea. Dr Burt agreed to a "brief chat" for this purpose "on an off the record basis." (This is a good example of a phenomenon to which I have already referred: Dr Burt has Mr Hadid speaking in language that he, Dr Burt, might have used; the substance may have been as Dr Burt recounted it, but it is difficult to believe that Mr Hadid would have used the particular words put into his mouth.) · At 3.30 pm on 8 November, Mr Hadid and Ms Scott called on Dr Burt at Bain's office. Dr Burt poured cold water on an overseas loan proposition. He suggested that Mr Hadid should devote his energies to reaching agreement with LCI. · On 9 November, Mr Hadid and Dr Burt had a further conversation: there was discussion of Mr Heller's pending arrival and the difference between UCOM and LCI as to free carry. Mr Hadid said that Mr Heller was "currently at" 10 per cent whereas Mr Hadid was maintaining the appropriateness of 30 per cent. Dr Burt commented that it was satisfactory at least that some negotiation between them was taking place. Mr Hadid then raised with Dr Burt the list of UCOM expenses to be paid on capitalisation, particularly the amount claimed by Mr Elkhatib. Dr Burt said that the arrangement did not seem appropriate and that $20,000 should be enough to "keep [Mr Elkhatib] happy." Mr Hadid then mentioned various possible structures of the licence owning companies and various possible combinations of investors. Dr Burt said that he did not wish to be drawn into that. He said: "Look, Albert I don't want to get drawn into this … you should go and meet with Lenfest and in that regard how do you feel about what you were telling me yesterday about doing a deal? We have talked about these expenses, what is your inclination on doing a deal with them?" Mr Hadid replied that he was going to the meeting with Mr Heller in a positive frame of mind. · On 10 November, Dr Burt had a telephone conversation with Mr Heller. Mr Heller said that the UCOM people were being more obstinate than he had expected; it did not look promising. Dr Gadir and Mr Blanks were suggesting "that they cascade the licences down to the next bid." Mr Heller said that he was having dinner with Mr Hadid that evening and the following evening he was to dine with Mr Hadid and Mr Cooper. Dr Burt wished him good luck. · Dr Burt expressed views during the dinner, on 11 November, at the Treasury Restaurant. In summary they were: institutional investors would not accept a free carry derived from an independent valuation of the licences; neither would they accept high debt funding of the business, because of the large operating losses expected for several years; nor did he think that floating both licences in one vehicle would work; the best opportunity for UCOM was to talk to LCI as the company which had put the money up; he could not suggest some particular "premium" for the corporate contribution of UCOM in introducing the opportunity but, having for six months failed to find someone to pay the deposits, UCOM must be realistic; free carry could only be obtained by way of a "gift of equity" from Lenfest at the outset, so that UCOM should do its best now because it would not get a second bite at the cherry. · Between 11 and 15 November, Dr Burt had a number of meetings and conversations with Mr Heller - for example, discussions about the Becbran option, discussions involving Clayton Utz partners about LCI's options and discussions during the trip to Canberra on 15 November. None of those matters, however, is relevant for present purposes: by no stretch of the imagination did they involve advice to both LCI and UCOM. · On 15 November, Dr Burt and Mr Hadid spoke on the telephone. Dr Burt mentioned that he had had discussions with Mr Heller, that Mr Heller was seeking legal advice as to his options and that the matter seemed to be getting out of hand. Mr Hadid retorted that he was seeking legal advice too and would preempt any legal action contemplated by LCI. Dr Burt suggested that it was appropriate, given the short time before one of the bids lapsed, to explore the possibility of a commercial solution. Mr Hadid agreed. Dr Burt then made a proposal which he said that he had already put to Mr Heller, that he (Dr Burt) might participate in a meeting between Mr Hadid and Mr Heller in order to focus them on the outstanding issues and bring some commercial clarity to the situation. Mr Hadid agreed that that sounded sensible. Dr Burt said that he would require an indemnity and that there was some discussion about that. It was then agreed that the meeting would take place that evening at the Regent Hotel. · There is not much in Dr Burt's account of his discussions with Mr Hadid at the Regent Hotel which might be construed as advice to Mr Hadid or the offering of Dr Burt's opinions or views. However, Dr Burt repeated that he believed that a proposed payment of $1,500,000 to Mr Elkhatib would not be taken seriously and that $20,000 or $30,000 should be sufficient. He also expressed the view that UCOM's "walk away condition", payment in cash of $A37,000,000, was extraordinarily large and that Mr Hadid should be thinking of a compromise on that point. Then, in discussing with Mr Hadid Mr Heller's initial response to the list of six points, Dr Burt said: "Look, I will go firmly into bat on this drama commissioning agency and I will insist that there's no deal until they give you that. So let's leave that aside, just leave that in my court at the moment. Let's focus on the rest, assuming you could get that agency. I don't think you're going to get a director, they're just not going to do that. So I think you have to let that go."

After discussion of the amount of cash Mr Hadid would accept for himself and his fellow shareholders to "walk away", Dr Burt said:

"Well, 15's not an inconsequential amount of money. That's a good amount of money, Albert. If you get that then I think that's a great result and I'll go in to bat for it … I think you're going to wrap your expenses up in that amount because 15 just has to be a stand alone number, not a 15 plus as in the point 2 with all the expenses."

Then, in the next round, Dr Burt suggested to Mr Hadid that, in order to do a deal, he would need to accept somewhat less that $15,000,000. Finally, at the conclusion of the negotiation, Dr Burt expressed the view that the deal done was "pretty good."

813 I have included what, on Dr Burt's account, he said during the Regent Hotel negotiations for completeness. But if I were to proceed on the basis of Mr Hadid's principal submission, what was said during those discussions is irrelevant for present purposes (it might be otherwise if Mr Hadid's account, or some of it, were accepted). On no view could Dr Burt, if his account is accepted, be said to have acted otherwise than as an intermediary at the Regent Hotel, expressing views to each party as to compromises which, in his opinion, were necessary to do a deal but not acting separately as adviser to either of them. 814 Accepting Dr Burt's account and that of Mr Johnston as to events in which he was involved, what advice did Bain or Dr Burt give to both parties or to the "venture"? The only particular of such advice given in the statement of claim is the letter of 13 October 1993. But that letter was a response to a request for a non‑binding indication of views as to what might be achievable, given certain assumptions. Bain was not alone in being asked to give such an indication. Ms O'Connor told Mr Johnston that "three or four other people were being asked for their views as well." The views were expressed gratuitously, no doubt in the hope that Bain would be rewarded, ultimately, by being appointed underwriter. The views expressed were of a quite general kind. If to that were added what was said at the meeting on 6 September, attended by representatives of both LCI and UCOM, the picture remains the same: what was said both at that meeting and in the letter sent afterwards was little more than a "pitch" for an underwriting role - stressing the strength and credentials of Bain and offering some views, particularly the necessity for cornerstone investors, a matter stressed again in the letter of 13 October. I cannot identify, in the evidence to which I have referred, any other occasion on which it may convincingly be said that Dr Burt, or Bain, offered advice to both LCI and UCOM. 815 If one then turns to the question of advice given to Mr Hadid or UCOM, not a great deal, of any specificity, can be identified. The letter sent to Mr Hadid at the end of August was correctly described by Mr Johnston as a promotional letter. Certainly it enclosed an indicative timetable for an underwriting but that was a proposal from an organisation positioning itself to obtain an appointment as underwriters, not advice in any usual sense of the word. What advice, then, did Dr Burt and Mr Johnston give to Mr Hadid, again on the assumption that the evidence of Dr Burt and Mr Johnston is accepted? Both Dr Burt and Mr Johnston expressed views about free carry. For some time they both consistently maintained the view that it was not possible to assess what free carry might be attainable until matters reached a much more advanced stage; at the dinner at the Treasury Restaurant, Dr Burt expressed the view that an amount exceeding 10 per cent was unlikely to be achievable. Dr Burt advised (this is contrary, of course, to Mr Hadid's evidence) that UCOM should continue with TPL as advisers. Particularly in the later stages, he advised Mr Hadid that he ought to exert himself to reach a negotiated position with LCI. He expressed to Mr Cooper, at the Treasury dinner, the views which I have summarised. He may have expressed some views, at the meeting on 10 September, about matters relevant to structures and underwriting. But it is difficult to find much more. Bain did, at least on 18 September and possibly later, receive confidential information in relation to UCOM and the bids and, in addition to obligations of confidence which might have arisen in any event, was bound by contract to keep it confidential: but the evidence which I have described discloses no particular result of whatever consideration was given, within Bain, to the information. Additionally, Dr Burt was privy to Mr Hadid's expressed concerns about LCI and TPL and, at least from the time of Mr Plant's third visit, to those of Mr Plant and Mr Heller concerning Mr Hadid and the UCOM shareholders. 816 But where does this lead? It was submitted on behalf of Bain and Dr Burt that even if Dr Burt or Bain were to be regarded as an adviser, that role is not, without more, fiduciary. That submission relied on a passage in the dissenting speech of Lord Upjohn in Phipps v Boardman [1967] 2 AC 46 at 127. The submission proceeded that advice given in the course of discussions which, from Bain's point of view, were directed towards obtaining an underwriting role for Bain could not attract fiduciary duties: that was so because necessarily the interests of an issuer and an underwriter are not identical but in several respects conflict. There is obvious force in that submission, at least to this extent: it would be odd if views expressed by an institution, seeking an underwriting role, in the course of that pursuit attracted on its part a wide fiduciary obligation to prefer the potential issuer's interests to its own. That, I think, could not be so. It was submitted on behalf of Mr Hadid, on the other hand, that Dr Burt had given advice to both LCI and UCOM; he had received confidential information about a number of matters relating to the venture, in relation to which he had obligations of confidence. Dr Burt thus had "deliberately sought to and had become part of the Lenfest/UCOM venture. … trust and confidence had been reposed in Burt. Burt was an 'insider' to the venture having received financial and other information concerning the venture. He was a confidante. He was both an adviser and a sounding‑board. He had substantial expertise in the area he was being consulted about, and Bains was a substantial financial institution. The relationship between Burt and Hadid was not a commercial relationship at arm's length on equal footing." 817 Plainly, in my view, it is at least an oversimplification to say that Dr Burt, or Bain, had sought to become, or had become, part of the joint venture (assuming that there was one). Their interest was avowedly that of a prospective underwriter and, no doubt, in order to achieve that role Dr Burt took those opportunities which presented themselves in order to display his expertise and generally to "get close to" his prospective clients. But to say that that made him, or Bain, a joint venturer is, in my view, to stretch that expression beyond breaking point. On the other hand, advisers may, and often do, have fiduciary obligations: the typical case is the solicitor or estate agent (but the principle extends to other advisers: see Tate v Williamson (1866) LR 2 Ch App 55 and the discussion in Finn, Fiduciary Obligations, pp 175, 176) engaged to advise in relation to transactions concerning, or the management of, particular property. There is little doubt that the principle extends more broadly in the case of advisers whose task it is to counsel "an advised party as to how his interests will or might best be served in a matter which our society considers to be of importance to the advised's personal or financial well‑being" (Finn, "Fiduciary Law and the Modern Commercial World" in McKendrick, op cit, pp 10, 11): no doubt the solicitor is the paradigm. But it is another thing, and in my view the law has not gone so far, to impose the duties which affect such an adviser on a commercial party openly pursuing an interest of its own and, in the course of doing so, giving advice, or offering opinions, in a promotional, non‑binding or relatively casual way. 818 Such a party may have obligations of confidence in respect of information received by it - Bain and Dr Burt had obligations of that kind. The fiduciary duties alleged against Bain and Dr Burt, said to be owed both to Mr Hadid and to the alleged joint venture, included an obligation not to place themselves in a position to profit from the use of confidential information communicated to them by Mr Hadid or by the venture. But no attempt was made to identify particular confidential information misused by Bain or Dr Burt in conceiving or furthering Project Midsummer. What is said against them is that in doing so, and in the way they did so, they breached duties not to act to the detriment of Mr Hadid (or the venture) in relation to the exploitation of the licences, not to enter into agreements or arrangements, or otherwise place themselves in a position which conflicted with relevant affairs of Mr Hadid or the venture, to disclose circumstances, material and information relevant to the exploitation of the licences and not to place themselves in a position to make secret profits out of their relationship, Mr Hadid or the venture. Mr Hadid's substantial complaint was that Bain and Dr Burt breached duties which they owed to Mr Hadid, in relation to the licences, not, without full disclosure and informed consent, to enter into a transaction in which they had an interest in conflict with that of Mr Hadid. But, for the reasons I have given and having regard to the evidence to which I have referred, Mr Hadid has not made good the proposition that Bain or Dr Burt owed Mr Hadid (or the venture) such a duty. It may be (Breen v Williams (1996) 186 CLR 71, and see the formulation of the duty by Deane J in Chan v Zacharia (1984) 154 CLR 178 at 198, 199) that in general there is no separate fiduciary obligation to disclose information; in any event, in my view, there can be no scope for such an obligation where there is no obligation not to deal in one's own interests. 819 Thus, on the basis propounded by Mr Hadid in his "outline" document, I do not think that fiduciary obligations of the kinds pleaded in par 19 and par 22 of the statement of claim arose. 820 If Mr Hadid's evidence were accepted substantially, the matter would appear rather differently. There are a number of difficulties, however, in the way of such an approach. I have already held that Mr Hadid's evidence should not be accepted in relation to two significant matters: the "inconsistency" of the letter of 13 October with prior commitments said to have been given by Dr Burt, and the conversation which according to Mr Hadid followed shortly after he received the letter, and views said to have been expressed by Dr Burt that a free carried interest of 30 per cent would or might be achievable. I have referred in par 799 to other difficulties in his evidence of his conversations with Dr Burt. And acceptance of Mr Hadid's evidence would reveal Dr Burt as indiscreet, inconsistent and duplicitous to an astonishing degree. By any reckoning, Mr Hadid and Dr Burt were not, by 2 September, close acquaintances. Nevertheless Dr Burt, according to Mr Hadid's evidence (par 96), was prepared jokingly to denigrate TPL and to include, among a series of boasts in answer to the question "what makes you so much better?", the untrue statement that he was a director of Deutsche Bank. Mr Hadid had Dr Burt denigrating TPL with even greater vigour in later conversations. Dr Burt is said to have adopted a series of different, and inconsistent, positions as to the level of free carry likely to be available and as to whether foundation investors were necessary for a successful underwriting. He is said to have offered various unconvincing and incoherent explanations of inconsistencies with which Mr Hadid charged him: see, for example, the conversation recorded in par 307. And in the circumstances where Dr Burt had had the degree of contact with LCI which he had had from the time of Mr Plant's third visit to Australia, what he is alleged to have said, when inviting Mr Hadid to the mediated negotiations on 15 November, would have been a remarkable piece of duplicity: see par 312. Perhaps even more remarkable is the discussion which occurred, according to Mr Hadid, when Dr Burt presented the mediation agreement, saying that it was Bain's policy to have a disclaimer signed "whenever we do something like this" so that Bain would not "end up in a lawsuit": "I said, 'Has Don' … He said, 'Don has signed a copy of this already.' I said, 'Did he express any concerns' and he said, "No, you know, it's funny because he knows how close you are to me and expressed no concerns which shows me that it's going to be reasonable Albert' and I said, 'Yes, it's pretty strong, are you sure there's nothing else that I am not aware of, have you guys, have you discussed anything with him Wayne which, because the document's strong, have you discussed anything with him which I should know about that I don't already know' and he said, 'No, no', he said, 'Listen, you wanted me to get close to them for the underwriting, you know they haven't talked to us for two months and that night was just a hypothetical discussion, you know, there's nothing that I, you know, that you don't know.'" It is Mr Hadid's case that Dr Burt and Bain were parties to a conspiracy to cheat and defraud Mr Hadid so as to cause him to dispose of his interest in New World at an undervalue. An element of that conspiracy is said to have been the deliberate concealment from Mr Hadid of the existence of Project Midsummer. But in the passage quoted there is not merely the somewhat incoherently expressed direct lie: in effect, "I know nothing that you do not know." There is also the suggestion that for two months LCI had not talked to "us" (Bain, presumably), plainly untrue not only because of the Project Midsummer discussions (of which Mr Hadid undoubtedly knew nothing) but also because of the discussions (of which Mr Hadid had knowledge because he and Dr Burt had spoken of them at the time) with Mr Plant during Mr Plant's third visit to Australia in the later part of October. 821 I have not referred to, and I think it is unnecessary to refer to, all the conversations between Mr Hadid and Dr Burt alleged by Mr Hadid but denied by Dr Burt. It is sufficient, I think, to mention briefly two of them in addition to those which I have already recounted at length in the course of my narrative. Mr Hadid did not give evidence in chief about the earlier of them which, he said, occurred on or a day or two before 12 October. It concerned the dispute between UCOM and LCI about the terms on which TPL was to be engaged to advise. On 12 October 1993 Mr Blanks wrote to Mr Lenfest about the arrangements agreed between TPL and Mr Plant. His letter included the following paragraph: "I am advised by experienced underwriters that the arrangement proposed by Turnbulls would not meet [the requirement that it accord with reasonable commercial practices]. The major difficulty I see might be simply a matter of expression or it might be intended as it appears in your draft letter to Turnbull. The letter appears to provide that Turnbull will receive a fee of 1.75% of funds raised by any underwriter(s) introduced by them and to whom you and we agree. It might be desirable to appoint such underwriters but what amounts to a high overriding commission seems inappropriate and unreasonable." His memory refreshed by that letter, Mr Hadid gave evidence of a conversation on or shortly before 12 October. According to Mr Hadid, Dr Burt said: "Look, my advice to you is that the 1.75 per cent is too high a figure for a merchant bank to be demanding or requesting from the overall funds raised … the figure should be more like 1 per cent … the underwriter's figures … would be more like 4 per cent and theirs is 1 per cent because underwriters … take a lot more risk …" 822 Mr Hadid claimed that Dr Burt also advised that one party should raise the finance for both licences and that Bain would be happy with a commission of 4 per cent with no "extras": that figure would "cover all the advice we have been giving you, all the advice we give you …." 823 Mr Hadid, in the course of his cross‑examination, gave a series of accounts of that conversation; the only one of them which dealt with the question whether the fee referred to covered advice as well as underwriting was the last of them, given after Mr Hadid had seen Mr Blanks' letter. The letter itself, of course, does not deal with that topic or with the appropriate level of underwriting fees. Dr Burt left Australia for New Zealand on 10 October and returned on 13 October. He gave evidence that he did not speak to Mr Hadid between the meeting on 8 October and his departure on 10 October or while he was in New Zealand. If Mr Hadid's evidence were accepted it would establish an additional occasion on which Dr Burt gave advice to Mr Hadid and would establish also that it was Dr Burt's contemplation that Bain's fee on an underwriting would compensate it for advice given as well as for acting as underwriter. Given the way in which the evidence emerged, however, and Dr Burt's absence from 10 to 13 October, the probability is, in my view, that the conversation did not occur as Mr Hadid recounted it, and I so find. 824 The second of the two conversations was said to have taken place on 24 or 25 October. According to Mr Hadid, it took place at Bain's office; Mr Hadid had Mr Noah or Dr Gadir with him and Mr Johnston may have been there as well as Dr Burt. I refer briefly to Mr Hadid's evidence of that meeting in par 210. It was denied by Dr Burt and Mr Johnston; neither Mr Noah nor Dr Gadir gave evidence about it. No submissions were made about it on behalf of Mr Hadid. Neither Dr Burt nor Mr Johnston was cross‑examined about it. The evidence suggests that Dr Burt was otherwise occupied on Sunday, 24 and Monday, 25 October. It was during the weekend of 23 and 24 October that Dr Burt had, on his evidence, conceived the idea of Project Midsummer (that portion of his evidence is uncontroversial, as I understand it) and it was on 25 October that Mr Plant met Dr Burt and Ms O'Connor (par 206) with the outcome I have described in par 207 and par 208). In those circumstances, the account given by Mr Hadid of his conversation with Dr Burt is strange indeed: "Dr Burt said to me that now that, seeing that Lenfest has decided to finance licence A, why don't we put together a position where we try and bring both licences, A and B, into a - merge them into - the idea is to merge them one being, into a major entity, so that he said you and Lenfest can then control the market and there will be no - we will not have to compete with each other. I said Wayne, we've been through that, I can't accept that for two reasons and he said what are your reasons. I said well, first of all, if you look at it from a commercial point of view it's wrong and secondly, the process, the way the Government has designed these two licences they are to compete and if you look underneath it all it's sensible to have them compete because the studios would be looking for competition, they're not all going to be the massive one entity, they would start grouping up with the MDS or with the cable entities as they slowly get into the market or even those who are unhappy could even support people from outside Australia with their satellites that are outside the Australian market. So that could begin to cause us what you call a competition external whereas if we do the licences as we have been always talking, we would have a good market for both licences and I wouldn't do it because it's against the regulations and against the spirit of what the regulations were intending to do. I said the Government's studied this for ten years, I'm not prepared to entertain that. … He said are you sure you wouldn't like to look at it because I can show you a way it can work, I said I've thought about this hard and fast and I've been thinking about this for a long time, I can't accept your position." 825 In short, the evidence is improbable; it is uncorroborated; it is denied; the denial was not challenged; I do not accept it. 826 Dr Burt, at the time of the events in question, was a senior employee of Bain, a substantial institution. He was astute and experienced. I have mentioned that I observed Dr Burt giving evidence over a considerable period: his oral evidence occupied nine sitting days. Extravagant and inconsistent utterances of the kind attributed to Dr Burt by Mr Hadid seem to me improbable. That, taken together with the findings I have already made about the two significant matters to which I have referred in par 821, the circumstance that there is nothing inherently improbable, as it seems to me, about Dr Burt's account of the meetings he had with Mr Hadid and the views he expressed and the fact that a significant portion of Dr Burt's account, unlike Mr Hadid's, is supported by contemporaneous notes, leads me to conclude that Mr Hadid's account, to the extent that it differs from that of Dr Burt and is not corroborated by other evidence, should not be accepted. Nor, for reasons already given, do I accept the evidence of Dr Gadir and Mr Noah which might support Mr Hadid's evidence that Dr Burt accepted the feasibility of a free carry of 30 per cent. 827 Finally, there is the evidence of Mr Egan. I have sufficiently discussed the evidence about the meeting of 10 September. He took notes of two other relevant meetings, those of 28 September and 8 October. I have dealt with the meeting of 28 September in par 159 and indicated that I accept Dr Burt's version of the earlier part of the discussion. The only serious difference between Dr Burt and Mr Egan as to the latter part of the discussion is that Mr Egan gave evidence, which Dr Burt denied, that Dr Burt said that at least sixty days would be necessary for an effective underwriting. For present purposes it makes, I think, no difference whose recollection is correct about that: it is fair to say, however, that the form of Mr Egan's note suggests that he may well be right on this point. The evidence about the 8 October meeting is somewhat more problematical. It is dealt with briefly in par 172. There is little concurrence between any of the accounts on any matter. Mr Egan was the sole note taker; except by reference to his note, however, he had no recollection of what was said at the meeting. All the evidence suggests, and the note confirms, that there was some discussion of TPL. I am not, however, prepared to accept Mr Egan's evidence that everything which his note records as said about TPL was said by Dr Burt. If, despite Dr Burt's denial, Dr Burt said some of the things about fundraising which Mr Egan attributes to him then, again, that would add, in my view, nothing of significance for present purposes. 828 In my view the picture given by Mr Hadid of his relationship with Dr Burt was a highly coloured and exaggerated one. In the course of some evidence which he gave about copying and handing documents to Dr Burt on or about 8 October, and dealing with the suggestion that there was no evidence about it in his affidavit, Mr Hadid denied that the conversation during which documents were handed over was particularly important "… because it was the kind of thing that was happening with me and Dr Burt all the time." The following exchange ensued: "All the time? - Yes. What, 24 hours a day? - Dr Burt was literally there always for me, and me for him, and we had interactions in and out almost every day, almost every single day between 30 August and 17 November, Dr Burt was almost [sic] there. Almost? - There was a few days where he may not have been there but apart from that, Mr Hughes, Dr Burt was there, and I don't believe when he sits here he will deny that." 829 Similarly, Mr Hadid put into the mouth of Dr Burt, on the morning of 15 November, a description of himself as "your trusted friend and expert banker" eliciting from Mr Hadid the words "I trust you, rely on you, nothing will stop you, even though you're acting as an intermediary nothing will stop you from giving me your honest advice." It may well be that Mr Hadid believed that he had such a relationship with Dr Burt. I have already expressed the view that the handwritten letter of complaint to Dr Burt on 19 November displayed rage and agitation which cannot be dismissed as merely synthetic: in that letter he accused Dr Burt of betraying his trust and described him as "my proffessed advisor friend and underwriter." Ms Scott claimed to have used similar words in her conversation with Dr Burt during the weekend of 20 and 21 November. But in my view the evidence simply does not, objectively, justify that view of the relationship. 830 Thus, I find nothing in the evidence to displace the conclusion expressed in par 819. It may well be, given the expertise professed by Bain and Dr Burt, that a duty of care arose in relation to particular opinions or views expressed by Dr Burt. That, however, is not the duty of care pleaded, and it was not suggested that, if I were against Mr Hadid on both the alleged contracts and the alleged fiduciary obligations, there was a broader duty of care on which Mr Hadid might rely requiring Bain (or Dr Burt) positively to provide "full and frank advice, counsel and information" to Mr Hadid or the "participants of the Joint Venture Agreement." In summary, then, my conclusion on this aspect of the case is that neither the fiduciary duties pleaded in par 19 and par 20 of the statement of claim, nor the duties of care pleaded in those paragraphs, arose.

An interpolation: credit of Dr Burt 831 The findings which I have made about the position of Dr Burt (and of Bain) as an "adviser" to Mr Hadid or UCOM do not depend upon any particular general view of Dr Burt's credit as a witness. His credit was, however, the subject of a vigorous attack based on a number of particular matters. As with the other witnesses, I shall deal with them in turn.

(a) The Meridian option 832 I have discussed this in pars 694 to 697. For the reasons I have given, I do not accept Dr Burt's evidence that it was not he who told Mr Heller of the negotiations on 13 November but I do not regard the episode as providing ground for an adverse view of Dr Burt's credit.

(b) The drama commissioning agency; Regent Hotel negotiations 833 Again, I have dealt with this topic in some detail in pars 653 to 670. I have explained there my conclusion that what happened in relation to the drama commissioning agency on 15 and 16 November should not be taken as reflecting on the credit of Dr Burt. I have also dealt sufficiently, in pars 672 to 681, with the negotiation of the price payable on acquisition of the New World shares. The attack made on Dr Burt, however, grounded on the Regent Hotel negotiation, was somewhat more wide‑ranging, involving suggestions that it was on his part a charade and involved a conflict of interest. 834 Undoubtedly the allegation of a charade would have been largely made out if I had accepted either that it was always intended, and Dr Burt knew that it was always intended, that the drama commissioning agency would be conceded or that LCI was prepared by midnight, and Dr Burt knew it, to pay $15,000,000. But I have rejected both those allegations. The other element of the "charade", as it was submitted, comes, I think, to this: Bain had an interest, and Dr Burt had a considerable personal interest, in persuading Mr Hadid that he and his fellow shareholders should sell their shares in New World to LCI; he knew, but did not disclose, that there was a real possibility that, if LCI could acquire the New World shares, it would complete the foreshadowed arrangements with Australis; and the expected benefits to Bain and to Dr Burt himself depended upon completion of those arrangements. Dr Burt had planned to suggest his appointment as mediator, and had given instructions for the preparation of a document, some days before the proposal was actually put to either of the parties to the mediation; the purpose of the mediation was not genuinely to assist Mr Hadid; it was to bring about a transaction - the only transaction - from which he stood to receive a substantial benefit: "In any event unless Mr Hadid could be persuaded in some way to relinquish control the whole proposal was not going to happen, was it? - Correct, unless another alternative could be found, but yes. But no other alternative had presented itself to anybody? - Not at that stage, no. Well, now, your perception being that the arrangements between Lenfest and Hadid which would deliver control were not happening you determined that you might bring it about? - Yes, I determined that I might have to get involved and try and bring it about but I didn't have belief in my absolute ability to do it the way you put it. Well, you saw that this was a means by which the desired outcome of that aspect of the matter might be brought about? - Yes, rather than let it fall over at the last moment that I was prepared to get involved. In the result, of course, as we now know, you did succeed in having yourself appointed mediator, correct? - Yes. And after a considerable hard negotiation you did, in fact, manage to bring about the result? - Yes. Now you had envisioned this as a possibility plainly enough by 11 November? - Yes." 835 It is not apparent, however, that that provides any support for this attack on Dr Burt's credit. There is no doubt - it was readily conceded at the trial - that Bain had a significant interest, and Dr Burt a strong personal interest, in a successful outcome of negotiations between LCI and Mr Hadid: a successful outcome would, of course, be an agreement under which LCI, or its nominees, acquired control of New World. I see no reason to doubt Dr Burt's evidence (par 301) that by 11 November he knew that little progress had been made and the prospect was not encouraging. Clearly he knew on 15 November that no progress had been made in resolving the impasse which had developed. It may be accepted that his motivation in intervening in the process - and in contemplating and preparing for intervention as early as 11 November - was motivated by his (and Bain's) interest. Dr Burt gave evidence that he had told Mr Hadid, more than once, that Bain's concern was to "follow the money" and LCI was the party with the money. If he and Bain were to be rewarded, the reward would come from LCI (and, probably at least, Australis) not Mr Hadid or UCOM. 836 But Dr Burt's interests, and those of LCI, were not identical. I do not doubt that it was in Dr Burt's interest that Mr Hadid should be persuaded to do a deal; but equally it was in his interest that LCI be persuaded to do one. It was suggested that he had an interest in putting - and assisted in putting - pressure on Mr Hadid. It must be recognised, however, that he had an equal interest in persuading LCI to agree to at least the minimum terms which Mr Hadid would accept. He gave evidence that "I was trying to talk to Mr Hadid into doing a deal with Lenfest and the Lenfest people into doing a deal with Mr Hadid." Thus, there is nothing inherently improbable either in Mr Heller's reluctance to be involved with Mr Hadid in a drama commissioning agency nor in Dr Burt, having ascertained the significance of the agency in Mr Hadid's eyes, pressing it upon Mr Heller as something necessary to be conceded. So, equally, it was in Dr Burt's interest to persuade Mr Heller (and Mr Lenfest) that it was necessary that LCI pay, in cash, the minimum amount which he had ascertained that Mr Hadid would accept. I have already made findings, in pars 672 to 681, about the suggestion that Mr Lenfest was prepared to offer $15,000,000 for the shares. To that it may be added that Mr Heller made extensive notes of the discussions which commenced on 10 November; during the few days of those discussions he wrote also a series of notes reflecting his own thoughts on the course of negotiations; he wrote a report to Mr Lenfest on 12 November and a further detailed report, with discussion and recommendations, on 13 November. By 13 November an important consideration, clearly, was a comparison of the cost to LCI of doing a deal with Mr Hadid with that of exercising the Becbran option. No doubt there were considerations other than cost that made it desirable to do a deal with Mr Hadid if a deal could be done on reasonable terms. But there is nothing in anything written by Mr Heller during those days which suggests any contemplation of a payment of the order ultimately agreed upon. 837 Despite the considerable differences in detail between the accounts of the negotiation, there is no room for doubt about the starting point or about the stages through which the discussion proceeded: see par 664. Undoubtedly Dr Burt had a personal interest in achieving a result. Undoubtedly there were things which he and Mr Heller knew but Mr Hadid did not. Nevertheless, the negotiation, in my view, was a real negotiation both for Mr Hadid and for Mr Heller, not a charade or a sham. That being so, this ground of attack on Dr Burt's credit fails.

(c) Miscellaneous matters 838 Again, a number of particular, detailed matters were urged against Dr Burt's credit. I shall deal with each of them; few require extended treatment. · His willingness to deceive Hadid over Project Midsummer 839 The evidence referred to in support of this submission was a brief exchange in cross‑examination, dealing with the conclusion of the Regent Hotel negotiations: "And Mr Lenfest agreed to the figure of 13 million plus the drama agreement? - That's correct. All right. Then you went back via Mr Hadid's room, invited him to join you in … your room? - Yes. And in due course went through the routine of having Mr Heller come up and shake his hand? - That's correct. All right. And I take it that at no stage did you disclose anything to do with the Australis arrangement that was on foot, to Mr Hadid I mean? - No, I did not." 840 It has never been disputed, of course, that Dr Burt did not tell Mr Hadid about the discussions with Australis. Whether Dr Burt - or Bain - had a duty to tell him, or whether Dr Burt's failure to tell Mr Hadid about Australis amounted in the circumstances to a breach of the legal obligation binding on him, are questions which I have already partially considered and to which I shall have to return. But Dr Burt was not asked what he would have done if asked a question which, if answered at all, could have been answered truthfully only by revealing the discussions with Australis. Nor is there any evidence that Dr Burt understood, or believed, that by failing to disclose the discussions with Australis he breached any duty he owed to Mr Hadid. In those circumstances, I do not think this matter is of any particular significance in relation to Dr Burt's credit. · His conflict of interest position over the mediation; his planning to become a mediator and the idea he was genuinely only assisting Hadid as a mediator 841 Undoubtedly, Dr Burt had an expectation, or hope, of a substantial benefit to be derived from an arrangement to be made with LCI, the opposite party in the negotiation to Mr Hadid. Equally he had a personal interest which certainly did not fully coincide with that of Mr Hadid (nor was it identical with that of LCI). But that is of little assistance in relation to credit until particular aspects of the competing accounts of the discussions are resolved: particularly, did Dr Burt disclose that he was aware of some matters relating to LCI's intentions, that he had advised LCI and that he had an expectation that, if there were a successful transaction, he would receive fees? Did he say some of the things attributed to him by Mr Hadid, by way of advice or pressure, or assertion that he would offer honest advice or, on the other hand, are Dr Burt's denials to be accepted? Particularly, to assert that there was a conflict of interest involves the proposition that Dr Burt had a duty opposed to his interest. But, particularly, his duty as a mediator depended significantly on the provisions of the mediation agreement, and that agreement contained two provisions of particular relevance: "3 ACKNOWLEDGEMENT The parties acknowledge and agree that the Mediator shall be under no obligation to disclose any information to any of UCOM, the Shareholders or Lenfest during the course of any mediation under this Agreement. UCOM, the Shareholders and Lenfest further acknowledge and agree that they will not dispute any mediated settlement nor take any action against the Mediator if it transpires that there was information in the possession, custody or control of the Mediator, the Mediator did not disclose that information to any of UCOM, the Shareholders or Lenfest, and any of them did any act or omitted to do an act which it would not have done were it aware of the information. Further each of UCOM, the Shareholders and Lenfest shall indemnify and keep indemnified the Mediator against any and all liabilities, claims, demands, actions, suits, proceedings, costs, damages and expenses arising out of or in relation to the non‑disclosure of that information. 4 STANDARD OF CARE UCOM, the Shareholders and Lenfest agree and acknowledge that they are under no obligation to mediate, or to continue any mediation, under this Agreement. Accordingly, they acknowledge and agree that the Mediator is under no duty to either party in respect of the quality, standard or impartiality of the Mediator or any mediation. …" And, again, a good deal may depend upon whose evidence is to be believed as to what exactly was disclosed. That is a matter I shall need to consider in more detail later; for the present, however, it may be noted that Dr Burt's handwritten notes corroborate the proposition that he made at least some disclosure of his position, particularly, as an adviser to Lenfest. · His detailed evidence to the ASC on subjects about which he was uninformative to the Court [examples of particular evidence are given]; his assertion that the ASC examination was just a "chat" 842 As for the second part of this point, it is certainly true that he described his examination by officers of the ASC as a "chat" although it was an examination under affirmation at part of which a legal officer of Bain was present. Given the form which the examination took I do not think Dr Burt's description as a "chat", while perhaps not the description one would choose on reflection, is of any particular significance for present purposes. 843 As for the third proposition, no particular comparisons were drawn to my attention. I have carefully considered the passages in Dr Burt's cross‑examination drawn to my attention. Certainly it seems to be true that Dr Burt was - perhaps not surprisingly - rather more colloquial and "chatty" in speaking to officers of the ASC than he was giving evidence in Court. Perhaps in part because of the nature of the questioning, Dr Burt also on a number of occasions appears to have given to the ASC answers of a more summary and "broad brush" kind than he gave in Court. For instance, he said, in relation to the Regent Hotel negotiations: "I agreed to help which meant that for the next three days basically I spent almost fulltime with Hadid, that was the 15th to the 17th, talking to him about what he wanted out of these licences, talking to him about what I saw as the reality of the capital markets. He was very keen to know what he could get out of the licences in terms of either cash or a free carry position. Again, I just gave him my advice on what I thought was appropriate, what the markets would bear, and various sorts of issues." On one or two occasions Dr Burt corrected what he said were mistakes in answers he had given to the ASC. But I am unable to see any particular respect in which it is fair to say that he was more informative or forthcoming in one context than the other. · His attempt to justify acting as a mediator by saying Clayton Utz had advised on it with full instructions including telling Mr Elliott the "five matters"; Mr Elliott says he was not told about Australis, and his notes bear this out 844 The five matters referred to were that Dr Burt had originated Project Midsummer, that Project Midsummer carried a potential for a substantial advantage of a financial nature both to Dr Burt and to Bain, that a key component of Project Midsummer involved obtaining control of New World, that Dr Burt was proposing to act as mediator in negotiations directed towards achieving that objective and that it was a key element of Project Midsummer that "that which was occurring should be kept entirely from Mr Hadid." 845 The position is somewhat more complicated than the submission suggests. In fact Dr Burt did not give evidence that Clayton Utz had been instructed on all five matters. He was asked about a number of them, though not, I think, in that context about the requirement that Mr Hadid not be informed of Project Midsummer. Dr Burt's answers to questions about what he told Clayton Utz concerning Project Midsummer cannot be characterised as clear or confident assertions. For example: "… Did you tell the solicitors that you were the author of 'Project Midsummer'? - Yes, I think it is most likely we did. I am not sure but I think it is likely, yes. What did you say to the solicitors about your authorship of 'Project Midsummer'? - I can't precisely recall but we would have said that we had an idea that involves an association between Lenfest and Australis, put it to Lenfest and it has gathered some momentum and people are generally very interested in it. Did you produce the 'Project Midsummer' letter to them? - Not to my knowledge, no." 846 That evidence concerned a meeting which Dr Burt and Mr Johnston had with Mr Halstead and Mr Elliott on 11 November 1993, at which Clayton Utz received instructions to prepare a draft mediation agreement. Mr Elliott took notes at the meeting. His notes appear to be quite full, though he was not asked whether they comprised a complete record of what was said at the meeting. They do not refer to Australis or to Project Midsummer. Mr Elliott was not asked whether on 11 November he was told, or was aware, that there had been discussions with Australis involving the Project Midsummer proposal. The relevant questions and answers were as follows: "Could I ask you, were you aware at that time of an arrangement involving Lenfest and Australis? - No. … Did you at some stage become aware of an arrangement which had been made in Missouri in early November between Lenfest and [Australis]? - I heard at some stage about a meeting in Missouri. The question however is, did you learn at some stage that an agreement had been reached or a proposal had been offered and agreement reached at least in principle at that meeting? - I don't believe so. So you never learned that? - I never learned that an agreement had been reached at a meeting in Missouri. … Mr Elliott, you're telling us, are you, that during November and for some considerable time thereafter you knew nothing of the events which had occurred in Missouri in early November 1993, is that your position? - That is correct." In fact, Mr Elliott's recollection of when he first heard about any part that Australis might play in any transaction did not emerge clearly from his evidence. In part, at least, that may have been because he was never asked that direct question though he was asked about a number of related matters. For example, his evidence was that he did not hear of the code names "Autumn", "Lent" or "Symphony" until 16 November. Early in the morning of 16 November he sent to Mr Cosser, at Mr Heller's request, a draft of the agreement for the purchase of the New World shares. But that is as far as it goes. Mr Johnston, however, gave this evidence about the meeting with Mr Halstead and Mr Elliott on 11 November: "Now, could I ask you what discussion, if any, took place as to what had occurred in the earlier part of the month when Dr Burt had been with the Lenfest representatives in St Louis? - My recollection is Wayne told them … Told them what? - That there had been discussions between Lenfest and Australis. Yes? - The object of which was to see if the pay TV licences could eventually be, let's call it backdoored into Australis. Yes? - Australis would then raise funds. Yes? - We wanted to act for Australis in that fund‑raising." 847 In short, Mr Elliott's evidence casts no clear light on his recollection. His notes do not refer to Australis. Mr Johnston gave evidence that Mr Elliott and Mr Halstead were informed of the discussions which had taken place between Australis and LCI. Dr Burt's evidence, given by no means dogmatically, was that he thought that had happened. It would be surprising if it did not. The topic plainly was not absent from Dr Burt's mind or from Mr Johnston's. One of their principal purposes in having the discussion with Clayton Utz was to ensure that, if Dr Burt acted as mediator, he and Bain would be protected. In those circumstances it would be surprising if the matter were not mentioned. In any event, I do not think there is any ground in this aspect of the evidence for a conclusion adverse to Dr Burt's credit. · His attempts to say he was not advising; he was giving "views", "low‑level advice", "commonsense advice"; it was advice but non‑binding … contrary evidence was given to the ASC. It was also contrary to Recital C of the mediation agreement and his instructions to Mr Elliott about the mediation agreement 848 In my view this attack was not made good. I have dealt at length with the advice given by Dr Burt and I have referred to what he said in his interview by officers of the ASC. I do not think there is any significant inconsistency. · His denial of any scene at Clayton Utz arising from his New Zealand nationality 849 There is nothing in this point. Dr Burt, in common with all the witnesses to the event, other than Mr Hadid, denied Mr Hadid's account of shouting and slamming of doors. He said that he did not hear Mr Heller "directing his anger at Mr Elliott." Rather, Mr Heller expressed "frustration": "What was Mr Heller's reaction? Was it not one of outright anger? - No, he was frustrated and I was saying we can easily fix it and he turned his mind to having it fixed. So it was all perfectly calm and sensible and dealt with without fuss, was it? - No, there was some urgency in the matter and there was some frustration but there wasn't an unintelligible shouting and slamming of doors." The slight differences between that account and those of others (apart from Mr Hadid) are entirely inconsequential. · His evidence that for him his conflict of interest with Hadid was then a dim "perception" 850 The evidence referred to is the portion of Dr Burt's cross‑examination in which he agreed that he was the originator of the Project Midsummer plan, he had substantial fees "riding on it" and it was a key element of the plan that it be kept secret from Mr Hadid. The cross‑examination proceeded: "Did you perceive that that situation raised all manner of potential conflicts of interest? - No. You say that it did not occur to you that in the circumstances which we have just discussed there may be some conflict of interest applicable to your own position? - No, I was following the instructions of my client. No, concentrate on my question. My question is, do you say here on your oath that it never crossed your mind that the circumstances which I have just put to you may give rise to some conflict of interest in connection with your own position? - Crossed my mind but I didn't believe I had a conflict of interest, I believed that there was the possibility of a perception of one hence we took advice to overcome that." 851 Dr Burt's evidence was not that a conflict of interest was for him but a dim "perception." It was that he believed there was no conflict of interest. He believed that, for the reasons put to him, there might be a perception (that is, no doubt, by others) that there was a conflict of interest. Accordingly, Bain took advice. The issue is very similar to one which I have already discussed. There can be no doubt that, as mediator, Dr Burt could not be regarded as impartial. He had a retainer from LCI. He had a personal interest. But, as I have already said, conflict of interest, if it is to be relevant, presupposes the existence of a duty. I have discussed the question whether a fiduciary duty arose from dealings between Dr Burt and Mr Hadid before the Regent Hotel meeting. There may, of course, be a separate question (though it is not one which is the basis of any claim in this case) whether one who undertakes a role as mediator in circumstances such as those which existed in this case owes fiduciary duties to the parties to the mediation. But, once again, the content of any such duty must depend upon the terms on which the mediation is entered into and relevant to any question of breach of duty must be the extent of the disclosure, by the mediator, of any personal interest in the outcome. It might have been surprising if the possibility of a conflict, or of a perception of a conflict, did not cross the minds of Dr Burt or Mr Johnston. But in fact, of course, the possibility did cross their minds. And I do not think that anything particularly relevant to Dr Burt's credit turns on the fact that he believed that there might be a perception of a conflict of interest but that there was in fact no real conflict: even if his view should, on examination, turn out to be wrong. · His prevarication on discussion in Bain on conflict of interest. He said there was "none"; but previously he said it was "lively" 852 Dr Burt's evidence on this topic, it seems to me, was not entirely clear. But I do not think "prevarication" is the word for it. What he first described as a "lively" discussion of the reasons why an indemnity agreement should be entered into as a precondition of a mediation did not strike him as "lively" in cross‑examination about the same events when counsel returned to them the following day. On the former occasion he seemed readier to see a connection between the discussion and a possible conflict of interest whereas, on the latter occasion, he was not so ready: he was prepared to accept that a possible conflict of interest may have been discussed, but that "wasn't the thrust." But the difference does not seem to me to be of any great significance. · His evidence about his fee of about $2,580,000 paid into a Swiss Bank account and an unwritten agreement regarding an equity provider of last resort. His evidence about his beneficial interest in the monies was unbelievable. Mr Borda, who filed an outline of evidence, was not called 853 This refers to an arrangement which was made, according to Dr Burt's evidence, between Dr Burt and Mr Borda when Dr Burt left Bain's employ in December 1993. The arrangement was that any fee earned on the expected underwriting of Australis' securities would be divided between Bain and Dr Burt, Bain receiving 55 per cent and Dr Burt 45 per cent "after costs." In fact there was no underwritten issue. There was a private institutional placement, the fee for which was agreed with Mr Price at 3Ľ per cent of the amount placed. In accordance with the arrangement with Mr Borda, Dr Burt was entitled to, or to direct the payment of, 45 per cent of that: a sum of about $2,580,000. That sum was in fact paid by Australis, at Bain's direction, to a bank account in Switzerland. The account, according to Dr Burt's evidence, was not his; it belonged to Mr Michael Fitzgerald, an investment banker resident in Monaco with whom Dr Burt had a long standing association. The sum was payable to Mr Fitzgerald's account in the following circumstances. The placement was difficult and Dr Burt feared a shortfall. Mr Fitzgerald agreed that a group of investors arranged by him (the identity of the investors being unknown to Dr Burt) would take up to $80,000,000 worth of Australis securities which Dr Burt was unable to place in Australia. In exchange for that undertaking Mr Fitzgerald and his group of investors were, as against Dr Burt, entitled to the whole of the $2,580,000 due to Dr Burt; Dr Burt, in turn, had the right to "claw back" part of that sum if Mr Fitzgerald and his investors were not required to take up the full $80,000,000 worth of securities. Dr Burt was entitled to retrieve one‑third of the fee referable to so many of the securities as Mr Fitzgerald and his associates were not obliged to take up: thus, if they were obliged to subscribe for only $40,000,000 worth of securities, Dr Burt's entitlement was to one‑sixth of the $2,580,000. As matters turned out, according to Dr Burt, all the securities were in fact placed in Australia, though only at the last moment, and Mr Fitzgerald and his group were not required to subscribe for any. Consequently, Dr Burt was entitled to one‑third of $2,580,000; he did not receive it personally, however, but agreed that it would be invested in certain joint ventures between Mr Fitzgerald and the trustees of trusts of which Dr Burt was a beneficiary. 854 The arrangements with Mr Fitzgerald were, Dr Burt said, entirely oral; he made them over the telephone from his desk in Sydney. He did not inform Mr Borda of them. The arrangement was not entirely watertight or free of risk. If, for example, Mr Fitzgerald were to suffer a fatal encounter with a bus, none of the $80,000,000 was likely to be forthcoming nor, probably, would the $2,580,000 be seen again. Similarly, if Dr Burt were to suffer a like misfortune, Bain would be unable to take advantage of the arrangement. Dr Burt was asked whether he had disclosed any part of the fee to the Australian Taxation Office as part of his assessable income. He replied that he had not; and his evidence was that he had been advised that he had complied with the tax laws of all relevant jurisdictions. 855 Questions put to Dr Burt as to some aspects of those arrangements were such as to suggest, on the part of the cross‑examiner, considerable scepticism. But it was not directly suggested to Dr Burt that any part of his account was untrue. Dr Burt was asked a series of questions about the arrangements and he answered them fluently and without hesitation. His evidence was that arrangements such as he described are not uncommon; that he regarded a successful placement as sufficiently important to his reputation in the market, and thus to his long‑term interests, to justify the considerable short‑term detriment which he suffered; that Bain would not have agreed to participate in paying for the "insurance" because it required a minimum clear return on the placement; and a shortfall of $80,000,000 would not have been a matter of particular concern to Bain, which had not guaranteed a placement but had undertaken merely a "best endeavours" obligation; and in those circumstances it did not occur to Dr Burt to tell Mr Borda about the arrangements. 856 To the uninitiated, several aspects of that evidence may seem remarkable. Scepticism is readily aroused by tales of large commitments dearly bought from unidentified persons off‑shore under arrangements concluded over the telephone, never reduced to writing (and of which, for all that appears, no note is kept) and where the performance of the commitments depends not only on the integrity but also on the survival, his faculties unimpaired, of a particular individual. But there was no evidence of practices in this field of activity; it is hardly a matter for judicial notice; I do not see how Mr Borda's absence from the witness box assists me towards a conclusion that any particular part of what Dr Burt said was untrue. And, surprising as the evidence may seem, I do not think there is a sound basis for a finding that it is so inherently improbable or unbelievable that it (or any part of it) should be found to be untrue. And I can see no other basis on which the evidence is capable of assisting a finding that Dr Burt's evidence is not worthy of credit. · He denies he was present at meeting of 14 November 1993, this conflicts with notes of the meeting, and cannot be readily attributed to memory lapse; compare his denial of presence at meeting of 10 November 1993 with Elliott 857 The meeting on 10 November was held at Bain's office and was attended by Mr Johnston and Mr Elliott. It was a meeting at which, in general terms, Bain provided information to Clayton Utz and indicated matters on which they sought advice. Mr Johnston said that Dr Burt was there; Mr Elliott's evidence and note confirm that he was; Dr Burt's evidence was that he attended the meeting of 11 November but that Mr Johnston (though not Dr Burt himself) may have "visited" Mr Elliott on 10 November. But there is no apparent reason to regard this as anything other than a failure of recollection: I cannot see any reason why Dr Burt would have wished, or would have found it in his interest, to deny, knowing his denial to be untrue, that he was present at the meeting of 10 November and no reason was suggested on behalf of Mr Hadid. 858 No witness gave evidence of the meeting of 14 November. The only evidence of it is, apparently, a handwritten note prepared by Mr Mangioni. A copy of it in evidence is by no means easy to read but it appears to record the following: "Don Heller/Wayne Burt/MJ/GW/JC/RW/RAM 14/11/93 [018 046 206 358 4468/Regent 258 1107] Licence Process Risks: · Govt. End process · Intervening Lic B bid. Brown scenario: · Lenfest - TCI deal together. · 15 day max. lic. B disposal of clowns bid. · […] L/T re Brown substance (RAM [?] Bain [?] Lenfest)." 859 That looks like a note of a meeting held on 14 November 1993 attended by Mr Heller, Dr Burt, Mr Mark Johnson, Dr Gary Weiss, Mr Jim Crase (the last three representing Australis), Mr Ron White (of Norton Smith, representing Australis) and Mr Mangioni (also representing Australis). 14 November was the day immediately following the signing of the Becbran option agreement. Dr Burt gave evidence that the first two of the telephone numbers listed were his own and the third was a number at which he might be reached at the Regent Hotel. The note itself is not free of obscurity but it appears to reflect a discussion of matters which might be expected to have been discussed at the time. "Clowns" is an unfortunate way in which, particularly in Mr Mangioni's notes, of which several are in evidence, those associated with UCOM were referred to at about this time and later. Mr Heller and Dr Burt were the only listed participants who gave evidence. Mr Heller was not asked about such a meeting on 14 November. Dr Burt gave evidence that he recalled attending a meeting with Australis board members, Mr Heller and Mr Mangioni on 17 or 18 November. He was then shown Mr Mangioni's note. He accepted that the telephone numbers listed were his. He gave firm evidence, however, that he was not present on 14 November at a meeting of the kind which the note appears to reflect: "I will start again. At a meeting with those persons whose names we see at the top of Mr Mangioni's document was there ever any discussion about the Brown matter at all? - No. I was not at a meeting where the Brown matter was discussed on that date with those people and by the time I met with those people I don't believe it was discussed - well, not in any detail anyway. Is it your [understanding] that Mr White, whose name appears second‑last on the list, was a solicitor who was acting, or had at one time acted, for Australis? - Yes. I've never met Mr White and I hadn't noticed his name there but that was my understanding, that he was a lawyer known to Mr Price." 860 The effect of the submission is that the note can only be a contemporaneous record of a meeting between the persons listed. The meeting therefore should be taken to have occurred as described and the persons listed to have attended. Dr Burt's evidence cannot reasonably be attributed to a failure of memory (unlike, perhaps, his evidence about the meeting of 10 November). Therefore he must be taken to have lied about it. The difficulty with this submission, however, is that there is no apparent reason why Dr Burt, if he did participate in such a meeting, should have lied about it. His attendance would not have given him any knowledge which he did not admittedly have or put him in contact with any group with which he was not, in any event, plainly and admittedly in touch. It may be that Dr Burt's apparently clear recollection - both that he was not at such a meeting and had never met Mr White - is incorrect. It may be (particularly in the absence of evidence from the note taker or any other of the persons listed) that the reality underlying the note is not what it appears, in the absence of explanatory evidence, to reflect. Either way, the matter does not provide any firm basis for the submission. · His professed lack of knowledge about the origin of the deposit monies for licence A given in the Supreme Court two‑channel case; but in this case he said he had known the origin of the monies 861 Dr Burt gave evidence that he was aware, at the time the deposit on licence A was paid on 3 December 1993, of the source of the deposit: a loan by Mr Lenfest to Century. In earlier proceedings in the Supreme Court concerning other claims of Mr Hadid against certain of the respondents, Dr Burt had given evidence that he did not have an understanding as to the source of the deposit monies and, when asked whether they were to be lent by Lenfest as he understood it, had replied, "Not at the time but I am subsequently aware of that." He accepted that the answer which he had given in the Supreme Court proceedings was plainly wrong. Dr Burt's evidence (in cross‑examination in this proceeding) continued: "And do you have any explanation as to how you came to give that wrong answer to the Supreme Court of New South Wales? - No, other than there are a myriad of complex transactions and I've given the wrong answer. No, it's a mistake." 862 There the matter was left. There is no doubt that Dr Burt did know of the source of the money: his evidence on that topic in this case was correct. But no particular basis was put to me, and none is apparent, for a submission that what Dr Burt said in evidence in the other proceeding was a deliberate lie rather than a genuine failure of recollection. Certainly I could see no basis for it in the way in which he gave the evidence, to which I have referred, in this case. · His denial that the matter was "settled" at midnight (cf Elliott) 863 I have already considered this in some detail and concluded that the matter was not "settled" at midnight. Mr Elliott gave evidence of the detailed instructions he received from Dr Burt. His evidence was based on his file note. It was evident that he had no clear independent recollection. The cross‑examination on the topic commenced: "Could I take you now then to the situation immediately prior to midnight. You were expecting that you would receive instructions to implement by creation of documentation any agreement which was reached? - I believe so, yes. And at midnight, did you receive instructions via Mr [sic] Burt? - Yes, I did." That is hardly clear evidence that the matter was indeed settled by midnight. Dr Burt's evidence was: "And did you tell him that the matter had been settled? - No, I said that things are progressing and I am hopeful of a settlement being reached and gave him some parameters." · His denial in his outline of evidence that he was giving Mr Hadid market views; in cross‑examination he conceded he was 864 Dr Burt's outline is not in evidence. He accepted that it includes a statement that he "did not provide Hadid, UCOM or any joint venture with advice and guidance in financial and other matters"; apparently that was in response to matters asserted by Mr Hadid in an affidavit which also is not in evidence. Dr Burt's explanation was this: "I assert that that statement was trying to draw a distinction between advice in a formal sense where one has a retainer or a mandate, and advice given in a general commonsense way, where someone would come to your office and talk to you and you would give them your views. I am not expecting people to go and follow my views in an informal fashion as I would be if I had a retainer and I gave them serious considered corporate financial advice. That is the distinction I am trying to draw." 865 An exchange ensued about "guidance in financial matters" and hierarchies of advice or guidance. There is no doubt that Dr Burt did offer advice or guidance about some matters, such as preconditions to an underwriting and the topic of free carry. It is not literally true that he did not offer to Mr Hadid, UCOM or some combination of them, any advice or guidance in financial or other matters. On the other hand, I do not doubt the existence of distinctions between kinds or levels of advice of which Dr Burt gave evidence. It is impossible to reach a conclusion adverse to Dr Burt simply on the basis of the brief passage put to him without knowing a good deal more: for example, what it was that he was responding to and what else he said in his outline. Did he, for example, mention the letter of 13 October (of which, of course, all parties must have been aware)? Did he refer to any discussions in which he made observations about free carry, or about preconditions of an underwriting? It would be somewhat surprising if he did not. Given its context, the submission on behalf of Mr Hadid might stand revealed, as senior counsel for Bain and Dr Burt described it, as a quibble. What matters, however, is that the material which I have is insufficient to enable me to conclude that it is anything else. · His denial that he ever told Hadid the 30 per cent free carry was achievable 866 I have dealt with this topic at length. For reasons I have given, I accept Dr Burt's denial. · His evidence that the Lenfest reply to the Hadid letter of complaint to Lenfest was a response to the Hadid letter of complaint to Burt 867 Dr Burt gave evidence that he attended a meeting with Clayton Utz on 19 November when a reply to Mr Hadid's complaint to LCI was discussed. As submissions on behalf of Dr Burt accept, Dr Burt was wrong in recalling that he had by then received Mr Hadid's handwritten letter of complaint addressed to him. Dr Burt's evidence was also, however, that he was later advised by Mr Wang that the letter written by LCI in response to the complaint directed to it was a sufficient response to the complaint separately made to Dr Burt. It does not particularly matter whether that advice, if given, was sound. Dr Burt's evidence that he received the advice was not challenged in cross‑examination. If he received it, it explains Dr Burt's evidence. Dr Burt made a note of his discussion with Mr Wang (in at least part of which other partners of Clayton Utz were involved as well). His note does not refer to that part of the discussion. It would, however, be very surprising, given that the complaint had been faxed not only to Dr Burt but also to the chairman and the chief executive of Bain, if advice had not been sought about a response. · The evidence that during the mediation Mr Heller and Dr Burt, when alone, talked as though Project Midsummer did not exist 868 In my view this does not fairly reflect the evidence. The cross‑examination began with a straw person (the scene is dinner between Dr Burt and Mr Heller on 14 November): "Over dinner did you say, 'Don, this is a bit of a problem implementing our grand plan, if we can't get Albert on board'? - No. Words Australis never crossed your lips? - Well, I think we, as I said to you before, I talked about the Neil Brown thing in general terms, so Australis would have been mentioned, yes." Then, a little later, dealing with the Regent Hotel negotiations: "You see, at any time in your discussions or reports to Mr Heller did you say anything at all about the St Louis deal? - No, I mean, you quite rightly said it was in the background but I can't recall discussing the St Louis deal. Did you ever at any stage say, 'We've got to get Mr Hadid on board or the whole arrangement is going to come to nothing'? - No, he knew by my comment that I was trying to get him to do a sensible deal with Mr Hadid and, conversely, Mr Hadid with him, that was what I was doing." The complaint is not made good. · His evidence that the mediation was first discussed with Mr Heller on 14 November 1993, whereas Mr Johnston talks of the request on 11 November 1993 and Mr Heller on 15 November 1993 · Evidence the mediation was first discussed in a taxi. This is denied by Dr Burt, but there is no reason for Mr Heller to lie on this point of detail 869 Undoubtedly, Dr Burt, Mr Johnston and Mr Heller cannot all be right. I accept that it is not easy to see a reason why Mr Heller would lie about the matter. Nor, however, is there any obvious reason why Dr Burt would see a need to say that the suggestion was made on the evening of 14 November rather than the morning of 15 November. It is, I think, likely that Mr Johnston's evidence was wrong and that the process was initiated by a suggestion made relatively late by Dr Burt (but which he had been considering for some days) rather than a request made by Mr Heller or Mr Hadid earlier. But it is not easy to see a good reason for preferring Mr Heller's recollection to Dr Burt's; why should it be regarded as more probable that he left the suggestion as late as the taxi ride on returning from Canberra on 15 November?

(d) The "deception" of Ms Combs 870 I have given a brief account of the evidence in par 245 and par 246. It concerns Dr Burt's telephone conversation with Ms Combs on either 4 or 5 November. The action plan, it will be recalled, included, as one of the series of things to happen, "Bain to call Margaret Combs"; there was a note against that entry, "DLH spoke to WB on 11/4. He will speak to GL on 11/5 and call Margaret 11/5." The next entry suggested that Ms Combs would speak to Mr Hadid after Dr Burt had spoken to her. Dr Burt's evidence was that he was asked by one of "the Lenfest people" - probably Mr Plant or Mr Heller - to telephone Ms Combs in order to seek her views on the United States situation (that is, presumably, the availability of United States investment) and to inform her of his understanding of the attitudes of the market in Australia. The request was made to him when he was in Los Angeles on his way back to Sydney from St Louis; and he telephoned Ms Combs from Los Angeles. Despite what the action plan says (Dr Burt's evidence was that he did not see it before the commencement of the proceeding) Dr Burt's evidence was that he did not speak to Mr Lenfest about his discussion with Ms Combs, nor did Mr Lenfest have any recollection of hearing about the discussion. There is no doubt that Ms Combs had been brought substantially up to date, both by Dr Gadir and by Mr Lenfest, concerning the state of negotiations between Mr Hadid and LCI. 871 Dr Burt's note, which he claimed was a note of the conversation taken while he and Ms Combs spoke, was written in pencil on the back of a page of one of the company Project Midsummer documents prepared by Bain. A transcription of it follows: "Gerry Lenfest (215) 692 5900 Margaret Coombes (417) 335 8600 Margaret Coombes: ‑ unable to bring in US investor because of cloud ) TCI ‑ " to agree with AH & ) scared TW away Cont Comcast Cox ‑ without US investor impossible to do public placement ‑ can't do it without finance ‑ 10% free carry? Ô can't get with Australian Ô continued Ô forfeit "A" deposit Ô AH group striving for last pound of flesh Ô only way is to transfer stock of New World ‑ Bain & Co Nominee ‑ $2m upfront // 1/2 of any carried interest // forfeited or 1/2 profit // minimum of $3m // 8.30 Don Heller 11.30" 872 In substance, Dr Burt's evidence was that the note records, principally at least, statements made to him by Ms Combs and topics of conversation which Ms Combs introduced. The suggestion put to Dr Burt in cross‑examination was that it is not a note of a conversation at all but an aide‑mémoire prepared by Dr Burt, recording instructions given to him by LCI for the purpose of arming Ms Combs to exert pressure on Mr Hadid, while keeping from her any information about what had been discussed in St Louis. 873 One aspect of the submission may be dealt with quickly. A typescript accompanying the tender of the note records the first line under "Margaret Combes" as "unable to bring in United States investor because of clowns": that is, "clowns" rather than "cloud." The suggestion was that this was a correct rendition of the handwriting and that Ms Combs was hardly likely to have referred to any of the UCOM shareholders as clowns. The second part of that submission may be accepted, but the first part, in my view, is clearly incorrect. The handwritten word is undoubtedly "cloud" not "clowns." Looked at without regard to anything else, it is clear enough; and there are sufficient examples of Dr Burt's handwriting in evidence, including the letters "u", "w", "n", "d" and "s", to permit me to conclude with confidence that my first impression is correct. 874 Secondly, if the purpose in fact was to give information to Ms Combs on the basis of which Mr Lenfest (or Dr Burt) could then persuade her to put pressure on Mr Hadid, the question is immediately raised, why choose Dr Burt? Mr Lenfest was well acquainted with Ms Combs and it was proposed that he would speak to her anyway. Mr Heller was well acquainted with her also. Dr Burt was not. Why would Mr Lenfest, who had already supplied information to her, not continue to do so (retaining, by doing so, control over what she was told and what she was not told)? If, on the other hand, the real purpose was as Dr Burt claimed, to obtain her views on the position in the United States market and to inform her about the attitude of the Australian market, then Dr Burt, as the potential underwriter, was the logical choice. In that respect, in my view, the probabilities favour Dr Burt's version; and I do not think the balance is tilted the other way if one wonders (it was not explained) why anyone would have thought that any particular purpose was to be served by Dr Burt having such a conversation with Ms Combs at that stage. 875 Mr Lenfest's evidence is consistent with Dr Burt's. He asked Ms Combs to try to persuade Mr Hadid "to be reasonable." He called Ms Combs; he said "I don't recall Wayne Burt or anybody else calling her." Mr Heller was plainly uncertain: that is reflected in the following evidence: "What was the purpose in Dr Burt speaking to Mr Lenfest? - I don't know. I don't recall at this time. I mean, there certainly was a reason then but I don't recall it now. …. And the proposition, if I followed it correctly, is that Dr Burt would tell Ms Combs something of the affair and would ask her to intercede with Mr Hadid in some way? - Yes. In other words, to seek to have her bring her good offices to bear in an effort to persuade Mr Hadid to sell at least 90 per cent? - To be reasonable in discussions. … Did you speak to Dr Burt about this matter? - I spoke obviously according to the notes here to Dr Burt on 4 November and went on and recorded that he was going to have the conversations that are recorded in the notes. But you see even before you actually spoke to him, the proposition had taken its place in the action plan that Bains should call Margaret Combs? - Yes. Now, what I am asking you is, did that item take its place there after some conversation between yourself and Dr Burt? - I don't recall why Bain was to call Margaret Combs. In retrospect, it doesn't make any sense to me but for whatever reason at that time that was how it was nominated." It is not an unfair paraphrase of that evidence, I think, that one's first impression, on simply reading the action plan, might well be that the point of what Dr Burt was to do would be to advance the proposal discussed in St Louis particularly by enlisting the aid of Ms Combs to effect step 1 ("resolve Hadid deal"). But, on further reflection, that "doesn't make any sense." 876 The handwritten note itself, perhaps, does not offer much assistance. It would, however, be unique among Dr Burt's notes in evidence if it were an aide‑mémoire rather than a record of an actual conversation. Its form might be consistent with either version, though perhaps it sits more naturally with Dr Burt's account. In the end, however, although on any view the incident is a slightly odd one, I think Dr Burt's evidence of what happened is more probable than the alternative submitted. I do not think Mr Heller's evidence supports the alternative. Plainly Mr Lenfest's evidence does not. There could, I think, be no suggestion that Ms Combs, who did not give evidence, should be considered to be in the "Bain camp" or even in the "LCI camp."

(e) Conclusion 877 For the reasons I have given, I do not think that the attack on Dr Burt's credit succeeds. His evidence is, of course, by no means infallible. In several cases I have preferred contrary evidence given by others. For instance, I have accepted Mr Heller's evidence that it was Dr Burt who informed him, in the interval between discussions with Mr Neil Brown, of the imminent Becbran transaction; I have preferred Mr Plant's account of the circumstances in which he became aware of the Project Midsummer proposal; I do not doubt that the evidence of Mr Johnston and Mr Elliott, that Dr Burt was present at the meeting with Clayton Utz on 10 November, is correct. As I have indicated (par 379), I prefer the evidence of Mr Johnston and Mr Elliott to that of Dr Burt about aspects of the licence A transaction. And it is clear that Dr Burt's evidence about his lack of knowledge of the source of the licence A deposit, in the Supreme Court proceedings, was wrong. Additionally, Dr Burt gave, with great fluency, evidence, in many cases in minute detail, of conversations which had occurred five years previously, often without the benefit of any note or extending well beyond the boundaries of his notes (his account of the Regent Hotel negotiations is probably the clearest example of this). That characteristic of his evidence, looked at against the (entirely unsurprising) fallibility of his memory as to particular details and his strong personal interest in the outcome of this case, requires that his account of events be regarded cautiously and critically. But the suggestion, put in vigorous terms, that he set out to deceive the Court is not sustained. Nor is there any basis, in the criticisms made, for a conclusion that where there are differences between the evidence of Dr Burt on the one hand and Mr Hadid, or one of the witnesses called by Mr Hadid, on the other, the evidence opposed to that of Dr Burt should be preferred.

The licence A representations 878 I have set out the representations, as pleaded, in par 414. They were said to have been made by Mr Plant on or about 21 October 1993. The substance of them was that LCI would purchase licence A (my emphasis); that would assist in finding investors in licence B, who would be or include a "friendly competitor"; and the "Joint Venture" would establish an operating company to be owned in equal shares by the owners of each licence. 879 Although the claim based on those alleged representations was not abandoned, it was not strongly pursued. I can deal with it reasonably briefly. 880 It is, of course, true that the proposal on which Bain based its letter of 13 October 1993 included among its elements that LCI and/or UCOM would control licence A, but licence B would be sold to a third party or third parties and that, if necessary, LCI would provide the funds in a debt/equity mix to pay the fee for licence A by the due date. There is nothing particularly surprising about that. The question of paying for licence A was considerably more urgent than the question of paying for licence B. On 13 September the ABA had requested the Trade Practices Commission to report on the bid for licence A. No request had been made in relation to licence B. The Commission could be expected to report within the forty days allowed to it by the Act; and, not later than thirty days after the Commission reported, licence A would have to be paid for. UCOM Australia was notified on 18 October that the Commission had reported. Thus it was known, very shortly before Mr Plant's visit (commencing on 21 October), that by 17 November licence A had to be paid for; otherwise, the bid would lapse. Project Midsummer - involving the acquisition of licence B - was not proposed, of course, until shortly before Mr Plant's departure on 27 October. 881 In summary, Mr Hadid's evidence was that he met Mr Plant at the Ritz‑Carlton Hotel on 21 October. Mr Plant said that LCI would finance licence A; that decision was definitely made. That did not mean, however, that LCI would necessarily "stay in A." LCI might "go into B", leaving UCOM in A. When asked why, Mr Plant replied that it was as they had discussed in New York, it was better to have friendly competitors because Mr Lenfest's "interest is in the operating company." The operating company would be owned "half by Licence A and half by Licence B." Mr Lenfest would be "back to us next week as to which licence he is going to park Lenfest in, A or B." Mr Plant also said that LCI had spoken to the banks and the money was already approved. 882 Mr Hadid gave evidence that shortly after speaking to Mr Plant he told Dr Burt what Mr Plant had said. Dr Burt's evidence was that he did not recall such a conversation. 883 Mr Plant denied Mr Hadid's account. His evidence was (and to this extent is clearly correct) that the banks in fact had not at that stage approved finance. He said that LCI was leaning towards licence A but no decision had been made; the decision was one for Mr Lenfest to make. Mr Lenfest's evidence was that he had not made that decision. 884 Mr Blanks gave evidence which supports Mr Plant. He said that on 25 October he had lunch with Mr Plant in company with Mr Hadid and Dr Gadir. Asked whether he recalled what Mr Plant said about LCI's intentions concerning the licences, he replied, "I think Mr Plant was saying that they were tending to the view that they would opt for licence A." In cross‑examination, Mr Blanks agreed that it was possible that on or about 26 October Mr Plant had said, at a meeting, that LCI was leaning towards licence A but that a decision had not been firmly made. Draft minutes of a meeting of UCOM's directors held on 22 October, prepared by Mr Blanks, record: "Note that Lenfest appears ready to propose that it pays for balance of licence - expect to discuss terms before SP leaves next week." Mr Blanks said that that note correctly recorded what was said at the meeting. 885 As for the documentary evidence: Mr Heller's "Australian Pay TV, Action Plan, License A" of 19 October 1993 included, as the last step in a proposed overall strategy: "Designate our position in either the A or B license based upon maximising the carried interest (most likely License A at the date of this document - October 19, 1993)." Mr Plant faxed a copy of that document back to Mr Heller on 25 October (par 207). He had made some amendments to it but none affecting that step. His accompanying memorandum, which Mr Heller was invited to share with Mr Lenfest, said nothing about any commitment to finance licence A. Instead it referred to Bain's confidence about financing 65 to 80 per cent of licence B and its operating costs and recorded that "[Bain] would not be interested if we were not in the B license because of potential competition." 886 Some evidence of Mr Egan was relied upon in relation to this matter, though, as will be seen, even if accepted it would be of very little assistance. I referred to the episode briefly in par 201. Mr Egan's evidence of what Mr Plant said to him was as follows: "Mr Plant said words to the effect that Gerry Lenfest was worth some $500 million and that he would not have any difficulty in financing the licences if required. …. He then went on to say words to the effect that … Lenfest Communications Inc had raised several hundred million dollars in both junk bond and Euro bond issues through Credit Suisse First Boston. He then went on to say words to the effect that he was the private banker to Macaw of Macaw Communications in the States in his capacity as a banker with Philadelphia National Corporation and … his role with Lenfest was as also Gerry Lenfest's personal financial adviser or financier. … He then went on to say confidentially 'Don't be surprised that we are only interested in licence B and not licence A.' " Mr Egan proceeded, over objection, to give evidence that what Mr Plant had said surprised him because "on every occasion from my first meeting with Stephen Plant all discussions had been on licence A and not licence B." Mr Hadid gave evidence that Mr Egan informed him of his conversation with Mr Plant: see par 202. For a reason which is not entirely clear (the reason given by Mr Egan was that he understood that Mr Hadid was engaged in very important negotiations and should have the information), Mr Egan wrote to Mr Hadid on 16 November as follows: "Further to my recent discussions with Steven Plant of the Lenfest Group, don't be surprised that Lenfest are only interested in Licence 'B.' This is despite all possible theories that Lenfest would finance the 'A' licence. The interest in 'B' was disclosed to me by Plant in confidence Albert, please consider this seriously as this is a most important time for you." By 16 November, of course, that information would not have come as a surprise. 887 Mr Plant denied Mr Egan's account. According to Mr Plant, Mr Egan said that Mr Hadid believed that LCI was interested in financing licence A, to which Mr Plant responded that the decision had not been made and that Mr Lenfest was the person who would make it. Mr Plant also gave evidence that he said to Mr Hadid at the airport, shortly before he left Australia, that no decision had been made, that Mr Plant could not make a decision and that he would discuss the matter with Mr Lenfest on his return. 888 What in my view is inescapable is that the accounts of Mr Hadid and Mr Egan both incorporate, at least, considerable exaggerations. Mr Hadid's letter of 1 November (par 227) spoke of "Steve's stated position, on his most recent visit to Australia to finance A …", not of a decision of LCI of which he had been informed: it is consistent with Mr Plant's version of their conversation. There is no apparent reason why Mr Plant would, immediately upon his arrival, have said to Mr Hadid that a decision had been made to finance licence A and, while taking no steps to disabuse Mr Hadid of that notion, have told Mr Egan "confidentially" that he should not be surprised if LCI turned out to be interested in licence B, not licence A. And the theory that LCI would definitely "finance" licence A in circumstances where they might later take up a substantial interest in licence B, not licence A, and in circumstances where bank approval (however much it might have been expected) had not been obtained and, more importantly, no structure had been agreed upon with the owners of the successful bidder (probably, of course, Mr Hadid) seems to me entirely implausible. 889 Equally, it would be somewhat remarkable if, as Mr Egan claimed, Mr Plant had said that Mr Lenfest would have no difficulty "in financing the licences if required." The evidence certainly does not suggest that LCI, or Mr Lenfest, could readily have "financed" both licences and there is no apparent reason why Mr Plant would have said that LCI or Mr Lenfest could have done so. It may well be that Mr Plant did speak, during his visit, of the financial capacity of LCI and Mr Lenfest and of the possibility of their financing one of the licences. Discussions with the banks were initiated while he was in Australia. Dr Burt gave evidence, which has some support in his notes, that Mr Plant spoke of LCI's financial strength and of the possibility of it financing one of the licences. It may be that Mr Plant said something at least about the possibility of LCI financing payment for one of the licences during his meeting on 22 October with the Nomura representatives and Andrew Price and Mr Johns. I have quoted the memorandum written by Mr Johns in par 204. The misstatement, in the note, of the balance payable for licence B does not inspire confidence in its general accuracy; and it is not easy to see any sensible reason why, in the light of Mr Heller's and Mr Plant's documents to which I have referred and the other evidence about events during Mr Plant's visit, Mr Plant would on 22 October have "revealed" that LCI "will" provide the funds to pay for licence B. In any event, the note provides no support for the alleged representations about a decision to fund licence A. 890 For those reasons, I do not accept that Mr Plant made, on 21 October, the statements attributed to him by Mr Hadid. It follows that the claim that the "Licence A representations" were made is not made out. 891 In any event, even if the Licence A representations were made, Mr Hadid has not established that he suffered any loss as a result. He gave this evidence: "On the 26th you had a conversation with Lenfest? - I did. As a result of that conversation you ceased to believe that Lenfest was willing to fund licence A, did you not? - Well, I was - you know, it was such a surprise I wasn't sure where they're angling from any more. You knew on 26 October 1993 that Lenfest was telling you that he was not prepared to fund licence A did you not? - I was getting that feeling. He told me that a bit later, the next two days or something, he said that he's not prepared to finance licence A. Do you agree that it became apparent to you on 26 October 1993 that Lenfest was not prepared to finance licence A? - …. I can only say that at that point in time he put a deal to me and he said, that's the deal. I had no views on that and in fact for a few days I kept on wondering whether …. it was just another way now they're negotiating because they had to re‑think things or what they're doing. … But it became apparent to you on the 26th that he was not prepared to finance licence A did it not? - What became apparent is that there's something happening. …. It was all of a sudden out of the blue, I'm sitting with Steve Plant, until that day everything was in perfect time and he's reporting everything is in harmony with friends, no you're right, the press are trying to separate us, I don't know who's doing it, all that stuff, and then suddenly I get this phone call from Mr Lenfest totally out of the blue, sir. Do you accept or reject this proposition? Whatever Plant told you on 21 October in relation to the financing of licence A, it became apparent to you on 26 October as a consequence of your conversation with Lenfest that Lenfest was not willing to finance licence A; do you agree with that proposition or do you disagree with it? - I think I more agree with it." Mr Hadid then accepted that on or about 27 or 28 October Mr Lenfest, in a further conversation, said "I'm not interested in financing licence A." There is no credible evidence that, on the assumption Mr Plant said on 21 October what Mr Hadid attributes to him, and thus misled him into a belief of which he was undoubtedly disabused within a week, Mr Hadid was in a position to take, and would have taken, action which would have retrieved the licence A bid from the cascade.

Project Midsummer - discussion and findings 892 What happened in St Louis, and later, must be seen in the context of events during October. An appropriate starting point is, I think, the exchange of correspondence which commenced with Mr Lenfest's letter to Mr Hadid of 11 October (par 180). That letter dealt with the allocation of responsibility for approaching investors; affirmed that any "deal negotiated" required the assent of both parties; and followed up proposals about the distribution of proceeds of "the sale of our interest." Mr Lenfest's letter of 12 October (par 183) made a more precise proposal. It offered what Mr Lenfest saw as a concession to Mr Hadid on the division of free carried interest and in exchange proposed three changes to the 29 August arrangements. One of those would provide for the application of sale proceeds. Another would have removed the UCOM shareholders from any financial interest in the operating company and from any operational responsibility in relation to the licences: those matters would be determined by LCI and "the US operators and other investors." A third would give LCI the right to make the final decision about advisers and underwriters, after consultation with UCOM. Mr Hadid's reply of 13 October (par 184) accepted that sale proceeds would be applied first to repayment of the deposits. He did not accept any other element of Mr Lenfest's proposal; he did not wish to make any alterations to the 29 August arrangements. 893 The report of the Trade Practices Commission to the ABA followed on 15 October. In other respects, the situation when Mr Heller wrote his memorandum of 19 October and Mr Plant arrived in Sydney on 21 October was as I have briefly described it in par 189. Essentially, no substantial progress had been made in attracting investment; and time was fast running out. Mr Plant became convinced, as a result of his discussions during his visit, that matters had become urgent. Particularly, as his fax of 25 October indicates, as does a further report which he wrote during his flight back to the United States (par 207 and par 208), it was essential that LCI "take control of the process." That was "most critical" ("otherwise we will be stymied in all efforts and end up losing our deposits"); it was necessary to take control "so that we can salvage a desperate situation." That view was formed, the fax indicates, before Mr Plant had any knowledge of the Project Midsummer proposal (though, no doubt, his discussions with Bain - which was already working on the proposal - were among the matters which influenced Mr Plant in forming his views). Equally, the proposal which emerged from Mr Plant's meeting with TPL on 26 October and was reflected in Mr Lenfest's letter of that day to Mr Hadid, was consistent with the views which Mr Plant had expressed and preceded the disclosure to him of the Project Midsummer proposal (pars 218 to 221). It follows from my finding that Mr Lenfest and Mr Heller did not know of the Project Midsummer proposal until the morning of 28 October that the discussions between Mr Heller and Mr Hadid referred to in par 223 took place at a time when Mr Heller did not know of any potential interest or involvement by Australis. Mr Hadid's counter‑proposal (par 225) rejected outright some of the significant items of Mr Lenfest's proposal and did not accept any of them; and the counter‑proposal was entirely at odds with what Mr Plant had recommended as necessary in order to avert disaster. It is hardly surprising that on 29 October Mr Heller - who by this time had heard about Project Midsummer - expressed concern about "the direction our agreements are headed." Nor could Mr Hadid's rejoinder (par 227) have done anything but increase the level of concern. 894 In summary, from the perspective of LCI, the situation when the meetings at St Louis commenced was that time was very short; no one had been found who would commit to an investment on terms which both LCI and UCOM would accept; LCI had formed clear views as to what was necessary in order that investment might be attracted; but Mr Hadid controlled the companies which had made the successful bids; and Mr Hadid showed no sign of accepting any of what LCI regarded as essential conditions. Nor, it should be added, was there anything in any of the written communications between Mr Lenfest, Mr Heller and Mr Plant which suggested that there might be any consequence other than loss of the deposits should a satisfactory arrangement not be reached with Mr Hadid. In other words, there was no hint of a suggestion that LCI might itself raise funds to finance the acquisition of either (let alone both) of the licences in circumstances where the control issue, and therefore the terms on which investment might be sought, had not been resolved. Nor do I see any reason to doubt that LCI had, by the end of October, genuinely formed the views that, first, free carry of anything like 30 per cent was unrealistic, secondly, "free carry" could not take the form of shares having the same rights as those issued to investors who subscribed cash and, thirdly, no United States cable operator would share operational control with UCOM or Mr Hadid. 895 It is unnecessary to traverse, once again, the events which took place in St Louis on 2 and 3 November. There are, however, some aspects of them about which it is necessary to make findings and some which, because they were controversial, I should discuss briefly. · I have already found (par 240) that no concluded agreement was reached at St Louis. Particularly, the letter drafted by Mr Heller and signed by Mr Price bound neither party. Mr Price gave evidence that he had no authority to make such an agreement, which would require board approval and, probably, approval by a general meeting. There is no reason to doubt that evidence. Mr Lenfest, even had he wished to do so, did not have authority to commit LCI: that was his evidence and, as I have pointed out, it is sufficiently supported by the circumstance that TCI held 50 per cent of the shares in LCI and by the terms of Dr Malone's note to Mr Lenfest quoted in par 239. There was no suggestion that Mr Lenfest was precluded by any binding agreement from renegotiating arrangements with Mr Price as he did in West Chester on 17 November (par 348) (surprised and angered, as Mr Price no doubt was, by the extent of the proposed changes with which, without warning, he was confronted). A matter of a considerably lesser order of significance was the question whether there was attached to the letter of 3 November the form of exhibit contemplated by clause 10 (the terms of Bain's engagement). There was a suggestion by counsel for Mr Hadid that it had such an annexure, and that the annexure was a copy of Dr Burt's letter to Mr Plant of 1 November (par 234). But the original document in evidence has no annexure, the evidence was that it had no annexure when signed; and there is no reason to doubt that evidence, if only because the success fee agreed to be paid to Bain was different from that suggested in the letter and no agreement had been reached on the level of underwriting fees or, indeed, that Bain would necessarily be appointed as underwriter (again, I see no reason to reject the clear evidence given on both those matters). · One matter which aroused some controversy but seems to me of very little importance is whether Mr Price took with him from St Louis a copy of the handwritten letter which he had signed. Mr Price gave firm evidence that he had not. A copy, however, was produced by Australis on discovery (Mr Price's evidence was that he did not know how Australis had acquired the copy) and the discussions in West Chester on 17 November would have required reference to the terms set out in the letter. Australis may have acquired its copy otherwise than from Mr Price; Mr Price's ability to negotiate in West Chester was not necessarily dependent upon his retention at St Louis of a copy of the letter; alternatively, Mr Price's evidence may have been mistaken. It simply does not matter. · The letter of 3 November demonstrates that substantial, and quite detailed, common ground was reached in the discussions on 2 November, albeit from a standing start: Dr Burt's proposal was by no means detailed. The degree of consensus achieved was sufficient to suggest to Mr Heller that it was sensible to spend the evening drafting a letter expressed as confirmation of "the agreement reached." · Nevertheless, not only was there (as I have found) no binding agreement, but also I accept the evidence of Mr Lenfest and Mr Price to the effect that each was by no means certain that the deal reflected in the letter of 3 November would be done. · Both Mr Lenfest and Mr Price gave evidence that Mr Price stipulated that Mr Hadid and his associates should not retain any interest in the owner of licence B. Mr Heller's evidence was that the provision in the 3 November letter which contemplated the acquisition by LCI of at least 90 per cent of the shares held by at least 75 per cent of the shareholders of New World was intended to leave open the possibility that the existing shareholders might retain a small minority interest. Mr Price's evidence that that provision was inserted at his suggestion, based upon an imperfect recollection of the takeover provisions of the Corporations Law, seems to me much more probable and I accept it. · Thus it was, in effect, a condition of any deal between LCI and Australis that LCI buy out Mr Hadid and his fellow shareholders. Equally, I accept the evidence that it was accepted by Mr Price (and, for that matter, Dr Burt) that negotiations with Mr Hadid were a matter for LCI, particularly Mr Lenfest. 896 Then there is the topic of confidentiality or secrecy. A convenient starting point is clause 12 of the letter of 3 November: "No communication or announcement of this agreement is to be made without the prior written consent and agreement of both parties except to those needed to complete the transaction. Those persons will also be bound by this restriction." 897 A first, and obvious, comment about that clause is that it is in very general terms. It gives no appearance of being aimed at anyone in particular. A second, and equally obvious, comment is that in using the words "communication or announcement" it uses language which is both typical of confidentiality clauses in commercial agreements and is apt to reflect precisely the concerns which Mr Price gave evidence that he had, and which he and the other participants gave evidence that he expressed. Thirdly, the clause contemplates that those people will be told who need to be told in order that the transaction may proceed; but they will be required to observe the confidence. I do not at all doubt the reality of the particular concerns expressed by Mr Price. Australis had promoted itself, and had raised capital, as a company which had examined the various ways in which pay TV might be transmitted and had chosen MDS as the most suitable. Its prospectus, issued in August 1993, began with a letter signed by Mr Price addressed to potential investors. It included these paragraphs: "In many countries subscription television has proved to be a business which enjoys rapid growth and long term profitability. The success stories can be characterised as those services which offer consumers a wide choice of channels through a low‑cost, readily available delivery mechanism. Accordingly, the Australis Group rejected satellite, direct‑to‑home transmission on the grounds of dish size, reception quality, cost to the consumer and technology risk (including satellite launch failures and the reliance on digital compression which is still being developed for domestic application). Equally, cable was considered inappropriate, … For these reasons, Australis selected a proven technology, MDS, currently being used in more than 40 countries around the world. MDS can provide immediate coverage to 2 million homes in Sydney and Melbourne with small, light‑weight, easy to install antennae. Australis plans to supply subscription television and audio programs and, ultimately, data, interactivity and communications services. The primary objective of Australis is to establish the MDS delivery mechanism promptly as the first and preferred 'gateway' to the family home." 898 What was now proposed might well be seen as a radical change of direction involving Australis embracing a technology which it had recently rejected in favour of MDS. It is easy to accept that the release of information that Australis contemplated not only so substantial a change of direction but also a significant shift in the ownership and control of Australis itself, in circumstances where it was by no means certain that a deal would eventuate, might be very damaging indeed. Additionally, I do not find it difficult to accept (and I do accept) Mr Price's evidence that it was not particularly a matter of concern to him whether Mr Hadid was told provided that, if he were told, he was bound to keep the information confidential. Dealings with Mr Hadid were a matter for LCI, not for Mr Price. In that respect, Mr Price's concern was with the outcome, not the process. Thus, I do not share the apparent scepticism of cross‑examining counsel about the following evidence given by Mr Price: "And you knew perfectly well, did you not, that telling Mr Hadid of Mr Lenfest's viewpoint [that is, his knowledge that Australis was in the wings] would have been weakening his position? - Yes. It would've made a nonsense of the whole exercise, would it not? - If it was necessary to give Mr Hadid information it was not of my concern. It was Mr Lenfest's concern. You've said that, Mr Price, I understand that, the question however is what did you expect if Mr Lenfest or any of his officers were taxed with anything which required disclosure of that which had occurred at St Louis by Mr Hadid, did you expect them to tell the truth? - Yes. You did? - Yes. So had Mr Hadid said to Mr Heller, for example, Don, what about the Australis people, do you think that they might be interested? You say, do you, that your expectation after St Louis was that they would say, Well, as a matter of fact, Albert, they are interested? - If necessary, yes. If necessary, what does that mean? - If asked. If asked. You are solemnly telling this Court that it was your expectation after you left St Louis that if Mr Heller or anybody else from the Lenfest organisation who was in the know were asked any question by Mr Hadid or his interests about whether Australis might be worth approaching or whether they had an interest or might have an interest you believed that they would simply tell the truth as to that which had occurred in St Louis? - They may have had to ask for a confidentiality agreement. There was nothing prohibiting him." 899 After all, there could be no doubting Mr Price's business experience or acumen. If a deal was done, it would necessarily become public. Is it to be thought that he would have expected Mr Lenfest, or any other representative of LCI, to make a statement which events would shortly reveal, beyond any serious question, to have been false to the knowledge of the maker of it? 900 Mr Lenfest undoubtedly viewed the matter from a different perspective. He was concerned that the discussions not be disclosed to Mr Hadid. "Number one, we had agreed to keep this entirely confidential and if it was disclosed to Mr Hadid and he disclosed it it would have killed the deal. Number two, based on past experience with Hadid my feeling was his approval would be unreasonable and that he would hang up the deal because of unreasonable demands … I mean in order to transfer the New World shares to us would be on a basis that was not acceptable." 901 Mr Lenfest gave the following evidence in cross‑examination: "Did you not take the view that in connection with the acquisition of the New World shares in accordance with the plan advanced by Dr Burt that you would deal with Mr Hadid at arm's length, as it were, ie without informing him of anything to which the acquisition was directed? - Yes. I will make it abundantly clear: you had a plan which you not only did not tell him about but which for its success depended upon not telling him? - Yes, but it was just one alternative. Yes, but it's the one that you followed in the result? - Yes. And the reason that you could not tell him, I imagine, was because it would give him knowledge of a factor, namely the value of the asset which you were seeking to acquire. You did not want to alert him to the true value of the shares? - No, we did not want to alert him because he would have hung up the deal. Well, he'd have certainly wanted more money, wouldn't he? - Yes, he would. Yes. So that the purpose in your concealing from him was to conceal from him information as to the actual worth of the shares which you were seeking to acquire? - We knew that … there was a limited value to it because of the cascade of the B licence. … Mr Lenfest, it is clear, is it not, that the reason that it was necessary to conceal the Australis deal from Mr Hadid is because he would have sought more money? - Or made other demands, yes. Yes. Well, he would have sought to get better value in whatever way he saw fit for the New World shares? - We'd also committed not to disclose it. However that may be, it was important for the reason that I just indicated, was it not? - It was important that we did not disclose it to Albert, number one, because we said we would not; and, number two, that if he did [find] out about it he would have been unreasonable as he had been in the past." 902 None of the participants in the St Louis meeting gave evidence that the question of keeping the discussions confidential specifically from Mr Hadid was mentioned. Mr Price gave this evidence: "Did you mention in any way at all in that meeting that from your side the question of confidentiality had anything to do with Mr Hadid? - Well, clearly it didn't in my mind but I'm not sure that - I think confidentiality in relation to Mr Hadid was not discussed." 903 Mr Price was cross‑examined at some length on this topic. The cross‑examination included the following passage: "Did Mr Lenfest say at any time that the question of buying out Mr Hadid should be left entirely to him? - Yes. And did he say that he believed that he had a cordial relationship with Mr Hadid which would facilitate that taking place? - Yes. Did he also say that the matter should be kept entirely confidential from Mr Hadid because if it was disclosed to him it would have killed the deal? - No. Anything to that effect? - No. Was that your own perception anyway that disclosure to Mr Hadid would kill the deal? - No. Was it your own perception that should Mr Hadid get wind of the deal which was on foot or in contemplation between Australis and the Lenfest Group that he would have been in a position known sometimes as 'green mail'? - I had never even thought of it in that light." 904 Mr Plant also gave evidence that it was not stated at the meeting that Mr Hadid would be told nothing of what had occurred. He was prepared to accept that the context of the discussion admitted of no other possibility than that Mr Hadid was not to be told. Dr Burt gave evidence which is consistent with that of the other participants. In his evidence in chief he said: "Mr Price … also said, 'We [sic] a public company with a share price, shareholders, certain disclosure information, disclosure requirements, etcetera. We're very very sensitive to the possibility of these discussions being leaked, given that they're embryonic, and we're also very very sensitive to any involvement of Mr Hadid and his UCOM people, given the very unfavourable press and general commentary in Australia that exists.' " 905 He did not give evidence of a discussion about keeping the information specifically from Mr Hadid. That aspect of Dr Burt's evidence was not dealt with in cross‑examination. Dr Burt did, however, give some evidence about his attitude and knowledge on 11 November, when he instructed Clayton Utz to prepare a draft mediation agreement: "You knew that Bains and yourself had substantial fees riding on the eventual outcome of the matter? - Yes. And you realised that it was of paramount importance that Mr Hadid not get wind in any way of the Project Midsummer plan? - Yes, up until that stage I'd been instructed that that was the case, yes. And those instructions never varied one iota, did they? - No, but there was the possibility they might that's why I said up until that stage, yes. You knew that a key element of the plan was that it be kept secret from Mr Hadid? - Yes." 906 Dr Burt also gave evidence that on 15 November he asked Mr Heller whether he had mentioned the Australis discussions to Mr Hadid and that Mr Heller replied that he had not. The evidence proceeded: "I see. And … he went on to say, did he, that Lenfest saw no reason to tell Mr Hadid of the fact that some discussions had taken place, he said that, did he? - Yes. And that Lenfest and Australis did not want you to tell Hadid of that either? - Yes. Did you need to be told that? - No, I'd already been told it previously. Look, the whole situation was one of utmost secrecy from the time that the first conception of the plan which you say was in October, was it not? - Late October, yes. Yes, and the whole matter, plainly understood and discussed from that time onwards, was one involving the utmost secrecy, particularly from Mr Hadid? - Yes, not particularly from him, from everyone, yes. I suggest particularly from him since it was known that if he was aware that there was in fact a way in which the licence - one of the licences might be developed he would plainly wish to be part of it or indeed to be paid extra in order to drop out, do you not agree? - It is possible but no I can't agree to it, I mean it is possible." 907 Mr Johnston's evidence is somewhat confusing. That is perhaps not surprising, as he was not directly involved in the discussions and relied on unaided recollection of what he was told. His evidence was that he was told by Dr Burt that he (and Bain) were not to disclose the Project Midsummer proposal; particularly they were not to disclose it to Mr Hadid or his associates. He understood this to be a requirement of both Australis and Lenfest (elsewhere in his evidence he said that "the instructions from Lenfest were that we were not to discuss the matter.") He also gave this evidence: "Well then, do you say that it was not apparent to you that Mr Hadid was to be kept in ignorance of the merger proposal whilst negotiations to obtain his interest went on? - I was not a party to the discussions with Mr Hadid. I understand that. I am asking you about what you recognised at the time. Did you recognise that part of the modus operandi in November involved keeping Mr Hadid ignorant of the proposal for a merger? - I knew that I was not to talk with him. I didn't know if others would. Did you assume that others would not talk similarly? - I wasn't a party to the negotiations, I didn't know what was going to be said. Realistically, did you not recognise that Mr Hadid was to be deceived as to the ultimate fate of the licence as proposed? - No." 908 What emerges from the evidence of Dr Burt and Mr Johnston is that they both asserted an understanding that they were not to disclose Project Midsummer to Mr Hadid. Dr Burt went so far as to accept that it was an essential part of the Project Midsummer proposal, which he had devised, that Mr Hadid should not be told. Both, however, recognised a possibility that Lenfest might disclose it: Mr Johnston explicitly, Dr Burt in his evidence about the question he put to Mr Heller on 15 November. There is no doubt that, if the Project Midsummer proposal were to proceed, the interests of Mr Hadid and his associates in licence B had to be acquired. For that purpose negotiations had to take place with Mr Hadid. The evidence makes it clear, and I find, that it was agreed between Mr Price and Mr Lenfest that the process of dealing with Mr Hadid was a matter exclusively for LCI, particularly Mr Lenfest. Whether it was strictly also a matter of agreement on the part of Dr Burt is less clear, and perhaps does not matter: what is clear is that Dr Burt at least accepted that he and Bain were to leave the negotiation with Mr Hadid to LCI and were not themselves to disclose Project Midsummer to Mr Hadid. But I do not think it can truly be said that there was a three‑way agreement, reached in St Louis, that Mr Hadid would not be told. There was certainly an intention, on the part of Mr Lenfest, that he not be told. Very likely Dr Burt expected that he would not be told. But whether he was told was (subject to compliance with the confidentiality arrangements set out in the letter of 3 November) a matter for LCI. In my view LCI would have infringed no agreement or understanding reached in St Louis had it informed Mr Hadid of what had been discussed, provided that he had been bound to keep it confidential. Dr Burt or Mr Price would have acted contrary to what was arranged and understood at St Louis if, without LCI's permission, he had told Mr Hadid about Project Midsummer. 909 It is alleged in par 29 of the statement of claim that: "… each of the Respondents knew that each of the other Respondents would, if asked by the Applicant and/or his servants or agents whether Australis was interested in taking an interest in the licences, falsely deny such interest or otherwise dissemble the true state of affairs." 910 That allegation was put to Mr Price alone among the witnesses who were involved in the St Louis discussions. Mr Price denied it. The evidence (I have referred to a good deal of that which bears on it) does not, in my view, establish it. What the evidence does establish is that others were to leave to LCI the task of dealing with Mr Hadid; LCI was of the view that it was important that Mr Hadid not be told; in fact he was not told; it will be necessary for me to consider, later, precisely what was said to him. 911 Hindsight gives those able to exercise it a considerable advantage, but the insights it offers must be treated with caution. If one looks in retrospect at the series of events commencing at the end of October 1993 one sees, in the initial discussions between Dr Burt, Mr Plant and Mr Cosser, an insistence by Mr Cosser on confidentiality and an acceptance by Mr Plant that matters be kept confidential; one sees a detailed proposal worked out at St Louis including an arrangement that it be kept confidential (except from those necessary to complete the proposed transaction, who have themselves agreed to keep it confidential); one notices that an essential aspect of the proposal is that the shares in New World, or the rights to licence B, are to be acquired from Mr Hadid and his associates and that LCI is to be responsible for negotiations to that end with Mr Hadid; one sees negotiations resumed with Mr Hadid in which LCI stresses the urgency of the matter and the very unfortunate consequences of failure to reach agreement; one sees that Ms Combs, also, who has been kept informed of the course of negotiations but knows nothing of the St Louis discussions, adds her voice in support of the proposition that Mr Hadid should act reasonably, so as not to cause LCI to lose its deposits; Dr Burt from time to time tells Mr Hadid that the only sensible course for him is to do a deal with LCI; Mr Heller comes to Sydney to negotiate a deal; an apparent stalemate is resolved when Dr Burt, having actively contemplated doing so for some days, enters the arena as mediator; marathon nocturnal negotiations finally result in a deal. All the while, Australis may be seen hovering expectantly just behind the sideline; Mr Price negotiating a fall‑back with Mr Neil Brown, meeting Dr Burt and receiving, in addition to yet another Bain pitch, some general information about the progress (or lack of it) of discussions between LCI and Mr Hadid; and legal work, both by Norton Smith & Co and Tress Cocks & Maddox, beginning in earnest shortly before 15 November. And, throughout, Mr Hadid is told nothing of Australis, is unconscious of its looming presence and knows nothing of what has been discussed at St Louis. It is easy to observe all that, once it has happened, and tempting to conclude that active concealment of Project Midsummer from Mr Hadid must have been a matter (indeed an essential matter) agreed upon at St Louis, and that the confidentiality clause in the letter of 3 November must have been prepared, though prudently it does not say so, specifically with Mr Hadid in mind. 912 But in order to reach that conclusion it is necessary to reject the evidence of those who participated in the discussions at St Louis. Of course, evidence, even of several witnesses, may be wrong, particularly where they deny something which they have a strong and obvious interest in denying. But if one looks at the events at St Louis, and immediately preceding the St Louis meeting, from the point of view of those who participated, at the time they did so, there is, I think, nothing improbable about their evidence. The particular concerns about confidentiality expressed by Mr Cosser before St Louis and by Mr Price at St Louis were precisely the concerns which one would expect them to have: a leak of information not only before there was agreement, but in circumstances where it was by no means certain that agreement would eventuate, would plainly be highly damaging. The clause drafted by Mr Heller reads as a provision designed to accommodate concerns of that kind. Nor is there anything surprising about Mr Lenfest's claimed insistence, and the other parties' ready concurrence, that negotiations for the acquisition of the shares in New World or the rights to licence B be left solely in LCI's hands. That being so, it seems to me no more surprising that other participants should not have offered suggestions (far less instructions) to Mr Lenfest as to how the negotiations with Mr Hadid should be conducted. That was a matter for him. An agreement between all participants that in no circumstances was any interest of Australis to be revealed to Mr Hadid in order that the acquisition price be kept as low as possible is not a necessary explanation of what followed, and seems to me an unlikely one: even accepting, of course, that from Mr Lenfest's perspective the difficulty of doing a deal with Mr Hadid would be significantly increased because of what LCI perceived as his "unreasonableness" if he became aware of the prospect that Australis would acquire the holder of licence B. Similar comments (as will be seen) are in my view equally apt in relation to the use of hindsight to place the two action plans in the scheme of things, particularly in relation to licence A. It is easy to be misled by what, in retrospect, may look like a pattern. 913 That brings me to the two action plans. The earlier of them is the one whose print date is 4 November 1993 and is set out in par 242. I have already made a finding that that document was prepared by Mr Heller (possibly, though improbably, with the assistance of Mr Plant) following the discussions at St Louis. I have already commented also that elements of the action plan reflect matters discussed at St Louis. "The deal" had to be resolved if the proposal were to proceed (item 1); it had, probably, to be resolved in any event. Equally, Mr Price required as a condition of Australis' participation in a transaction based on the proposal that TPL not be involved: that explains step 2. A number of other items reflect matters which would undoubtedly have to be dealt with by LCI if the shares in New World were to be acquired: for example, items 4, 13, 14 and 16. Items 5, 6, 7 and 8 were, perhaps, not as immediately urgent but would have to be faced, probably, in satisfying Australis as to the substance of the parties, and the business, with which it would become involved and to establish an appropriate and lawful structure for the transaction. The Sly & Weigall relationship (item 17) was peculiarly an LCI problem: having acted for UCOM, Sly & Weigall would be precluded from acting in any sense contrary to UCOM's interests. Mr Dougherty (item 11) was, doubtless, a fall back for LCI; his proposal was not obviously a matter of interest to either of the other parties to the St Louis discussions. I have already dealt with items 9 and 10, "Bain to call Margaret Combs" and "Margaret Combs to call Albert": the evidence is that that was a matter initiated after St Louis; there is no evidence to suggest, and no reason to think, that it was a matter discussed at St Louis or, in any event, with Mr Price. There is no evidence that anyone outside the LCI camp saw the document during the period between the St Louis discussions and the end of November. Both Mr Price and Dr Burt gave evidence that they did not see it during that period. That evidence, taken together with Mr Heller's practice of writing "to do" lists for himself and others within LCI and the steps which it describes suggests, I think, the clear conclusion that it represents not a series of steps which were agreed upon at St Louis and allocated among the participants but Mr Heller's list, written in the light of St Louis, of things that needed to be (or might usefully be) done, and by whom. Indeed, given the limited duration of the meeting and given the scope of the matters discussed, it seems highly improbable that there would have been time for discussion and resolution of all the steps listed - in many of which, particularly, Mr Price (and Dr Burt) would have had no direct interest. 914 Two particular aspects of the document require comment. One is step 12, which appears to allocate to Mr Price the task of engaging legal counsel by 5 November. Obviously Australis needed lawyers and in fact (in circumstances which I shall consider later) had already instructed lawyers in Sydney on 2 November. Why Mr Heller should have thought it appropriate to include that step in the action plan is not elucidated in the evidence and seems to have struck Mr Heller himself as somewhat mysterious: "The question of engaging legal counsel, item 12, appears to have been attributed to Mr Price, was there some discussion somewhere along the line which resulted in that proposition? - I don't recall and there's no notation about an action next to it or status so I just don't recall. Well, it was something to which a timing had been attributed namely the 5th of the 11th, was that something left to Mr Price to do by agreement perhaps made at St Louis? - Not that I recall. I mean this was - Plant and I believe - I believe Plant and I putting together what we thought needed to be done to move forward and since Australis was a public company, we needed to deal with legal counsel so that's why it was assigned to them because they were the Australian public company. All right. It's not something which was pursued in any way by any of the Lenfest interests, was it? - No, and I don't know that we even informed Price of the fact that that point was on there." 915 Mr Price gave evidence that he had no recollection of discussing the matter with Mr Heller or with anyone else from LCI. The matter is mildly puzzling but, I think, insignificant. 916 The other item requiring comment is the last, number 18, "determine century interest." The final position of Mr Hadid's counsel on this item was not entirely clear. The case was opened on the footing that the action plan demonstrated that there was an agreement or arrangement between the parties who met at St Louis which extended to exploring Century's interest in licence A, an exploration which led to Century's ultimate acquisition of the licence. The position ultimately adopted in closing submissions appeared to be that Century did not in fact become involved in 1993 at all, its involvement arising substantially later and in a way that had no direct connection with the steps taken in December 1993 to acquire licence A or with the November action plan. In any case, the evidence given by the LCI representatives was that step 18 was simply intended as a following up of earlier suggestions that Century might invest in one of the licences, probably licence B. And it is clear, I think, that there was no discussion in St Louis of a proposal, licence B having been acquired, to attempt to place licence A in the presumably friendly hands of Century. There was no evidence of any such discussion; Mr Heller's attempt at a formal record of what was discussed - the letter of 3 November - does not mention Century or licence A. And the transaction which occurred ultimately arose, the evidence makes clear, fortuitously, following a request by Mr Hadid to Dr Burt for his assistance with a bid three cascades distant from the bid which was current on 4 November. An account of the circumstances begins at par 376. I can see no basis for a finding that "determine century interest" refers to a matter which was discussed or agreed at St Louis. 917 The second action plan, which no witness was prepared to claim as his own, is set out in par 385. Plainly it is a later document. It apportioned responsibility for some steps to Clayton Utz, who (I am satisfied) were instructed only on 10 November and to Tress Cocks & Maddox who were instructed two days later. It refers to a number of matters - for example, a form of release and the documentation and perfection of security for the deposit on licence A - which were current at the beginning of December but not earlier. I can see no reason to suppose that that action plan represents steps, or an elaboration of steps, agreed upon at St Louis. 918 Paragraph 27 of the statement of claim alleges that: "Pursuant to the Project Midsummer Proposal and/or the 3 November Agreement, each of the Respondents agreed that they and their agents would perform various tasks allocated to them in documents called or styled 'action plan' [the two action plans are described by reference to discovery numbers] to bring or attempt to bring the transaction proposed in Project Midsummer and after 3 November 1993, the 3 November Agreement, to fruition in accordance with its terms …" 919 The necessary conclusion, based on the findings I have made, is that that allegation is not made out. I so find.

Events following St Louis: discussion and some conclusions 920 It will be recalled that by 25 October Mr Plant had formed the clear view that a position must be negotiated with Mr Hadid "wherein we control the entire process." No progress had been made in attracting investors, though Mr Plant thought that Mr Dougherty's proposal seemed to have "some credibility" (but that proposal had been firmly rejected by the UCOM board). It is apparent from the notes which Mr Plant wrote on 25 October and during the course of his flight back to the United States that his concerns about Mr Hadid were based on two grounds. One was that, in Mr Plant's opinion, Mr Hadid's views about the terms on which investment might be attracted (particularly as to free carry) were unrealistic, so that while Mr Hadid retained control over the process no other investors would come in. A similar point appears in the note he wrote during the flight: "Summary - viable business opportunity

• Must separate UCOM from Lenfest.
• Can't afford perception of no support (US).
• Remove Albert totally." 921 A second basis for his view was stated in that note. After describing what he saw as the attitudes to the bids of the two federal ministers concerned with the process, the Trade Practices Commission and the ABA, Mr Plant added: "(All of above have no confidence or respect for Albert)." Those perceptions, whether right or wrong, would have been reinforced by the views expressed by Mr Price at St Louis. Finally, correspondence and conversations between LCI and Mr Hadid in the days before the St Louis meetings left the parties a very considerable distance apart. And time was short. 922 The first step in the negotiations, after St Louis, was Mr Heller's letter to Mr Hadid in which he informed Mr Hadid of LCI's election to take its substantial carried interest in licence B (par 252). Mr Heller recommended to Mr Lenfest a "straight cash buy" (par 252). But Mr Lenfest's letter of 5 November (par 256) made a rather more complicated proposal, including an offer of 50 per cent of any free carry achieved; Mr Lenfest's letter also made it quite clear that he wished to "salvage" licence B and contemplated forfeiture of licence A. Mr Hadid's reply of 8 November did not deal with the substance of the proposal put by Mr Lenfest; and Mr Hadid only sought confirmation that LCI did not wish to finance licence A and expressed the view that, if licence A were not to be financed, then the Department should be told. 923 Discussions resumed on Mr Heller's arrival in Sydney, on 10 November. I have described the course of discussions in the section of these reasons commencing at par 268. A great deal of what happened is recorded in notes, reports and written proposals and the documents are, I think, of considerable importance. Thus, it is evident not only from the oral evidence but also from Mr Heller's notes of his conversation with Mr Hadid on 10 October that Mr Hadid outlined a series of proposed options which were reduced to writing and discussed in more detail the following day. Mr Heller made a note of the options. He also wrote the following note, he said, in anticipation of a conversation which he had with Mr Lenfest at 3am on 11 November: "Met w Albert Nov 11 3AM w/Gerry Tried to Negotiate off our last Letter He kept moving from detail to general discussion I told him we needed control/ownership We were not going to put up an additional 97 to 117 without control He wants to get A and take a loan for B and alleges he has someone to loan and show me on a page with letter head cut off saying they couldn't meet A timetable and no mention of B He also told me s & s want to cascade and drop us out. They have 5 each bid on each licence. He moved to control under conditions and I asked for detail. He didn't have. Kept on about A and I told him we couldn't risk B going to Packer. I pressed him for detail to move control. He was to write it up have dinner but he called to delay and never delivered it so I'll see him in the morning. We also speak to Sly to start case to legally force issue re s & s remarks." 924 Mr Heller made a note of what were, he said, Mr Lenfest's instructions, given over the telephone early in the morning of 11 November. The note reads: "Let A Cascade We will fund B We will give you 1MM for cost We will guarantee 7˝min vs 50%." 925 That last note, later proposals make clear, is a reference to a share of free carry, and a minimum free carry, to be given to the UCOM shareholders. On 11 November Mr Heller met Mr Hadid, Dr Gadir, Mr Blanks and Mr Cooper at Sly & Weigall's office. They discussed Mr Hadid's "draft for discussion only" (par 271). The options proposed show how far apart the parties were. The first option would have had LCI funding the purchase of both licences until underwriting, whereupon so much of LCI's funding as was not required as equity would be returned together with interest and expenses. LCI would pay the UCOM shareholders, for expenses and a success fee, $7,500,000. LCI would "procure experienced foreign equity participants" and would cooperate in maximising free carry with Australian underwriters. LCI would receive the lesser of 50 per cent of free carry or the available free carry less 5 per cent of it, in the licence which it elected to control, and 2 per cent of the free carry in the other licence. The second option would have had LCI funding licence A only on the terms of the first option. Additionally, LCI would assist New World in "finalising" loan finance (and if their finance were achieved LCI would receive between 15 per cent and 20 per cent of New World); alternatively, "New World deals with Licence B, keeping Lenfest fully informed. When New World has a deal, Lenfest will have a right of first refusal." The third option would have had LCI paying $US25,000,000 for the ownership of one channel which LCI would agree to operate for UCOM. I have referred in par 272 to a fourth option which emerged during the course of discussion. 926 Mr Heller made a note of that meeting as well: "Thursday Nov 11, 1993 Met with A.S.S. and Martin Cooper to review options submitted this AM reviewed all points for clarification and requested revision of option sheet. Also added fourth option Albert presented during meeting (see revised sheet). I informed them we were not going to fund A licence and leave B at risk. If we were to fund one it would be the B licence. I believe they may be starting to understand this point. Suggested we meet with Bain & Co to resolve free carry issue and meeting set for tonight. The option sheet raised a number of issues which may be resolved after the rewrite and problem areas will be identified after the rewrite." 927 Mr Heller's reasonably brief note of the discussion at dinner on 11 November is not particularly important for present purposes, except that it records Mr Heller's undertaking to present a "new deal" which he would develop overnight. I have set out in par 281 and par 282 the documents (which appear to have gone through a number of drafts) which Mr Heller prepared overnight. Mr Heller's contemporary account of what happened next is recorded in his note of 12 November 1993: "Met w/Albert & James Egan and discussed stragedy [sic] & Deal and proposal [?] Albert questioned film producing. I said it could not be the way he structured would listen to proposal. Told him we would use Sly to draw agreement & Bain to structure and underwrite. He suggested Nomura. I said no way. Also discussed loan, other fees and bids. He explained loan, said he would provide detail on bids and I told him to clean up other fees as they were not realistic or reasonable and had nothing to do with us or doing anything on our behalf. He asked about funding A. I told him I would contact Gerry. Reconvene at 5‑15 today Friday." That note is immediately followed by a note of a conversation which Mr Heller said he had with Mr Lenfest: "Spoke to Gerry re A. Get 1st right but no guarantee. Do deal today or pull out." 928 No deal was done that day, nor did Mr Heller "pull out." He reported to Mr Lenfest as follows: "Australian Pay TV update November 12, 1993 "Gerry
• Met with Albert today at 5PM
• He rejected our offer because a) dilution of his minimum upon full capitalization b) does not believe we will maximize free carry with underwriter.
• He gave no counter offer but suggested we meet Saturday AM at 10AM - He suggested we talk to Dougherty. Dougherty will give deposit of 6 mil on Monday. - I said I would consider the deal pay us 10.7 mil & cost and we would go away. I think he wanted us to pay for A and sell B but was shocked at my response. - I instructed Sly & Weigall to prepare agreement assuming he is negotiating and to ready [?] forced capitalization of B and lawsuit (we need to discuss) - We keep you advised. Don cc Steve" On the following day, Saturday, 13 November, Mr Hadid handed Mr Heller the documents quoted at length in pars 285 to 287. Those documents, read in the light of the preceding negotiations, are significant for at least two reasons. First, they demonstrate that no significant progress had been made towards achieving common ground; neither party had entered into serious discussion of any proposal put forward by the other; instead, there had been a series of proposals and counter‑proposals with little by way of common ground between them. Secondly, there was the first clear suggestion of an outright purchase for cash: "we are reluctantly prepared to accept a walk‑away payment of not less than (U.S). twenty five million dollars (US $25 million) payable on transfer of shares and within 30 days." 929 The next important document is Mr Heller's fax of 13 November to Mr Lenfest. That was written after Dr Burt had "introduced a new and positive element" (pars 296 to 298). There are a number of interesting aspects of the document. One is that it did not rule out a deal based on the first three of Mr Hadid's six points: acceptance of the first point would have left the UCOM shareholders with 5 per cent of the fully capitalised owner of licence B. Secondly, Mr Heller showed no interest in a "walk‑away" cash purchase. Thirdly, he seriously contemplated not merely a threat of legal action, but actual proceedings to "take B by force." He was expecting advice on that the following day (the fate of this odd proposal is described in par 309). What is particularly striking about Mr Heller's recommendations is that they do not contemplate a quick resolution. The Becbran option would be taken; legal action would be commenced; and negotiations would be "strung out" while the licence A bid lapsed. 930 The final document of the series is the aide‑mémoire prepared by Mr Heller for his meeting with departmental officers in Canberra on 15 November. The picture Mr Heller painted in those notes was not an optimistic one. LCI had been induced by Mr Hadid's misrepresentations to provide the deposits; LCI had attempted to find investors but had been prevented at every turn by the "non‑professionalism" and inexperience of the UCOM shareholders coupled with their desire to "fulfil personal agendas." LCI would continue to pursue avenues both commercial and litigious. But there was no suggestion that a solution was in sight or could be reached quickly: "We regret any difficulties this causes the government officials. Our only mission was to provide service to the people of Australia. Sometimes the road is not as smooth as we would like but we will continue to press on with our negotiations, legal recourse and other options. I wanted to brief the department now as after the last week of fruitless negotiations you should be made aware of the status." 931 It is not to be supposed that what Mr Heller wrote to Mr Lenfest was other than a reflection of views genuinely held and suggestions and recommendations genuinely made. Nor can I see any reason why Mr Heller would have wished to paint an unrealistically pessimistic picture when briefing the departmental officials. If that is right, what Mr Heller contemplated might have been a reasonably lengthy and hard fought process. Mr Heller's notes and his reports to Mr Lenfest do not suggest that what he was about was applying pressure for the purpose of rushing Mr Hadid into an improvident deal. Nor is there any hint that either Mr Heller or Mr Lenfest regarded the acquisition of New World followed by the implementation of Project Midsummer as so likely substantially to enrich LCI as to justify a serious and urgent effort to find common ground with Mr Hadid. The documents display caution, not enthusiasm. Certainly, this may be contrasted with some displays of enthusiasm after the event. Counsel for Mr Hadid referred me, for assistance, to a fax sent by Mr Lenfest to Dr Malone on 19 November, in which Mr Lenfest, after referring to TCI's failure to help, wrote, "I look forward to TCI's help in developing the full potential of this outstanding opportunity." But it must be recalled that Mr Lenfest was addressing a reluctant convert: Dr Malone, as has been seen, was unconvinced, on 11 November, that what was then proposed made commercial sense. By the time he intervened (from a distance) in the negotiations with Mr Price at West Chester, it may be inferred, perhaps, that he had at least accepted a fait accompli. But he did not sign, until 23 November, the necessary "action by unanimous consent." And what was written at the time is, I think, a better guide than enthusiasm directed, after the event, at Dr Malone. 932 What, then, of Mr Price? I have described his activities, after the meetings at St Louis, in the section of these reasons commencing at par 348 and his participation in the Meridian transaction in the section commencing at par 290. I see no reason to doubt Mr Price's evidence that he did not recall retaining Norton Smith & Co and did not know who had done so. They were retained on 2 November, Sydney time, that is before (apparently: Mr Price's evidence is not exactly clear on this point) Mr Price was told what Dr Burt proposed (his evidence was that he did not know, before he met Dr Burt and Mr Cosser at St Louis, for what purpose he had been asked to attend meetings there). Mr Price expressed the view, in his evidence, that it was improbable that the source of instructions was Mr Cosser: one might otherwise have thought that he was likely to have been, either directly or indirectly, the source of the instructions. There is, in any case, nothing particularly surprising about the circumstance that Australis instructed lawyers earlier rather than later. The view might well have been taken that if there were to be a transaction, it might have to be entered into both soon and quickly, and there were obvious legal complications including the requirements of the Corporations Law, the Stock Exchange listing requirements, the provisions of the Broadcasting Services Act and additional legal requirements to be observed if a foreign corporation were to make a substantial investment in Australis. In the event, a great deal of legal work was done in a very short time: Norton Smith & Co, according to their account delivered to Australis, between 2 and 17 November gave advice on the relevant law and prepared a trust deed, debenture and associated documents. Tress Cocks & Maddox, who were instructed on 12 November, had responsibility for devising, or at least refining, the structure of the transaction (which was by no means uncomplicated) and prepared the agreement between Lenfest and Australis. There is no indication in the evidence that Mr Price directly participated in any of those matters except in the closing stages, by telephone from West Chester. A good deal of time was spent, during Mr Price's cross‑examination, on the topic of instructions to lawyers. I do not think, however, that anything of significance emerged from it. 933 What is clear is that Mr Price's evidence that, though the St Louis discussions formed no part of the formal agenda of an Australis board meeting held immediately upon his return on 5 November, he nevertheless informed his fellow directors of them, must be correct. It is equally clear that the directors formed the view that the discussions were well worth pursuing. Mr Mangioni's detailed account to Australis indicates that he was instructed in a conference with Mr Crase on 12 November, received further instructions in conference with Mr Crase and Mr Johnson on 14 November, gave immediate consideration to a possible structure, prepared an outline of the structure and a draft agreement and sent a revised version to Clayton Utz on 16 November - that is, of course, the day on which the agreement with the UCOM shareholders was negotiated and settled, following the overnight negotiations which commenced the previous evening. There is no evidence of any communication between lawyers acting for Australis and Clayton Utz before 16 November; but an intensive course of discussion and negotiation began on that day. Again, Mr Price personally appears to have had no direct involvement in that. He left for New Zealand immediately after the conclusion of his discussions with Mr Neil Brown. He attended meetings in New Zealand on 15 and 16 November; on 16 November he was asked, via Mr Crase, to travel to West Chester. He left New Zealand the same evening. 934 Certainly there can be no doubt that Australis formed the view that it was well worth while to pursue an arrangement under which LCI would fund the acquisition of a satellite licence in return for approximately one‑half ownership of Australis and considered also that there was a sufficient prospect that a transaction along those lines would proceed to justify the expenditure of considerable effort and resources. It might confidently be inferred in any event that Mr Price shared that view, whatever lack of confidence he may have felt, at the conclusion of the St Louis discussions, that LCI would, on reflection, actually fund the acquisition of the licence. His own direct participation in the Meridian negotiation leaves no serious room for doubt on that score. But there is no evidence that Mr Price had any detailed knowledge of, much less participation in, the negotiations between LCI and Mr Hadid. 935 Counsel for Mr Hadid relied, in closing submissions, on a number of matters known by Mr Price, most of which are hardly controversial. He knew that New World was the successful bidder for licence B and that Mr Hadid was its major shareholder. He had seen press reports about the payment of the deposit and about the seeking of investors; and that activity by the "Lenfest and Hadid interests" had not resulted in drawing in any investors. He knew that both LCI and UCOM had a business relationship with TPL. He had the "impression" that before 2 November Dr Burt was, as the cross‑examiner put it, "working with Lenfest and UCOM for Mr Hadid trying to put a funding package together to acquire one of the licences." He assumed, because it was obviously so, that there were arrangements between LCI and UCOM. He knew that licence B probably could not be dealt with without Mr Hadid's co‑operation; and that, accordingly, a deal with LCI could proceed only if Mr Hadid were "brought into the equation" or taken out of it; or if (the bid having cascaded) some other deal were done (such as the Meridian transaction). Mr Price did "not necessarily" accept that it was obvious that if Mr Hadid knew of the discussions at St Louis he would be in a better bargaining position (but "he might have been pleased that his position was better.") Mr Price knew - it was, of course, the subject of discussion at St Louis - that LCI would need to negotiate with Mr Hadid. He knew that his own requirement was that Mr Hadid be got out of the picture altogether and that, accordingly, if Project Midsummer were to progress, that would have to happen (his suggested use of the takeover provisions of the Corporations Law was plainly directed to that requirement). I have already discussed sufficiently the evidence about what was said or agreed concerning the disclosure, or non‑disclosure, to Mr Hadid. There is, however, no evidence that Mr Price knew of the contractual relationship between LCI and UCOM or, with any precision, of the nature of their activity in relation to the licences between the end of August and 2 November. Nor is there any evidence that he had any precise knowledge of the involvement, before 2 November, of Dr Burt or Bain in what LCI and UCOM had been doing. Mr Price's evidence was that he did not see the 4 November action plan; there is no evidence that he saw it; there is no basis for an inference that he saw it. The same is true of the later action plan. Nor is there any evidence that Mr Price was involved in the initiation of the events which led ultimately to Century's investment in licence A; and he denied any such involvement. 936 Little further need be said at this stage about the involvement of Bain and Dr Burt. The evidence makes it clear, in my view, that Dr Burt's role was that of initiator and facilitator; and, of course, he was keen to secure the desired roles, and fees, for himself and Bain. The substance of the discussion and negotiation, however, took place between Mr Lenfest and Mr Price. Dr Burt at that point became little more than an observer. The preponderance of the evidence is, and I accept, that he was not present when the 3 November letter was tabled and discussed. I am satisfied that he did not see the 4 November action plan. Apart from his intervention (by invitation) in meeting Mr Hadid and Ms Scott on 8 November and Mr Hadid again the following day and in attending and expressing views at the dinner at the Treasury Restaurant, Dr Burt's activities, apart from his participation in the Meridian transaction, were those described in the section of these reasons commencing at par 300: instructing Clayton Utz, introducing Mr Heller to Clayton Utz, consolidating his position with Mr Price, discussing with Mr Heller the progress of negotiations and, finally, proposing the mediation. 937 In summary, there is nothing, it seems to me, in the events which succeeded the St Louis meetings which casts doubt on the denials by the participants that a matter agreed upon at St Louis was that they would lie and dissemble rather than reveal a possible involvement of Australis or that there was even agreement that Mr Hadid not be told about it. And my conclusions about the action plans lead to the further finding that what happened afterwards was not choreographed at St Louis. Those findings have, of course, substantial consequences for the conspiracy allegation. Together with the other findings I have made, they have consequences also for the allegations of liability of the various respondents arising from involvement in wrongdoing alleged against other respondents. It is convenient, however, to return to those topics following a consideration of the claims (other than those arising from the alleged licence A representations) based upon misrepresentation and upon conduct said to have been deceptive or misleading.

Representations as to Australis; as to whether other parties interested in acquiring or investing in licence B; as to LCI having to "go it alone" 938 The four alleged representations are set out in par 416. It is no longer suggested that any of them was made by Mr Johnston. It is said that certain of them were made by Mr Heller on 11 November 1993 (and possibly also on 10 November). Certain of the pleaded representations are said to have been made also by Dr Burt and Mr Heller on 15 and 16 November; and there was evidence also of statements by Mr Elliott on 16 November which need to be considered in connection with this aspect of the case. It is necessary once again, I think, to mention the way in which the case was conducted on behalf of Mr Hadid. It was opened on the footing that the pleaded representations were made and that they were false to the knowledge of those who made them. Evidence was led from a number of witnesses as to the making of the representations. Written submissions made on behalf of Mr Hadid, at the conclusion of the evidence, included a relatively brief outline of bases on which, it was said, I should find that the alleged representations were made on 11, 15 and 16 November. But the topic was not dealt with in oral submissions in chief, though senior counsel for Mr Hadid returned to it in written and oral submissions in reply. The respondents identified what, they said, were serious difficulties with the evidence on which Mr Hadid relied. Submissions in reply, on behalf of Mr Hadid, grappled with some, but by no means all, of those matters. Instead, a principal focus in the closing submissions on behalf of Mr Hadid was on a proposition that not to disclose to Mr Hadid the Project Midsummer or the possibility (or likelihood) that LCI would enter into a transaction with Australis was, in the circumstances, conduct, attributable to all respondents, which was misleading or deceptive. I shall return to that proposition. Certainly, however, the case based on the alleged express misrepresentations was not by any means abandoned, and I shall consider it first.

(a) The events of 10 and 11 November 1993 939 The evidence about what occurred on 10 November is set out in par 268 to 270. Mr Hadid's evidence (denied by Mr Heller) was that at a meeting on that day at the offices of Sly & Weigall, attended by Dr Gadir and Mr Cooper, Mr Heller said: "The studios and cable companies are saying they don't want to work with Ucom, we have to go this alone but there's no one interested anyway so we have to go this alone and unless you know we do something we will all lose everything." 940 I have already found that no meeting took place on 10 November attended by Dr Gadir or Mr Cooper. Given that finding, and my general conclusions as to the reliability of Mr Hadid's evidence, the appropriate finding is that the particular representation alleged by Mr Hadid to have been made by Mr Heller on 10 November was not made. In the light of the events of 11 November, however, that may not be a particularly significant finding. 941 There is no doubt that a meeting took place on 11 November, attended by Mr Heller, Mr Hadid, Dr Gadir, Mr Blanks and Mr Cooper. I have set out the evidence about the alleged representations made at that meeting in pars 272 to 278. It is necessary also to refer to some evidence given by Mr Noah. I have mentioned, in par 597, that Mr Noah gave evidence that Mr Heller had attended a meeting at UCOM's premises at Stanmore. He claimed that he was involved in a meeting with Mr Heller, attended also by Mr Hadid, possibly Mr Egan and Dr Gadir, a matter of days after Mr Heller's arrival. He gave evidence of the following conversation: "It was Dr Gadir who said words to the effect that Australis had to be the prime investor and I remember Mr Heller, his reply was words to the effect that, 'ignore them, we've already spoken to them and they already said no.'" 942 Thus four witnesses (Mr Hadid, Dr Gadir, Mr Blanks and Mr Noah) gave evidence that on or about 11 November Dr Gadir specifically raised with Mr Heller the question whether Australis might be interested in investing in licence B and Mr Heller replied to the effect that he was aware that Australis was not interested. A fifth witness, Mr Cooper, gave evidence that on 11 November Dr Gadir said to Mr Heller that he did not believe that all the possibilities available in relation to Australis or Dr Gadir's contacts in Thailand had been explored and Mr Heller replied, not specifically mentioning Australis, that there was no further time for engaging in a fruitless search for investors: there was an immediate problem that must be dealt with. That appears to be - as senior counsel for Mr Hadid submitted it was - a formidable body of evidence arrayed against Mr Heller's denial. Additionally, evidence was given by several of the witnesses that Australis was rather an obsession with Dr Gadir and that he raised it as a likely, or logical, investor on several occasions. Mr Egan, for example, gave evidence that on three or four occasions before 28 September Dr Gadir had suggested Australis as a possible investor. Apart from his role in arranging the early October meeting with Mr Price and Mr Cosser, however, Mr Egan did not follow up Dr Gadir's suggestion: his own view was that "Australis was a small company that had only recently floated and seemed very focused on an MDS distribution strategy." Dr Gadir's evidence was that he raised the matter twice with Mr Heller on 11 November. He claimed to have suggested Australis to Mr Heller, in all, five or six times. The first, he said, was during Mr Heller's first visit, in early September; the second was shortly before the meeting with Mr Price and Mr Cosser on 1 October. He said that in 1993, possibly in late 1992, he held the view that Australis was a company which logically should have been interested in investing in the satellite licences: "Well, I formed that view fairly early in the piece. Even before my Ucom involvement, there was a meeting that took place between myself and Steve Cosser at an earlier stage well before my UCOM involvement in which I actually asked him the question, to what extent he was interested in satellite licensing." 943 When asked whether it was his view throughout the period from June to November 1993 that Australis was a company which logically ought to be interested in investing in the satellite licences, Dr Gadir replied: "I think it may - it's not like I had a solid interest in them and kept talking to them every day but obviously it - the subject arose especially after they succeeded in … the corporate play and … launched a business based on microwave frequencies which to my mind had relatively little reach - power to reach the vast majority of the Australian population so it looked like a logical option for them to get involved with a satellite licensee, you know, either get the licence directly by their bidding or get involved with somebody who bid and succeeded in getting a licence." Mr Hadid said that "Simon brought the subject up many times … . Simon had this fixation about Australis because he was in the industry." Dr Gadir was "relentless about Australis." He raised it with Mr Heller at least six times between 10 and 13 November. Mr Hadid thought that what Dr Gadir said sounded logical, but he had not himself focused on Australis. 944 Mr Blanks gave evidence that Australis "was one of Dr Gadir's favourite topics." His cross‑examination by senior counsel for LCI includes the following passage: "And is it your evidence that Gadir had raised this topic on many occasions with Heller? - I don't know how many times he raised it with Heller. Is it your evidence that Gadir to your knowledge, raised this matter with Heller on more than one occasion? - If my knowledge includes what Mr Hadid and Dr Gadir told me that he had done, yes. When was this information given to you? - During the course of the period we were in the deal with Lenfest. And not information given to you after 17 November 1993? - No. Then is it your evidence that so far as your personal knowledge is concerned this matter was only raised upon one occasion at which you were present? - To the best of my recollection, yes. But you were told, were you, by Hadid and Gadir that it has been raised by them on many occasions? - Yes." 945 It is, of course, no small matter to reject such a body of substantially congruent evidence in favour of a denial by a witness whose interest clearly would be served by a finding that the statements attributed to him were not made. But apart from matters going generally to the reliability of the evidence of the various witnesses, there are particular matters that must be considered in relation to the evidence of the events of the days following Mr Heller's arrival on 10 November. First, I cannot give Mr Noah's evidence any weight. No one else gave evidence of a meeting with Mr Heller at Stanmore; Mr Heller denied that he ever went to Stanmore; no one suggested that Mr Noah was in the offices of Sly & Weigall on 11 November. Secondly, if it were true that Dr Gadir held the view he claimed and if he were as free in his expression of it as he and others assert, some of the other facts established by the evidence must be regarded as very odd and calling for some explanation. Dr Gadir wrote a memorandum addressed to "Board Members" (presumably the UCOM directors) at some time after the end of August, probably about 11 September. The memorandum listed, and commented on, a number of potential "players" in Australian pay TV, in several categories. Under a heading "additional potential investors and other issues" Dr Gadir listed a number of companies and organisations, most (but not all) of which were foreign. That section of his memorandum included this comment: "Conrad Black should logically be at the top of the list of potential investors, as he has the capabilities financially, and he is already involved in Australia. His Fairfax holdings would preclude him from licence A. However, any holding in licence B would enable him to hold a strong card against Packer's future ambitions on Fairfax …" The next section of the memorandum is headed "Australian companies" and several companies are listed, some under headings "technology - manufacturing" and "cinema distributors." Nowhere in the memorandum is Australis mentioned. The essence of the explanation given by Dr Gadir for that omission appears in the following evidence: "This document only covers part of the story. I mean I may have essentially re‑jigged an old document. I put in some additions there and the fact of the matter is that I did mention Australis at the Turnbull meeting and I did say it was an important party, you know, whether it was at that time something that I reconsidered and brought them up as part of the agenda I can't recall but it's clear to me that I made that reference at the Turnbull meeting. That Turnbull meeting was around 6 September. The document was a re‑jigging of an old document. It might have just slipped my mind to actually put the name Australis inside the list. It was a general document." Even if it was a "general document" and a "re‑jig" of an older document, it is still surprising, if Dr Gadir held the view that Australis was at the forefront of potentially interested parties, that the document does not mention Australis at all. Nor did Hi Vision's Project Koala document, though it referred to Australis, suggest that it was a strong prospect: it referred only to an "uneventful meeting in New York." And Dr Gadir held his view, he said, despite a discouraging conversation with Mr Cosser in late 1992. He asked Mr Cosser "to what extent he was interested in satellite licensing." His account of Mr Cosser's reply was: "He said basically that he didn't have an interest in it. He believed that there would be one major player and he believed he would be it using MDS frequencies." That was consistent with statements in the Australis prospectus. (It is, of course, true that Australis' view underwent a rapid transformation when Project Midsummer presented it with the possibility of acquiring a satellite licence without expending its own money: that - and the fact that Dr Burt proposed it - suggests, no doubt, that the view which Dr Gadir claimed to have had about the advantages of combining the relatively low cost of MDS transmission with the greater geographic coverage of satellite was not at all an eccentric one.) Then there is a document headed "contact list" which Mr Noah claimed to have prepared from a number of sources, including the Project Koala document, information which he had himself, possibly information from Mr Wright and "Nomura Wasserstein Perella notes." Mr Noah's evidence was that he prepared it on 16 September and both he and Mr Hadid said that he faxed it to Mr Hadid in Pennsylvania. It was described by Mr Noah as being a list of "the elite of the prospects." Dr Gadir's evidence was that he could not recall seeing it. It does not, however, mention Australis at all; and that is, perhaps, somewhat surprising if Dr Gadir held, and was well known to hold, the view that Australis was a very strong prospect. Nor did UCOM - particularly, nor did Dr Gadir - approach Australis before the end of August. Dr Gadir explained this by saying that the time was not right: "… the interest was not like a solid block. It was ups and downs. It was a question of the period in time. Whether there was the right timing or not the right timing, there was a period in which previously Cosser came out with full page advertisements against the Government - that did not put them in good stead with anybody. When the company, Australis, was floated originally, there was the expression in the press that the company was going to be de‑cosserified, the costs were being taken out of it and the company becoming a very nice corporate entity and all that so I mean there were certain [stages] in the process. I'm pretty sure there was a good reason why we did not approach Australis at the time." 946 He could not recall precisely whether the factors to which he referred were operative during the period between April and August 1993: "Are you telling his Honour that you made a conscious decision in this period between April and August of 1993 not to approach Australis because you thought they were 'on the nose' so far as the Government was concerned? - I can't tell you for sure it was a conscious decision but we certainly didn't … I personally didn't make a conscious decision to approach them." 947 Nor did anyone on the UCOM side approach Australis in November 1993. Dr Gadir accepted that, by then, relations between UCOM and LCI were "not too cordial." He gave the following evidence: "Well, what I want to know, what I want you to tell his Honour is this: if at the beginning of November 1993 you held the views that you say you held in relation to Australis, why did you not pick up the telephone or tell Mr Egan to pick up the telephone and talk to Mr Price or to Mr Cosser? - Because I had no authority in the matter. Is that your honest answer to that question? - It is an honest answer. I mean I had no authority in the matter, I wasn't a majority shareholder. I was a director of the company but I had no authority just to … Did it occur to you to suggest to Mr Hadid in November of 1993 holding the views that you say you held in relation to Australis, that he should authorise you to pick up the telephone and talk to Mr Price or Mr Cosser? - I certainly asked him to open up the opportunities for us to move ahead and talk to the relevant parties. Did you ask him whether you could pick up the telephone and talk to Mr Price or Mr Cosser? - I can't recall specific conversation. I just said let's move ahead by ourselves and do it. Well, if what you say is right, in the situation as it existed at the beginning of November of 1993, the obvious thing to do from UCOM's point of view was to pick up the telephone and talk to Cosser or Price, was it not? - It may have been an obvious conclusion with hindsight. But blind Freddy could see, could he not, if what you say is right, that that was the obvious course to follow? - There was obviously no blind Freddy around. If what you say is right, you would have to be pretty dumb, would you not, not to jump to the conclusion that the obvious course to follow in November 1993, was to pick up the telephone and talk to Mr Cosser or Mr Price? - My hands were tied. By Mr Hadid? - That's correct … . That's just rubbish, isn't it? - He was my joint shareholder. Do you say … Mr Hadid told you in November 1993 that you shouldn't pick up the telephone and talk to Mr Cosser or Mr Price of Australis? - I asked him to open up for us the opportunity to approach other parties and he said, 'we cannot do that.' Had you asked Mr Hadid in November 1993 whether you could pick up the telephone and talk to Mr Cosser or Mr Price of Australis about potential investment by Australis in license B? - Not specifically in those terms, no." 948 Mr Hadid was, undoubtedly, dominant among the UCOM shareholders and directors. It is not surprising that Dr Gadir would not speak to Australis without first seeking Mr Hadid's approval. If, however, despite what he had been told by Mr Cosser in late 1992 and what he knew to have been the discouraging result of the meeting of 1 October, he believed Australis to be so logical a prospect and Mr Heller's denial of any interest on its part so strange that he pressed Mr Heller a second time on the subject, it is surprising that he did not take the matter further, in specific terms, with Mr Hadid. 949 Mr Cooper's evidence of what was said on 11 November is significantly different from that of Mr Hadid, Dr Gadir and Mr Blanks. According to Mr Cooper, Dr Gadir named Australis as one (no doubt a leading one) of a number of possibilities which might repay investigation; and, according to Mr Cooper, Mr Heller's reply was not that Australis had been approached and were not interested but was more general: it was simply too late to approach any more investors. In cross‑examination Mr Cooper said that, though it was a possibility (at least a theoretical one) that Mr Heller said that Australis, among others, was not interested, to the best of his recollection Mr Heller did not say that. It emerged also, however, during cross‑examination that Mr Cooper had dealt with the 11 November meeting in his outline of evidence dated 26 March 1996 and that, although he then knew that representations concerning Australis were significant to these proceedings, the account in the outline attributes no remarks to Dr Gadir and, particularly, no exchange between Dr Gadir and Mr Heller such as the one of which he gave evidence in chief. 950 I have referred to this evidence in par 620 but it is desirable to deal with it in rather greater detail. Mr Cooper's outline, he said, went through three drafts. He was satisfied that the final version was substantially accurate as to the events with which it dealt and that it dealt with "all of the important events in relation to the matters which I was asked about." But although his brief contemporaneous note of the meeting did not record the exchange between Dr Gadir and Mr Heller, Mr Cooper firmly maintained that he had a clear recollection, when he gave his evidence in chief, that Dr Gadir made the statement which Mr Cooper attributed to him: "he absolutely made that statement." Mr Cooper was asked whether he did not know, until the cross‑examiner directed his attention to it, that he had omitted from his outline the exchange between Dr Gadir and Mr Heller. He replied: "The response to your question is that, in the process of refreshing my memory over the last five - four to five weeks about this matter, the details of that conversation have come into cognition in my mind." There was then the following exchange: "What was is that brought them into cognition in your mind? - Trying to recall those long ago events as I sat one Sunday afternoon reading the statements of various people, re‑reading my statement and trying to remember what happened. Is that not what you were trying to do when you prepared your outline back in March of 1996? - Absolutely, it was. And you were better equipped to undertake that task back in 1996 than last week or the week before? - Better equipped? I … didn't have any more documents at that stage, I didn't have anybody to speak to. I was in the same position, I suppose. Can you tell us what the particular thing was that you looked at or whatever which brought this particular matter back to your mind? - No, I can't. Something that you had forgotten when you prepared your statement? Something that has come back to your mind in the last couple of weeks but you cannot tell us what it was that brought it back to your mind, is that right? - No, I can't. Does that not strike you as being a little odd? - No. Then can you tell me, did you come to appreciate, prior to my drawing your attention to it this afternoon, that your outline did not contain any reference to this particular dialogue? - … It is not a matter I focused on until you handed me this statement a few minutes ago … . Is it right then that when you read through your statement just before Easter, to refresh you recollection of what was in it and to prepare yourself to give evidence, it had not then occurred to you that this dialogue was omitted from your statement? - No … . Are you agreeing with me? - I'm saying that it did not occur to me that that dialogue was omitted from this statement at that time. … But your question now is, was I aware at that time of the statements that Mr [sic] Gadir had made at that meeting? The answer is: at some point during the process of reminding myself of these events, I remembered that conversation. What I am trying to find out, Mr Cooper, and only you can tell us, is this: if you remembered this event when you were reading through your statement before Easter, preparing yourself to give evidence, it would have occurred to you that it was not contained in your statement? - No. I read a number of pieces of paper, probably two inches of paper, on a Sunday afternoon. I wasn't focusing on what was in one document and not in another. I simply went through all this paperwork and then went for a walk and tried to remember what had happened … Can you tell us when it was in this process that this particular matter, according to you, came back to you? - Precisely, no." 951 Certainly it may be accepted that something may happen which will bring to mind a memory of an event which occurred some years in the past where other triggers have not previously evoked the recollection. The particular chain of events recounted by Mr Cooper, however, is surprising: he prepared, some two years before he gave evidence, a statement, over which he took some care, in which he gave an account of a particular, and obviously important, conversation. He knew at the time that if, during the conversation, the possibility that Australis might be interested in licence B was mentioned, that would be significant. Nevertheless he did not recall Dr Gadir's statement. Shortly before giving evidence, Mr Cooper remembered Dr Gadir's statement with such clarity and certainty that he could say that Dr Gadir "absolutely" made it. But he could not say what it was that, so recently, had brought that recollection back to mind. 952 I have referred, in pars 610 to 613, to an even more striking instance of a similar phenomenon and, in pars 616 to 619 to an event about which Mr Cooper's detailed and confident evidence was demonstrably wrong. Plainly his account of what happened on 11 November - an account which in any event only partially corroborates the evidence of the other witnesses - must be treated with considerable reserve. 953 It is necessary then to turn to the two letters of complaint addressed to LCI, the letter dated 18 November signed by Mr Lynch (par 361) and Mr Hadid's letter of 19 November (par 363). The former was written shortly after Australis' Stock Exchange announcement. The latter was written, clearly, following press publicity the next day which referred to the meetings in St Louis. Neither contains any complaint of a positive misrepresentation made by Mr Heller on (or about) 11 November. No doubt it is easy, in hindsight, to find fault with letters of complaint written immediately after the events complained of. It is easy, and often unrealistic, to expect the writer to think, immediately, of everything. Additionally, I think it is clear, as counsel for Mr Hadid submitted, that the concentration in the earlier letter is upon the events immediately preceding the signing of the agreement for purchase of the New World shares. The "understanding" stated in the letter is that the transaction with Australis announced late on 18 November was in contemplation before the share purchase agreement was signed the previous afternoon. I accept also that the letter makes it clear that Mr Hadid and his fellow UCOM shareholders were taken entirely by surprise by the Australis announcement. Longer reflection about the terms of the announcement - particularly the reference to Dr Burt advising LCI - might have suggested that discussions must have been under way for at least a week and that therefore, if Mr Heller had made the statements attributed to him on 11 November, he must have known then that they were false or at least misleading. But I am not prepared to accept that, if the statements were made, they would certainly have been referred to in the earlier of the two complaints. The focus which the letter displays might well have diverted attention from them. 954 The second letter, however, seems to me a different matter. By then it had been revealed that a meeting with Australis had taken place a few weeks earlier. The complaint, however, is that: "Neither you, Don Heller nor Wayne Burt told us, or in any way suggested that there was any discussion between you and Australis. In my opinion I would be justified in accepting the advice I have received, that you have deceived me, and I feel entitled to repudiate the agreement." 955 That was written in circumstances where Mr Hadid had seen reports that the whole of his November negotiations with Mr Heller had taken place after discussions had commenced between LCI and Australis. If Mr Hadid's own evidence were accepted, Dr Gadir, five or six times during that period, said to Mr Heller that Australis was a logical and likely prospect and, each time, Mr Heller had replied that Australis had been approached and was not interested. Dr Gadir, on his evidence, raised the matter with Mr Heller once and was so puzzled by his answer that, although he did not disbelieve it, he raised it again and obtained the same response. Mr Blanks heard, according to his evidence, the earlier of those exchanges. Mr Cooper, according to his evidence, heard a somewhat different exchange, in which Australis was mentioned, between Dr Gadir and Mr Heller. Mr Cooper and Dr Gadir had both been involved in discussions with Mr Hadid after the Australis announcement was made. It seems to me very surprising that, in a situation where Dr Gadir had frequently raised the prospect that Australis would be interested, Mr Heller had denied it and then it appeared that Australis had indeed been interested, and Mr Heller had almost certainly known about it throughout his negotiations with Mr Hadid, Mr Hadid's only complaint should be about non‑disclosure. If one accepts the evidence of Mr Hadid that he and his fellow directors were upset and confused, nevertheless what they now knew was that throughout the November discussions a transaction with the very party about whom Dr Gadir so often spoke was in prospect. It is not easy to accept that they would not have realised that they had been positively deceived, not merely kept in the dark. Nor is there any evidence that over the ensuing weeks anything further was said by Mr Hadid, by way of complaint. Rather, as I have mentioned (par 387), Mr Hadid's relationship with LCI - and particularly with Mr Heller - was, to all appearances, reasonably cordial. 956 There is a further consideration. Although by the end of the week Mr Heller was plainly discouraged and seems to have contemplated a drawn out and possibly litigious process, his purpose on his arrival in Sydney was to reach a resolution with Mr Hadid and to do so promptly. Undoubtedly he knew that there was at least a possibility that a transaction between LCI and Australis would be entered into shortly after a purchase by LCI of the New World shares; and that that purchase might well take place very shortly after 11 November. It must have been apparent to him that, should he lie or dissemble about Australis, the fact that he had done so would be likely very shortly to be very obvious. It would be surprising to find an intelligent and experienced businessman lying for the purpose of achieving an object in circumstances where, if the object were achieved, the fact the businessman had lied would very likely be plainly revealed. 957 Against that background, I can return to the evidence about the discussions on 11 November. There are obvious elements at least of exaggeration in Mr Hadid's evidence - most notably the suggestion, supported by no other witness, that Dr Gadir and Mr Heller had in substance the same conversation five or six times during a few days in mid‑November. That, taken with other aspects of his evidence to which I have already referred, requires that his account be approached sceptically. I have already referred to some matters relevant to an assessment of Dr Gadir's evidence of his expressed attitude to Australis as a potential participant; and I have referred elsewhere to other aspects of his evidence which, I think, make it clear that his account also must be approached sceptically. What, however, of Mr Blanks? The first thing he said is that the recollection of the particular question and answer stands out as substantially the one detail of a long conversation which he remembered. His evidence in chief about the meeting should be quoted, to demonstrate the contrast. Mr Blanks recalled that he met Mr Heller on 11 November at Sly & Weigall's offices in the company of Mr Hadid, Dr Gadir and Mr Cooper. His evidence proceeded: "Do you recall when it was that that meeting started? - According to my workbook, about 1.20 pm. When did it finish? - I don't recall. My workbook says that the [attendances] in relation to Ucom finished at 6.30 that afternoon. I don't know whether that's the end of that meeting or the meeting which immediately followed on from it. Do you recall one meeting or more than one meeting on that day involving some or all of those people? - One meeting. In that meeting did you have some conversation with Mr Heller either alone or with others, in relation to the progress of finding investors? - Yes. First of all, do you recall when it was in the course of these meetings? - No. Or this meeting rather? - No. What was said by Mr Heller, what was said by you, or others in the course of this conversation? - I think Mr Heller was saying that there was no one who was interested in joining as investors in the licence. And Dr Gadir said, 'What about Australis?' and Mr Heller said, 'No, we've spoken to them and they're not interested.' Did he say anything concerning what Lenfest proposed to do? - No, well, I don't recall that he did. Was there anything said by anyone else as part of this conversation, do you recall? - I think I recall that Mr Heller might have said that Lenfest might have to fund the licence itself. Was anything said in response to that? - I don't recall. Do you recall whether the subject of PMT came up during the course of that day, the Packer Murdoch and Telstra …? - No, I don't. So far as your conversation with Mr Heller, did he say anything to you concerning what licence, if any, or either, Lenfest would wish to deal? - I think he said licence B." 958 Mr Blanks accepted that his recollection of the detail of the events of 1993 was not strong. There were, not surprisingly, mistakes in his evidence. For example, his firm evidence that his first meeting with Mr Plant and Mr Heller took place on Saturday, 4 September rather than Sunday, 5 September was clearly wrong. Perhaps more surprisingly, he did not recall, until shown some of the documents, that he had been told in September 1993 that the ABA did not have a sympathetic attitude towards UCOM. As to the 11 November meeting itself, he gave this evidence: "And at that meeting did Heller say that Lenfest could not get anyone else to invest the funds required to pay out the licences? - Yes. And did he say that a reason for that was the extent of the free carried interest which Ucom had been seeking? - I don't believe so, no. Was there something to that effect discussed at that meeting? - Not that I recall, no." But when reminded that in an affidavit filed in the proceeding he had said that Mr Heller did make such a statement, he accepted that that happened. Similarly, he did not recall anything said at the meeting about PMT, but when shown a note which he had made during the course of the meeting, Mr Blanks accepted that PMT had had been discussed: "And do you see, Lenfest can only put up money for one licence? - Yes. Is that something that Mr Heller said at that meeting? - Yes. And do you see that it says, Concern if Lenfest funds A, PMT will get B? - Yes. Is that something that was said at that meeting? - Yes." 959 In that respect, Mr Blanks' note coincides with a note made by Mr Cooper. Mr Blanks was also cross‑examined in relation to a paragraph of his affidavit in reply, in which he set out what purported to be his recollection of the conversation on 11 November, which contained no reference to Australis; his explanation was that he had mentioned the Australis conversation in his affidavit in chief, in an account of a conversation which occurred in "early November." Additionally, Mr Blanks gave evidence that he had a number of discussions with Mr Hadid about Dr Gadir and Australis. The cross‑examination began on an assumption that there was only one such conversation: "Did he seek to remind you on this occasion of what he said had happened on 11 November 1993 in relation to Australis? - No, I don't think so. Did you remind him of what you say had happened on 11 November 1993 in relation to Australis? - I may have. Did you? - I don't recall … What was the catalyst which caused you, if I could use your word, to mention this matter to Mr Hadid on this occasion? - We were having a discussion about what Lenfest had told us about Australis. When did you have that discussion? - I don't recall. What was said in the course of this discussion? - What was said? The effect of what was said was that Dr Gadir had raised on many occasions his view that Australis would be a natural buyer or investor in the licence because Australis had floated after the tender was first conducted and therefore had not been in a position to bid itself and that it had a business plan which was dependent on MDS and in Dr Gadir's view was inherently weak and it was Dr Gadir's view, and it was conveyed to Lenfest, that Australis was a prime candidate and he had never really understood why they weren't interested and hadn't expressed any interest. Is this something that Mr Hadid said to you on this occasion? - I don't remember. Is it something you told Mr Hadid on this occasion? - That's possible. … But he was the one who asked you what you could say on this topic, is that right? - I think so, yes. Can you tell us when this happened? - No. I am sorry to be persistent, but can you not tell us? - There've been more than one occasion where this has happened. So this is something that you have discussed with Mr Hadid on more than one occasion? - Yes. Have you discussed it on a number of occasions? - Yes. … What I am suggesting to you, or what I am asking you is whether your recollection of what was said on this occasion was prompted by what Hadid told you he recalled of it? - I wouldn't use the word, prompted. Improved? - I would describe it as more complete. Added to? - More complete, I think. Assisted and improved? - Yes." 960 To repeat a trite observation which I have made many times, there is nothing surprising about deficiencies of recollection after a substantial lapse of time. But I think the matters to which I have referred are sufficient to show that I would not be justified in having great confidence in Mr Blanks' apparently clear recollection of a particular aspect of the conversation on 11 November. 961 The allegation that Mr Heller, in answer to a suggestion that Australis might be interested, replied that LCI had spoken to Australis and they were not is an allegation of deceit. Although it is made in civil litigation and the civil standard of proof applies, it is helpful to recall not only the general proposition for which Briginshaw v Briginshaw (1938) 60 CLR 336 is commonly cited but also the observations of Dixon J at 361, 362: "The truth is that, when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality. No doubt an opinion that a state of facts exists may be held according to indefinite gradations of certainty; and this has led to attempts to define exactly the certainty required by the law for various purposes. Fortunately, however, at common law no third standard of persuasion was definitely developed. Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal." 962 I have considered the evidence and, in the foregoing section of this judgment, I have attempted an analysis of what seem to me for present purposes significant parts of it. I am left unpersuaded that Mr Heller was asked about Australis in any of the terms alleged or that he gave any of the answers attributed to him. Because there is no evidence that the first of the pleaded "Representations" was made on any occasion other than 10 or 11 November, my finding is that that representation was not made. 963 As for the other three pleaded representations, the relevant evidence about the meetings on 10 and 11 November was quite brief. Mr Hadid gave evidence that at the meeting which he said took place on 10 November, attended by Dr Gadir, Mr Blanks and Mr Cooper, Mr Heller said: "We've done our best, we can't find anyone interested. The studios and cable companies are saying that they don't want to work with UCOM, we have to go this alone but there's no one interested anyway so we have to go this alone and unless you know we do something we will all lose everything." Then, on 11 November, according to Mr Hadid, Mr Heller said: "Now if you care about Lenfest you would talk to us about selling [us] licence B otherwise we're all going to lose everything … If you care about our deposits that's what you have to do." I have already quoted Dr Gadir's evidence: the relevant part is his account of the following statement by Mr Heller: "… look Lenfest has got to do the financing of this licence by itself. There is really no party in America from all the people we have spoken to or otherwise that really wants to come in to the deal. We have got no choice. We have got to do it. We have to allow the A licence to drop and finance the B licence because we cannot take the risk of the media, the major media in Australia such as Kerry Packer taking over the B licence. So we have got to move on this by ourselves and we are prepared to lose our deposit on licence A because we have got no choice in the matter." 964 Mr Blanks' brief evidence was "I think Mr Heller was saying that there was no one who was interested in joining as investors in the licence." I have already quoted Mr Cooper's evidence of Mr Heller's response to Dr Gadir, that they had to deal with the immediate problem, funding a licence within five days, and did not "have time for any more of this fruitless search for investor partners." Mr Cooper gave evidence that Mr Heller opened the meeting as follows: "He said, 'Gentlemen, we have reached a point where we no longer have time to procrastinate about obtaining the financing for the first of the licences which is due for payment,' which was the A licence, and we had about, he said, 'five days to raise the money.' He said, 'We are finding it extremely difficult to deal with you,' looking at Hadid, 'and I think we now have to make a decision that we will invest only in the B licence and that we will allow the A licence to cascade.' " 965 It is desirable also that I quote in full the evidence given by Mr Heller on this topic. It is quite brief. In his evidence in chief, he said this: "Did you during this visit say to Dr Gadir, 'There is really no party in America from all the people we have spoken to or otherwise that really wants to come into the deal'? - I believe I would have said words to that effect. Can you recall when that conversation took place and what was said? - During what was my third visit there were two meetings that I attended with Dr Gadir, one on Thursday the 11th at the offices of Sly & Weigall and the other on the 12th and it could have been said during either one of those meetings. We had been rebuffed by all of the US parties that we had discussed being involved in the licences with. Did you say to Dr Gadir during the course of your third visit that you could not find any parties who wanted to come in with you and you would have to look for partners down the track? - I don't think I said those specific words." 966 There were then two brief passages in Mr Heller's cross‑examination. First: "Did you assert that in spite of your best efforts Lenfest was unable to find any interested party, did you say words to that effect? - What I said was we were unable to find anyone willing to invest, meaning put up money into the licences." Secondly: "Mr Heller, can I just take you to paragraph 89 of your own affidavit, Mr Heller, if I may. You will see - and I'm looking at paragraph A. Did you say to Mr Hadid between 10 November and 14 November, whilst in Australia, in the presence of Mr [sic] Gadir and Mr Blanks the following proposition: Lenfest has tried its best but we are still unable to find interested investors. Did you say those words or words to that effect? - Words to that effect that we couldn't find anyone interested in funding the licences. Did you say also as part of that conversation: But whichever way it is Lenfest has to now go it alone. We've all tried so hard but there is no other way to do it. This is absolutely our last chance to make anything happen otherwise we will all lose everything. Did you say words to that effect? - Certainly to the effect that Lenfest was going to be needing to fund the licence on its own." 967 Cross‑examination - of all witnesses - established, in my view, that there was not a great deal of difference, in substance, between the various accounts of the relevant aspects of the discussion. There are variations, but they are minor. The effect of the evidence is, I think, that Mr Heller said that efforts to find investors had been unsuccessful; LCI needed to go it alone - that is, find the funds itself to pay for licence B; to do that it required control; if a deal to that effect was not struck, then everything - particularly, the deposits - would be lost. 968 Those statements were not in my view, so far as they went, misrepresentations. They said no more than Mr Hadid had been told already, notably in the two letters (one from Mr Lenfest, the other from Mr Heller) of 5 November. If Mr Blanks' evidence in cross‑examination is right, that Mr Heller mentioned the free carry insisted on by Mr Hadid as a stumbling block (Mr Heller did not recall doing so), then Mr Heller was saying no more than both he and Mr Lenfest had said and written to Mr Hadid several times since 26 October. In any event, I think a submission on behalf of LCI, as to causation, is correct: Mr Hadid alleges a number of other positive misrepresentations (to which I shall come) closer to the time when the share sale agreement was signed. By their nature, they must have superseded any effect, I think, of the positive statements made on 11 November. To say that, however, is not necessarily to reject Mr Hadid's claim that if the Australis transaction, or its prospect, had been revealed on 11 November, or earlier, he would have taken action which, in the circumstances, he did not take. The essence of Mr Hadid's complaint, however, so far as it relates to the meeting on 11 November, is not so much that the positive statements made were false or misleading but that he would have acted otherwise, and in so doing would have avoided detriment which in fact he claims to have suffered, had further facts been revealed which were not revealed. In other words, I think, once I reject (as I have rejected) the allegation that Mr Heller positively represented that Australis was not interested, the essence of Mr Hadid's complaint as to events before 15 and 16 November relates not to what he was told but to what was concealed from him. That is a topic to which I shall return; I note for the present only that in considering "silence" it is necessary to take account of the context (including so much of it as comprised discussion) in which the "silence", or non‑disclosure, occurred.

(b) The alleged statements made on 15 and 16 November 1993 969 The evidence on Mr Hadid's side is his own and that of Mr Cooper. As I understand it, the particular matters relied on are following. 970 First, Mr Hadid gave evidence of his conversation with Dr Burt shortly after he arrived at the Regent Hotel on 15 November. The first topic of discussion was the mediation agreement. Dr Burt explained that Mr Heller had already signed a copy. Mr Hadid's evidence continued: "I said, 'Did he express any concerns' and he said, 'No, you know, it's funny because he knows how close you are to me and he expressed no concerns which shows me that it's going to be reasonable Albert' and I said, 'Yes, it's pretty strong, are you sure there is nothing else that I am not aware of, have you discussed anything with him Wayne which, because the document's strong, have you discussed anything with him which I should know about that I don't already know' and he said, 'No, no', he said, 'listen, you wanted me to get close to them for the underwriting, you know they haven't talked to us for two months and that night was just a hypothetical discussion, you know, there's nothing that I, you know, that you don't know' so I proceeded and signed the disclaimer." 971 A little later, after some discussion about the search for strategic partners, Mr Hadid gave evidence that the conversation proceeded as follows: "… I said, 'You know, you talk about strategic partners for example, there is … Australis, yes, they followed that through, that's true, but there's your contacts from Deutsche Bank which they haven't followed through, you know, they don't really seem to have done basically enough' and he said, 'Well, I suppose they could be criticised, but my feeling is after talking to Don we should let them continue and focus on Licence B and you're right about Cosser, but I was wrong about him anyway, it doesn't appear he is interested in satellite licences, that's you know, not Lenfest's fault' … ." Mr Hadid gave evidence of the following exchange, somewhat later in the conversation: "[Dr Burt] said 'Look, Albert, you know, you don't think Lenfest really want to be in that predicament, do you? I mean of course they've done their best.' I said 'Well, no, I suppose not and you know, I don't understand why I suppose, you know, one has to consider these things and when you look at even Australis how they could consider that they're not going to be in it, it's a bit odd, isn't it?' He said "Yes, well companies, you know, rise and fall by the decisions they make, Albert, you know but that doesn't change the fact that Lenfest is basically all in it alone." 972 Dr Burt's account was, as I have mentioned, very different; he denied Mr Hadid's evidence that the conversation included the three passages which I have quoted. Secondly, Mr Hadid gave evidence of the following exchange between Mr Cooper and Dr Burt during the course of 16 November: "… Mr Cooper said to Dr Burt, … 'Does Lenfest have anyone interested, you know, we're concerned in case they're selling off their interest, is there anyone interested in the licences to your knowledge, Wayne?' Wayne said, 'Look, I've been working with these guys for two days, I'm certain, absolutely certain that they have no other interest, they are concerned that they haven't found any interest, they're concerned that they're going to start from a clean slate and take the risks on their own.'" Dr Burt denied that that conversation occurred. Mr Cooper, in chief, gave no evidence of such a conversation, and in cross‑examination he said that he had no recollection of it. Mr Cooper was referred to the statement in the initial letter of complaint, dated 18 November, about assurances that Lenfest had no current plans to "on‑pass" its interest in licence B to a third party. He was asked whether he would agree that Dr Burt never gave him personally such an assurance. His answer was "Never. At any time. Not that I recall." 973 Thirdly, there is the response which Mr Cooper said that he received from Mr Elliott when, on 16 November, he asked Mr Elliott two or three times whether there was a "deal to sell this licence on" (see par 322 and par 323). Mr Hadid gave evidence that he heard one of those exchanges. Mr Elliott denied that they occurred. 974 Fourthly, similar assurances were attributed to Mr Heller. Mr Hadid's version is set out in par 326 and Mr Cooper's in par 324. Mr Heller denied giving the assurances. 975 The question, once again, is what findings should be made on that disputed evidence? The conflict of evidence as to the discussions between Mr Hadid and Dr Burt on 15 November must, I think, be resolved in Dr Burt's favour. It is true that it would not be particularly surprising, in the circumstances, to find that Mr Hadid asked Dr Burt whether he knew anything Mr Hadid did not know. It was said that Mr Hadid had a track record of asking such questions: certainly he did so in his fax to Mr Heller of 28 October (par 222). But Mr Hadid's account contains a number of improbabilities. For example, he attributed to Dr Burt a ready agreement to underwrite licence A at a free carried interest of 30 per cent: it would be extraordinary had Dr Burt made such a commitment in any event, but, additionally, subsequent dealings between the parties provide no confirmation that he did so. But there are also improbable aspects of the particular exchanges relied on. I would find it very surprising if Dr Burt, in addition to merely denying that he knew nothing that Mr Hadid did not know, had gratuitously added corroborative detail about Mr Hadid's wish that he get close to LCI and a further exculpatory reference to the Treasury Restaurant dinner; and his alleged - and, if true, fraudulent - reference to Mr Cosser's lack of interest in satellite licences was, on Mr Hadid's account, substantially unprovoked and volunteered. In circumstances where Dr Burt must have realised that his deceit was likely soon to be exposed, what is alleged against him is not merely fraudulent but irrational. In short, given the nature of the claims against Dr Burt and Bain, in my view there is no proper basis for accepting Mr Hadid's account in preference to Dr Burt's. The second assurance attributed to Dr Burt - that said to have been given on 16 November - may equally be characterised as irrational, and also encounters the difficulty that Mr Cooper, to whom Mr Hadid said it was given, not only gave no evidence of it but firmly denied any recollection of it. 976 I have already referred (pars 610 to 613) to circumstances which throw real doubt on Mr Cooper's evidence about the assurance said to have been given by Mr Heller. There is no reason to doubt (Mr Cooper's evidence about this is confirmed by his contemporaneous notes) that Mr Cooper was genuinely concerned about the possibility that the licence might be on‑sold or "flicked." Nor is there anything surprising about the suggestion that Mr Cooper's suspicions about that were heightened by the width of the releases and indemnities which LCI sought. And the letter of complaint dated 18 November does refer to assurances - by both Mr Heller and Dr Burt - of the kind of which Mr Hadid and Mr Cooper gave evidence (Mr Heller in response, of course, promptly and vigorously denied that such assurances had been given). But, once again, the fact that the allegation involves fraud demands caution; and given the particular difficulties with Mr Cooper's evidence and my general conclusions on credit, I think Mr Heller's denial must be preferred. Once again, he, as an intelligent businessman, must have known that if he gave any false assurances they would probably be exposed very shortly. And there are other matters submitted by senior counsel for LCI and Mr Lenfest and also by senior counsel for Bain and Dr Burt, to which I shall come and which in my view give added strength to Mr Heller's denial. 977 Mr Elliott firmly denied the exchanges with him of which Mr Hadid and Mr Cooper gave evidence. He accepted that he had almost no recollection of the discussions extending beyond the notes he made at the time. He agreed that it was possible that Mr Cooper asked him why the releases and warranties were very wide and that he replied that they were wide because LCI wanted unfettered control so that it could deal without concern with the various authorities. He then gave this evidence: "Now, you are aware that Mr Cooper asserts that he asked you directly, on the [16th], 'John, there isn't a deal to sell this on, is there?' and he asserts that you replied, 'Not so far as I'm aware.' Now, do you concede to the possibility of him at least asking the question? - No, I don't. Why is that? - Because if that question was asked, I would have said that it raises a commercial matter that should be raised with my client and I believe I would have taken a note. If I could go back one step. Had you been asked by Mr Cooper, 'Is there some deal on to on‑sell the licence', what do you say your response would have been? - If I'd been asked, is there a deal to on‑sell the licence? Yes? - I would have said that that raises a substantial commercial matter that has to be answered by my client. All right. If you had so responded, you wouldn't go away and make a note of that question and answer, would you? - I believe I would have, I believe I would have taken a note to indicate to my client, to remind me to tell my client that he's likely to get a question along those lines. Can you say with confidence that you would have done so or only that you may well have done so? - I believe that I would have done so. You are relying then are you on the fact that you made no such note to support the proposition that it did not occur? - That his question did not occur? Yes. - Yes." 978 Until submissions were made on behalf of Mr Hadid in reply, the position taken by his counsel was that no attack was made on Mr Elliott's credit. Indeed, Mr Elliott's evidence was relied on as the basis of one of the attacks made on Dr Burt's credit: see pars 844 to 847. Mr Elliott's notes of the meetings on 10 and 11 November with Dr Burt and Mr Johnston do not refer to Australis. No doubt it is somewhat surprising, if the possibility of a transaction with Australis was discussed, that Mr Elliott did not record the discussion. However, Mr Elliott was not asked a question in cross‑examination which would have enabled him to make clear whether, before 16 November, he was aware of any possible transaction with Australis. Certainly his evidence was that he did not know of the St Louis discussions until after 16 November and that he heard of the various code names adopted both in relation to Project Midsummer and also in relation to the Becbran transaction only on 16 November. He could not recall precisely when on 16 November he had his informative telephone conversation with Mr Mangioni. The evidence suggests that Mr Halstead may have known of a potential transaction with Australis at some time before 16 November, though precisely when is by no means clear. It would be surprising if Mr Elliott was left entirely in the dark before 16 November and there is no clear evidence that he was in fact left in that state. Indeed after what may have been some vacillation, the submission in reply on behalf of Mr Hadid did not in the end depart from the position that Dr Burt's evidence (and Mr Johnston's) was probably wrong, that they did not tell Mr Elliott about Australis on 10 or 11 November and that Mr Elliott may well have known very little about Australis, or any potential transaction with it, before 16 November: indeed, until after the time when he had his discussions with Mr Cooper. The submissions in reply also relied on the terms of the "transaction overview" and draft document which Mr Elliott received from Mr Mangioni on 16 November. The overview and document, it was said, related to the Becbran transaction, not to a transaction with Mr Hadid. Thus, it was said, Mr Elliott might truthfully have said to Mr Cooper, on 16 November, that he was unaware of any deal by which the licence, or the shares in New World, might be on‑sold. Though misleading (it was said) such a statement would not necessarily have been fraudulent on Mr Elliott's part. And (presumably) his evidence involved a failure of recollection and should be rejected in favour of that given by Mr Cooper and Mr Hadid. 979 To the extent that the submission relies on the form of the documents sent to Mr Elliott by Mr Mangioni, I think it is mistaken. In fact both Becbran and UCOM were incorporated in the plan reflected in the documents. They reflected the two alternative possibilities: the licence might be acquired either through the Meridian bid or through the New World bid; both the rights under the Becbran option and the New World shares would be acquired. It is hardly conceivable that, once Mr Elliott had seen the documents and had a discussion with Mr Mangioni, he did not have a good understanding of both elements. But he was not asked about it. Even if I accept that Mr Elliott's knowledge about Australis by 11 November was, at best, sketchy, I cannot believe that at the time he and Mr Cooper spoke on 16 November he did not know enough to realise that to answer Mr Cooper's questions as he was alleged to have done was at least disingenuous. As well as seeing Mr Elliott give evidence and re‑reading the transcript of the evidence, I have seen several examples of his note‑taking, including the way in which he noted the discussion of his first draft of the share purchase agreement in order to prepare a revised version. As a result, I am confident in my assessment that he is a careful and methodical lawyer. I do not think it at all likely that he would have answered a question from Mr Cooper in a way which was "slippery" or, if not false, then only more or less true. He is, I think, far more likely to have reacted in the way he said he would have, and as he did in relation to the slightly different matters put to him on 18 November (to which I shall return). It is noteworthy also that the letter of complaint dated 18 November, though it referred to assurances allegedly given by Dr Burt and Mr Heller, did not refer to any assurances said to have been given by Mr Elliott during the course of the negotiations: even in circumstances where, if Mr Cooper's evidence were to be accepted, the subject matter of the assurances had been of such concern to him that he was constrained, rather than accepting Mr Elliott's answer when first given, to repeat his question. And there is no evidence, as senior counsel for LCI and Mr Lenfest pointed out, that in all subsequent dealings between Mr Hadid and Mr Cooper on the one hand and Mr Elliott on the other, any suggestion was made that Mr Elliott had been less than frank in his prior dealings with them. 980 Additionally, while I am not at all surprised that Mr Elliott had little recall of anything he had not written down, I would find it surprising, given what subsequently occurred, if he did not recall giving an answer, on more than one occasion, which was disingenuous and might well have struck the questioner as dishonest. But it was not submitted that Mr Elliott was a dishonest witness (and I do not think he was). In the end, the submissions in reply were directed, as I understood them, towards finding a way by which the conclusion might be reached that Mr Cooper's and Mr Hadid's evidence might be accepted, Mr Elliott's evidence, though not dishonest, being mistaken and his answers to Mr Cooper, having regard to the limited knowledge that Mr Elliott then had, not actually false. But for the reasons I have given, and because of other considerations to which I shall turn, I do not accept the submission. Instead, I accept Mr Elliott's evidence that he was not asked the questions, and did not give the answers, alleged. 981 I have given an account, in pars 353 to 360, of the evidence concerning the conversation on 18 November between Mr Elliott, Mr Hadid and Mr Cooper. I have also given reasons, between par 614 and par 619, for my conclusion that Mr Cooper's evidence as to the circumstances of the telephone call and as to the way in which his file note of the conversation was prepared and settled cannot be correct. On the other hand, Mr Elliott's version is supported, as to the way in which the telephone call was made, by the Clayton Utz telephone records and, as to the substance of the conversation, by the evidence of Mr Parshall. According to that evidence Mr Parshall took notes as Mr Elliott spoke; after the conversation was concluded Mr Elliott dictated a file note (pausing from time to time to check with Mr Parshall as to his recollection of aspects of the conversation); Mr Parshall read the note the following morning and agreed with its content. There was no suggestion, and there is no reason to think, that Mr Parshall was other than a truthful witness. On the other hand, Mr Cooper's evidence of the circumstances in which he prepared his file note cannot, for the reasons I have given, be accepted; and Mr Hadid disclaimed any role in its preparation. 982 The principal difference between the two notes, for present purposes, is that Mr Cooper had Mr Elliott, at the second time of asking, conceding that he was aware between 6.00 pm and 7.00 pm the previous evening of the transaction which had been announced the following day; Mr Elliott and Mr Parshall, on the other hand, recorded Mr Elliott as responding only that he was aware that an announcement was to be made and was not surprised that one had been made and, rather than saying that, on the previous day, he had been aware of a transaction with Australis, as suggesting that Mr Hadid and Mr Cooper should speak to "the principals" about that. There is simply no reason to doubt that Mr Parshall made his note, as he said, as Mr Elliott spoke or that Mr Elliott's note was prepared in the circumstances of which both he and Mr Parshall gave evidence. There is thus no reason to doubt its authenticity, neither is there any reason to doubt its accuracy. In the contest between the two versions, there is, in my view, no doubt that Mr Elliott's is to be preferred. Thus, I find that, in answer to a question whether he was himself aware of the Australis transaction the previous day, Mr Elliott declined to answer directly but said that that was a matter which ought to be discussed with his principals. That, in my view, is corroboration of his evidence that had he been asked, on 16 November, a question of the kind of which Mr Hadid and Mr Cooper gave evidence, he would have answered it by saying that that was a matter for his clients. Apart from that, and apart more generally from its significance in relation to credit, the conversation of 18 November is of no importance in relation to any issue in the case. 983 I have mentioned that there were other matters on which LCI and Mr Lenfest relied in relation to the statements said to have been made on 16 November. One which in my view has some force is this. Mr Cooper's evidence, supported by his notes made on reading the draft agreement for sale of the New World shares, was that Mr Hadid was not protected - but should be - in circumstances where LCI resold the New World shares or the licence. That was, according to his evidence, a matter of central concern to him. He appreciated that the draft agreement included wide releases and indemnities (indeed, he complained of their width). He understood that there was an "entire agreement" clause. He knew - it was obvious - that it would be possible to amend the draft agreement to incorporate an appropriate warranty or undertaking. He had formed the view, and had expressed it to Mr Hadid, that Mr Heller was not to be trusted. Nevertheless, he could not recall asking that the agreement be amended to incorporate such a warranty or undertaking; certainly no such amendment was made. Nor did he, then or later, make a note of what (he claimed) had been said. He was content, on his evidence, to rely in the circumstances merely on unrecorded oral assurances and some general observations which he attributed to Mr Elliott (but which Mr Elliott denied) about protection offered by the Trade Practices Act. Mr Cooper certainly was aware - his note and evidence about the 18 November conversation established that clearly enough - of the importance or utility of contemporaneous notes of important matters. If he regarded the subject matter of the assurances as of no particular importance, then, no doubt, in the course of what was essentially a drafting meeting, it would not be surprising that he took no note. But he said that he regarded it as a matter of central importance, one justifying asking the same question of Mr Elliott two or three times. In those circumstances it is surprising that he made no record at all. And there could be no suggestion that the draft agreement was in every respect immutable: the evidence is that Mr Cooper made a number of requests and suggestions, several of which were agreed and incorporated. 984 The other matter particularly relied on by senior counsel for LCI and Lenfest was some evidence about conversations concerning a possible on‑sale to PMT. Mr Hadid accepted that there was a view, held by some respectable people, that licence A (which PMT because of the statutory restrictions could not acquire) would be enhanced in value if PMT were excluded from ownership of licence B: Dr Gadir held that view and Mr Cooper was concerned, on 16 November, about the possibility that licence B might be sold to PMT. Mr Hadid himself gave evidence (though Mr Elliott denied it and Mr Cooper did not support it) that in the course of the discussions with Mr Elliott on 16 November, he said to Mr Elliott, "Well, the reason Mr Cooper has been asking you questions about Lenfest is because he is concerned in case they're going to sell the licence to PMT or these other interested parties." 985 Dr Burt gave evidence that during the overnight negotiations which began on 15 November Mr Hadid asked him whether there was a deal between LCI and PMT (Mr Hadid denied this). Mr Heller gave evidence that when he and Mr Hadid shook hands at the conclusion of the negotiation Mr Hadid asked, "Are you selling the licence to the PMT?", to which he had replied, "No" (Mr Hadid denied that also). Again, Dr Burt gave evidence that during the late afternoon on 16 November Mr Cooper sought and obtained Dr Burt's assurance that there was no PMT involvement: that evidence is supported by a handwritten note made by Dr Burt which also recorded a statement by Mr Cooper to the effect that Mr Hadid realised that the licence might be "flicked on immediately." Finally, Mr Johnston gave evidence (again denied by Mr Hadid) that, in answer to a question, what he thought LCI would now do, Mr Hadid said that he did not care so long as it did not sell to Mr Packer or PMT. That is evidence in which there is substantial congruence, and about which there is nothing surprising. Dr Burt's evidence is supported by his note; and it must be recalled that Mr Johnston was among those whose credit was not impeached. I accept that body of evidence. 986 My conclusion is, accordingly, that to the extent that the claim that positive misrepresentations were made depends upon assurances said to have been given by Dr Burt, Mr Heller and Mr Elliott on 15 and 16 November, it is not made good.

Failure to disclose Project Midsummer or possible Australis transaction: misleading or deceptive conduct, or other breach of duty?

(a) Principal and derivative liability 987 In order to consider these issues intelligibly and productively, it is necessary to bear in mind the significant differences between the positions occupied by the various respondents and also the distinction between a claim based on a wrong said to have been committed directly, as principal, by a respondent and a claim based on accessory or derivative liability: involvement or participation in a wrong committed by another. No doubt Mr Heller, during the period from 10 to 18 November, acted on behalf of LCI so that, for example, if his conduct in the course of negotiations with Mr Hadid was misleading or deceptive (because of what he said or because of some combination of what he said and what he did not say) then LCI is responsible for that conduct: at least, so far as this proceeding is concerned, if the conduct falls within the allegations in the statement of claim. Whether, in respect of conduct attributable to LCI, Mr Lenfest or Bain, Dr Burt or Mr Price is liable must depend on an application of the principles which are to be applied in establishing accessory or derivative liability in respect of the particular class of wrong which LCI is said to have committed. If the wrong is infringement of s 52 of the Trade Practices Act or of s 42 of the Fair Trading Act, then the principles are to be found in the authorities dealing with the application of s 75B of the former Act and s 61 of the latter. If the wrong allegedly committed by LCI is tortious, then the principles are those relating to joint tortfeasors. If LCI's alleged wrong is a breach of fiduciary duty, then one looks to the cases following Barnes v Addy (1874) LR 9 Ch App 244. 988 Mr Hadid asserts a broader basis of liability on the part of each respondent for the alleged deceit and misleading and deceptive conduct on the part of other respondents. The "Representations" are alleged to have been made pursuant to and in the course of giving effect to the Project Midsummer proposal, the action plans and the "3 November Agreement" and, thus, on behalf of all the respondents. All the respondents are said to have known that the Representations were false and Mr Price, who did not himself make any of the Representations, is alleged to have known, before Mr Hadid and his associates agreed to sell their shares in New World, that they had been made. It is alleged, thus, that each respondent is liable for deceit in respect of the "Representations" and each is liable in respect of the misleading or deceptive conduct, contravening s 52 of the Trade Practices Act and s 42 of the Fair Trading Act, alleged against each other respondent (curiously, Bain, Dr Burt and Mr Price are also, apparently, said to be liable in respect of the "Licence A Representations" on the footing that they were made by Mr Plant as their agent: it is not easy to see on what basis that could be so). Each respondent who is alleged to have made any of the "Representations" is said to have done so as agent of each other respondent. 989 No doubt the derivation of the agency allegations is to be found in authorities such as Ahern v The Queen (1988) 165 CLR 87 at 94, 95: "That basis [for the admission of certain evidence despite the hearsay rule] is provided in an appropriate case by the rule which states that when two or more persons are bound together in the pursuit of an unlawful object, anything said, done or written by one in furtherance of the common purpose is admissible in evidence against the others. The combination implies an authority in each to act or speak on behalf of the others: [Tripodi v The Queen (1961) 104 CLR 1 at 7]. Thus anything said or done by one conspirator in pursuit of the common object may be treated as having been said or done on behalf of another conspirator. That being so, once participation in the conspiracy is established, such evidence may prove the nature and extent of the participation. The principle lying behind the rule is one of agency and the closest analogy is with partners in a partnership business. Indeed, conspirators have been described as partners in crime. The principle of agency has a particular application in cases of conspiracy where preconcert is the essence of the crime." But that is a principle applicable particularly to the admission of evidence; and, as the High Court emphasised in Tripodi, again in a criminal context, at 6, 7: "But when a substantive crime, not a conspiracy, is charged in the indictment it is the ingredients of the substantive crime that must be proved, not combination for a common purpose." That may be transposed readily enough into the civil context so as to refer to the elements of a cause of action which is alleged. Where the commission of a particular tort is alleged - here, deceit - the question must be, in the case of any respondent said to be liable as a joint tortfeasor, whether that respondent is one of two or more who "commit or are responsible for the commission of" the tort, as parties to a common design in furtherance of which "their respective shares in the commission of the tort are done" (The Koursk [1924] P 140 at 156). In the case of alleged involvement in the contravention by another of the Trade Practices Act or the Fair Trading Act, the question will be, has the respondent concerned aided, abetted, counselled or procured the contravention, induced it, been knowingly concerned in or a party to it or conspired with others to effect it? Again, the focus is on the particular contravention and the association of the particular respondent with it. Of course, in the present case, what was agreed or discussed between the parties, at St Louis or subsequently, is relevant to a consideration of whether a particular representation, if proved, formed an element of a common design to which a particular respondent was a party and whether, if particular misleading or deceptive conduct is established on the part of a respondent, another respondent is to be regarded as involved in the conduct in the statutory sense. In neither case, however, in my view, are matters much advanced by speaking - or pleading -, in general terms, of agency.

(b) The positions of Bain and Dr Burt; LCI and Mr Lenfest 990 I have referred to the particular position of LCI. I shall return to that. The position of Bain and Dr Burt is different. There is no evidence that they knew in detail of the conversations between Mr Heller and UCOM representatives between 10 and 15 November. Certainly there is none that they were aware of anything said by Mr Heller on 11 November - or at any other time during the period - about the failure of the search for investors, LCI "going it alone" or the consequences of failure to reach agreement. Dr Burt knew, on 15 November, that Mr Heller had not disclosed to Mr Hadid the possibility of a transaction with Australis. I have found that he did not make, on 15 or 16 November, the particular representations which Mr Hadid attributed to him. Apart from any question of derivative liability arising from understandings reached at St Louis, the question, in the case of Bain and Dr Burt, is whether Dr Burt's conduct in failing to disclose to Mr Hadid the possibility or likelihood of a transaction involving Australis was, particularly in the context of the Regent Hotel negotiations and what was said during them, misleading or deceptive. There is one particular aspect of that context which I shall mention before going further. I have already referred to recital C of the mediation agreement, which stated that Dr Burt and Bain had previously advised both UCOM and LCI in relation to matters connected with the licences. Recital D, which follows immediately, is significant also: "The Shareholders and Lenfest wish to promote a future public issue of a public company with an interest in License B referred to in Recital A which will require changes in the current shareholdings in UCOM and wish to appoint Burt (a director of Bains) to mediate all and any matters relating to changes in such shareholdings and the terms upon which the Shareholders will sell their shares in UCOM." 991 Apart from the reference to previous advice, there is no mention of Bain being retained by LCI or of its expectation of any fee resulting from such a retainer. I have mentioned (par 316) that Dr Burt's evidence was that he disclosed to Mr Hadid, at the commencement of the negotiations, that he had given advice on capitalisation to LCI and that he had an expectation that he would receive fees. He claimed to have said this: "I just want to clarify a few things and I have an indemnity agreement here which I am going to put to you in a second but I want to clarify that you are on notice that I've been advising Lenfest on some aspects of capitalising one of these licences. I don't know about everything they are doing. I know about some things. I am aware of some things that you've told me but I'm not aware of everything and in that regard I want an indemnity signed because I don't want to be held accountable or liable for anything that results. Rowan has had this indemnity prepared by our lawyers and I would like you to read it and sign it if you find it acceptable. Take it away if you want. Have Martin Cooper look at it but before we start I would like it signed." 992 There followed, according to Dr Burt, a lengthy conversation during which Mr Hadid explained his usual reluctance to sign such documents and his general approach to litigation, at the conclusion of which Mr Hadid pointed out errors in the document, which were then corrected before Mr Hadid signed. Dr Burt gave the following evidence about what then happened: "After the signing discussion and before I went to Mr Heller I then said to Mr Hadid, 'Well, at least I better fill in some fee for this so that there's some consideration on the document' and I filled in $1 and we had a bit of a joke and he handed over to me $1 and I said, 'Listen, Albert, I've got success fees on capitalisation of this licence and, hopefully, I'll get the underwriting but if we don't reach an agreement here, this dollar will be the only dollar I make out of Pay TV so I'm going to keep it.' He said, 'Yes, that's cute' and there was general mirth at that … ." 993 In cross‑examination Dr Burt claimed to have told Mr Hadid that he had a letter of retainer from LCI (he had not: according to his evidence, he was referring to "the verbal agreement to my letter of 1 November", but of course there had been no agreement on the terms of that letter). But the more interesting aspect of the evidence is one which was implicit in Dr Burt's account of the conversation in his evidence in chief but was brought out clearly in cross‑examination: "… My question to you, however, relates to the reaction that you are describing from Mr Hadid, to the proposition that you are alleging that you'd told him in the midst of this highly charged atmosphere that you are advising Lenfest on the capitalisation of one of the two licences? - Yes, if you have to take it in its contextual background that the first thing I said to him is are you prepared to do a deal do you want to do a deal with Lenfest, he said, Yes, and then I made my disclosure. All right. Well, now, and you felt that you were at liberty to disclose the existence of the letter of retention as you term it, to Mr Hadid? - Yes, I'd previously told him we were working directly with Lenfest on other occasions as well. And on no occasion had he reacted with so much as a sign of curiosity much less fury? - He was aware that I had a number of the meetings with the Lenfest people. … And there is of course no note of any of these alleged conversations with Mr Hadid, is there? - Yes, there's a note of the one we're in fact talking about now. All right. And you say that on no occasion did he react with so much as a sign of curiosity? - No. And he was, as you say, quite at ease with this idea, was he? - Mr Hadid was extremely anxious to do a deal and was at ease with the idea that I was there talking to him and Lenfest, yes. Yes. Did he say, look I realise that it will be inappropriate for me to press you for any detail of that because that might involve you in some breach of confidentiality, did he say that as well? - No, he simply wasn't interested." 994 That, at least at first sight, is surprising evidence. Dr Burt did, however, identify a note about which he gave the following evidence: "Can you tell his Honour when you made that file note? - Yes. Most of the file note, the top part I made after the discussion earlier in the evening of the indemnity position. Did you make it as an aide‑mémoire of what had happened? - I made it after Mr Hadid left my room as to what I'd told him." It is a somewhat cryptic handwritten note incorporating various matters, some of which (for example, a portion relating to Mr Neil Brown) appear to have nothing to do with the discussion with Mr Hadid, other sections the signification of which is far from obvious, and a number of arrows and boxes apparently signifying a connection between what otherwise look like miscellaneous scribbled notes. But the document does include the following phrases: "WB told HADID"; "PUT FAIRLY & SQUARELY ON NOTICE"; "Release we are an adviser to L/F"; and

Dr Burt was not asked to elucidate the note in detail; and it was not suggested that it was other than genuine or that it did not record matters which he claimed that it recorded. Indeed, if it were other than a genuine note made in haste at the time, one might, perhaps, expect it to be more coherently and persuasively expressed. But it does, if (as I do) I accept it as genuine, provide some corroboration of Dr Burt's account of this part of the conversation. I accept Dr Burt's evidence, in this respect, as substantially an accurate account of what was said. 995 I am fortified in doing so by the circumstance that, on reflection, the evidence is not as surprising as it might at first sight appear. Mr Heller's approach to the negotiations which began on 10 November included a number of elements. One was the proposition that a significant reason for the failure of LCI's search for cornerstone United States investors was that none would accept terms insisted upon by Mr Hadid, particularly as to free carry. Another was that LCI could and would fund one licence only; and, because no investors could be found on Mr Hadid's terms, LCI would fund the licence only if it acquired control. A third was that licence B was the appropriate licence to fund, because if licence A were funded and acquired there would be a risk that the licensee would be exposed to damaging competition from PMT, which could acquire licence B (or an interest in it) but not licence A. It was obvious, and Mr Hadid acknowledged it to be so, that LCI would seek other participants. Because of the provisions of the Broadcasting Services Act, it would in any event have to do so. No doubt, if he thought about it, Mr Hadid's expectation might have been that LCI, being able to negotiate with United States cable companies on its own terms, would attract cornerstone investment from that quarter and then undertake a fundraising of some kind in Australia. 996 But although Mr Hadid realised that some such process would happen and, no doubt, that it was very much in LCI's interest that it happen sooner rather than later, there is no evidence that he expressed any curiosity as to what LCI planned or had in mind. The likely reason why Mr Cooper's concern about LCI's freedom to sell the licence on was not pursued (or his suggestion that LCI should be restrained from doing so for a year) is that Mr Hadid instructed Mr Cooper that he did not share Mr Cooper's concern. Similarly, there is then nothing improbable about Dr Burt's evidence (though Mr Cooper denied it) that during the evening of 16 November Mr Cooper said that Mr Hadid realised that the licence might be "flicked on immediately." That evidence is supported by a handwritten note and Dr Burt was not cross‑examined on it. The note is written on Clayton Utz letterhead and is headed "Martin Cooper - Wednesday night", two matters which perhaps throw some doubt on Dr Burt's account of the conversation as occurring on Tuesday, 16 November but not on his evidence that such a conversation took place. The note - leaving out a section at the bottom which relates to a different matter - reads as follows: "Martin Cooper Wednesday night *Albert will realise he has done a good deal once he cools down emotionally Ů Good price and Drama Commissioning Agent *Wanted reassurance that it would not go to PMT Ů he said he realised it may be "flicked on immediately" and/or "restructured or recapitalised" but didn't want it to go to PMT *I told him that I had heard nothing at all to suggest PMT and I believe there was no chance that it would be flicked on to PMT in the short term" Mr Johnston's account of his conversation with Mr Hadid on 17 November (par 344) corroborates Dr Burt's evidence. 997 Those matters, in my view, also form an important part of the context in which Mr Heller's conduct (and thus that of LCI) must be assessed. Other important aspects of it are that - as I have held - LCI and Mr Lenfest did not owe to Mr Hadid the fiduciary duties alleged against them and the terms of their contract with the UCOM shareholders were those set out in the letters of 29 August, there being no implied terms of the kind pleaded. I have also held that Mr Heller did not make the positive representations, as to lack of investor interest, attributed to him. Undoubtedly another very important part of the context is the correspondence and the conversations between Mr Lenfest, Mr Heller and Mr Hadid beginning on 26 October. In relation to the timing of that correspondence and those conversations, it must be recalled (once again) that on 18 October the ABA had notified UCOM Australia of the report by the Trade Practices Commission. Mr Plant arrived in Australia only three days later. During that visit (which ended on 27 October) he formed, before he was told about Project Midsummer, some clear views, among them that no investors would be attracted, there would be no underwriting and that the deposits would be lost unless LCI took control. It was undoubtedly Mr Plant's report, and the advice from Mr Turnbull, which prompted Mr Lenfest's proposal to Mr Hadid on the telephone on 25 or 26 October, confirmed in greater detail in Mr Lenfest's fax of 26 October (par 221). The first term of that proposal was that LCI would, upon obtaining the financial commitments necessary to permit the purchase of a licence, acquire all the shares of the company which held the bid. The second term contemplated, in effect, a 10 per cent free carry equally divided, represented by shares carrying entitlements deferred to those of other shareholders. Subsequent correspondence (the last in the series before the St Louis meetings being Mr Hadid's fax of 1 November) made it plain that the parties were entirely at odds. UCOM refused to accept what LCI claimed to regard as the minimum conditions required to obtain investment or raise funds. 998 Submissions on behalf of Mr Hadid relied on two particular aspects of the correspondence, both before and after the St Louis meetings. One of the matters referred to is Mr Hadid's handwritten response to Mr Lenfest's letter of 26 October. The response was dated 28 October, was faxed, according to the transmission report, at 3.57 am and is set out in par 222. What is relied on is the opening request, "Kindly advise of any developments." What follows, however, makes it clear that what was being sought was information as to whether Mr Lenfest's offer was based on any offers or, alternatively, whether it was being suggested that LCI would itself pay for both licences. Mr Heller responded in a telephone call made on the evening of 27 October, Eastern United States time. He made a note at the time. It is in two parts: one, he said, was written in advance of the conversation and recorded things which he wished to say to Mr Hadid (and on his evidence, then said to him); the other part is a series of notes about other matters discussed during the conversation. The first part of the note, combined with Mr Heller's evidence, establishes, in my view, that Mr Heller told Mr Hadid, among other matters, two things: no definitive offers had been received but LCI had had conversations (presumably its conversations with Cox and Continental) which "indicated parameters they would consider", as reflected in Mr Lenfest's offer: "i.e. top carry of 10%"; and LCI did not plan to fund both licences but still hoped to bring enough parties to the table to accomplish that goal. I have found that Mr Heller did not learn about Project Midsummer until the morning of 28 October. It follows that the conversation took place before Mr Heller (or, for that matter, Mr Lenfest) was aware of Project Midsummer and there was nothing false or misleading in what Mr Heller said. And I accept submissions made on behalf of LCI and Mr Lenfest that Mr Hadid's fax cannot be read as a request for continuing information about future developments. What he wanted to know - and what he was told - was whether developments had occurred which particularly prompted Mr Lenfest's offer. 999 The other matter relied on relates to Mr Heller's letter to Mr Hadid of 5 November. The letter included the statement "you are aware of all the parties we have approached." That, it was said, was at best a half‑truth because, as Mr Heller knew, Mr Hadid was not aware of Australis. The letter is quoted in par 255. In context, the "parties" referred to are plainly only the United States cable companies. There is, in fact, nothing in the letter which is untrue or, I think, anything which can properly be described as a half‑truth. Whether, nevertheless, it might be regarded as misleading or deceptive because it omitted any mention of Australis is a matter to which I shall return in the context of the negotiations which began on 10 November. Mr Lenfest's letter to Mr Hadid, also of 5 November, (par 256) equally, in my view, says nothing which is untrue and tells no half‑truths. It also, of course, makes no mention of Australis. 1000 The submissions for Mr Hadid referred also to the communications from Ms Combs to Mr Hadid; but senior counsel for LCI and Mr Lenfest correctly pointed out that there is no evidence that those communications had any effect on Mr Hadid. Reference was made also to what was said to be "misleading and then equivocation about whether licence A will be abandoned and then an announcement of abandonment so [late that] nothing can be done about selling or funding it." On 8 November Mr Hadid wrote to Mr Heller indicating that he was "getting mixed signals" about licence A. He had, I think, some apparent justification for saying that. Mr Heller had written to him on 4 November (par 252) announcing that LCI wished to receive the "minimum 13˝ per cent carried interest" in licence B and 2 per cent only in licence A, in accordance with the 29 August agreement. That was a somewhat curious letter, given the offer already made to Mr Hadid and the proposals which shortly followed it. As I have mentioned, Mr Heller had made it clear to Mr Hadid on 27 October that LCI did not plan to fund both licences but still hoped to find sufficient investors to enable both licences to be funded. That is consistent with Mr Lenfest's offer of 26 October and with the proposal of 5 November. Mr Heller's explanation of his 4 November letter was that he informed Mr Hadid that LCI were going to be involved in one licence only, and that had to be licence B so as to exclude PMT; on the other hand they were not abandoning hope of attracting investors to licence A. Except, of course, that any such hope became increasingly unrealistic, that is consistent with the position that Mr Heller took from his arrival in Sydney. 1001 In fact, there was, I think, no inconsistency or any reason to doubt that the proposals put to Mr Hadid on 5 November were genuine offers. The suggestion appeared to be that LCI was deliberately obfuscating its position on licence A. I see no reason to think that it was doing so; nor do I see any reason why LCI might have thought that it would be in its interests to do so. Its own choice was licence B; but if licence A could be funded as well, there is no apparent reason why LCI would have wished to prevent that from happening. In short, I do not think that what was said or written either before or after 10 November about licence A is of any significance. 1002 The discussions which began on 10 November must be regarded as commercial negotiations between parties at arm's length. There was no longer any question of giving effect to the agreement of 29 August. LCI had already made it quite clear that it wished to have control and had asserted that neither of the licences could be salvaged unless it had control. Undoubtedly the real possibility that, if LCI obtained control of New World, the transaction proposed at St Louis (or something very like it) might take place was a significant development and was not disclosed to Mr Hadid. But equally, senior counsel for LCI and Mr Lenfest was correct in submitting that at least since the conversation between Mr Hadid and Mr Lenfest preceding Mr Lenfest's letter of 26 October there had been another significant change, of which Mr Hadid was well aware: LCI had concluded that investors would not be attracted if they could invest only on the terms which Mr Hadid would accept; and LCI wished to make a new agreement with Mr Hadid which would enable LCI to obtain funds to take up either or both of the licences. In other words, what commenced on 25 or 26 October was a process which marked a virtually complete break from what had preceded it. There is no doubt on the evidence that during the earlier period the search for investors had been a cooperative one and information had been freely exchanged between LCI and UCOM. I have referred (par 782) to evidence which suggests that Mr Hadid never regarded himself as subject to any general obligation of full disclosure; but certainly on the subject of attracting investors there was very substantial openness between the parties.

(c) Misleading or deceptive conduct, or other breach of duty? 1003 The question whether Mr Heller's conduct on or after 10 November was misleading or deceptive, however, depends, in part, on whether Mr Hadid had a reasonable expectation that, if a transaction of the kind contemplated with Australis was in prospect, that would be disclosed to him (Kimberley NZI Finance Ltd v Torero Pty Ltd (1989) ATPR (Digest) ¶46‑054 at 53,195; Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 32 per Black CJ and at 31 per Gummow J) and, in part, on the likely effect, in the context of Mr Heller's negotiations with Mr Hadid and the relationship between the parties at the time, of Mr Heller's statements that no investors had been found and that Lenfest would have to go it alone, taken together with his failure to mention the contemplated transaction with Australis (Demagogue at 32, 41; Brunninghausen v Glavanics (1999) 46 NSWLR 538 at 540 per Priestley JA and at 561 per Handley JA). 1004 I was referred by counsel for the respondents to a number of well known authorities which have considered allegations of misleading or deceptive conduct in commercial negotiations. The first is Lam v Ausintel Investments Australia Pty Ltd (1989) 97 FLR 458. Mr Lam was a creditor of a company in which he also held shares. He agreed to subordinate his claims as a creditor to the rights of certain other creditors of the company. He claimed to have entered into the agreement in reliance on a letter from the parent of one of the companies to have the benefit of the subordination agreement. The letter referred to the likelihood of a forced sale of the company's property which (it was said) "would undoubtedly lead to the complete loss of both equity and loans"; "expert advice" indicated that an early sale, even if not perceived as a forced sale, would yield no surplus for "shareholders/lenders." Nor, in the circumstances, was it likely that new lenders could be found. A short time after the letter was written, agents were appointed with a mandate to find a buyer for the company's property for a price, which those agents believed could be obtained, sufficient, if there were no subordination, to give some return to Mr Lam. Documents in evidence amply demonstrated that the beneficiaries of the subordination wished to ensure that Mr Lam did not find out about the appointment of the agent before he signed the subordination agreement. Gleeson CJ, with whom Meagher JA and Samuels AJA agreed, stated the principles at 475 as follows: "Where parties are dealing at arms' length in a commercial situation in which they have conflicting interests it will often be the case that one party will be aware of information which, if known to the other, would or might cause that other party to take a different negotiating stance. This does not in itself impose any obligation on the first party to bring the information to the attention of the other party, and failure to do so would not, without more, ordinarily be regarded as dishonesty or even sharp practice. It would normally only be if there were an obligation of full disclosure that a different result would follow. That could occur, for example, by reason of some feature of the relationship between the parties, or because previous communications between them gave rise to a duty to add to or correct earlier information." 1005 In the light of more recent authority to which I have referred, it is no doubt proper to take it that the conduct of the party having but withholding information might equally be regarded as misleading or deceptive if a feature of the relationship between the parties or previous communications between them gave rise to a reasonable expectation that earlier information would be added to or corrected. Additionally, the representations complained of in Lam were made before the agent was employed: the question was whether the information given in the letter should have been supplemented when the change in circumstances took place and the maker of the representations became aware of it. Gleeson CJ proceeded to apply the principles to the facts as follows, at 476: "Mr Lam was an experienced and intelligent banker and businessman with his own ideas about, and his own acute interest in, the future of the business [conducted by the company] and possible sale of [the company's property]. The advocacy in which the respondents engaged in the letter of 9 May 1986 and subsequently as to why it was in his best interests to agree to the subordination arrangements did not, in my view, impose upon them an obligation to disclose to him new facts which might improve his bargaining position at their expense. The new facts just mentioned did not render false the representations that had been made to him." 1006 In Poseidon Ltd v Adelaide Petroleum NL (1992) ATPR ¶41‑164 at 40, 227 Burchett J said, at 40, 227: "I do not think it has ever been suggested that s 52 strikes at the traditional secretiveness and obliquity of the bargaining process. Traditional bargaining may be hard, without being in the statutory sense misleading and deceptive. No one expects all the cards to be on the table. But the bargaining process is not therefore to be seen as a licence to deceive. If, for example, the bargainer has no intention of contracting on the terms discussed - perhaps because his real aim is to tie up the market, or to achieve some other ulterior purpose - may not (at least, in some circumstances) his conduct in seeming to bargain be accurately stigmatised as misleading?" 1007 Similarly, in General Newspapers Pty Ltd v Telstra Corporation (1993) 45 FCR 164 Davies and Einfeld JJ said, at 177, 178: "More recently, in Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31, Black CJ, Gummow and Cooper JJ emphasised that s 52 provides its own test, meaning that if conduct is not misleading and deceptive or likely to mislead or deceive in the circumstances in which it occurs, it will not breach s 52. That section does not require arm's length negotiations to be completely open or require full disclosure at all times. The particular facts of the case must be considered in the light of the ordinary incidents and character of commercial behaviour. Thus, in the ordinary course of commercial dealings, a certain degree of 'puffing' or exaggeration is to be expected. Indeed, puffery is part of the ordinary stuff of commerce. So also is a certain degree of 'put‑off', evasion or obfuscation by commercial people seeking to resist disclosing information which is confidential. Discussions in commerce are so understood." Gummow J, at 194, accepted the analysis of the facts made by Davies and Einfeld JJ and concluded that the facts, so analysed, did not reveal misleading or deceptive conduct, applying the principles set out in the judgments in Demagogue. His Honour expressed no view about the statement of the principles in the judgment of Davies and Einfeld JJ. Certainly the facts of General Newspapers are far removed from those of the present case. 1008 In a rather different context - one to which I shall return - senior counsel for Mr Hadid relied on the decision of Bryson J at first instance in Glavanics v Brunninghausen (1996) 19 ACSR 204. I have referred to the decision of the Court of Appeal, which affirmed the judgment of Bryson J: when closing submissions were made the appeal had been heard but not decided. The plaintiff and defendant in Brunninghausen were brothers‑in‑law. They were both directors of a company which imported skiing equipment. The defendant held the majority of the shares; the plaintiff held the rest. The defendant managed and controlled the company. The parties fell out and, though there was a degree of rapprochement between them followed by some business dealings, the plaintiff played no part in the affairs of the company and received no information about them or about the company's trading results. In substance, he knew no more than such information as he had before the falling out supplemented by what he had been able to observe in his later business dealings. Negotiations commenced for the purchase by the defendant of the plaintiff's shares in the company. They proceeded slowly and sporadically. Unexpectedly, the defendant received an offer for purchase of the company's business. The defendant negotiated with the offeror and ultimately agreement was reached. The sale of the business substantially enhanced the value of the company's shares, particularly, if he had remained a shareholder, the value of the plaintiff's shares as, potentially, a minority interest in a "cash box" rather than a trading concern. Shortly after negotiations with the offeror commenced, the defendant resuscitated discussions with the plaintiff. Discussions proceeded swiftly, resulting in an agreement under which the plaintiff sold his shares to the defendant. The plaintiff was not told about the offer to buy the company's business. Bryson J described the circumstances as follows, at 219: "There was no actual dependence on information and advice, as Mr Brunninghausen gave none and was not prepared to and Mr Glavanics did not ask for any or expect any. He would not have got any if he had asked. In practical terms Mr Glavanics was negotiating in the dark on the basis only of the external appearance of the business and general knowledge from years earlier, and Mr Brunninghausen knew this. There was no relationship of confidence, and indeed all trust had been broken years before and succeeded by hostility at the worst, wariness at the best." His Honour held that, nonetheless, in the circumstances the plaintiff was entitled to compensation by the plaintiff for breach of fiduciary duty; he found also that the defendant's conduct was misleading or deceptive, contravening s 42 of the Fair Trading Act, but that he was not entitled to relief under that Act because, when the proceedings commenced, the limitation period had elapsed. 1009 The decision of the Court of Appeal was based squarely on fiduciary obligations arising from the defendant's position as a director of the company. Handley JA stated the problem in this way at 554, 555: "If the defendant had caused the company to sell its undertaking and had not purchased the plaintiff's shares, the benefit of the sale would have accrued to the shareholders pro rata. Any attempt by the defendant to secure an additional personal profit would have been a fraud on the minority. Any attempt to dilute the plaintiff's shareholding by a substantial fresh issue in favour of the defendant or his friends would have been invalid under [Ngurli Ltd v McCann (1953) 90 CLR 425], and any attempt to intercept the gain by altering the rights attached either to his shares or those of the plaintiff would also have been invalid. Yet it is said on the authority of [Percival v Wright [1902] 2 Ch 421] that the defendant is entitled to take advantage of his special knowledge to acquire the plaintiff's shares at a gross under‑value without disclosing that knowledge. Such a result appears anomalous." 1010 Handley JA, with whom Priestley and Stein JJA agreed, proceeded to consider a number of authorities and concluded that Percival v Wright should not be followed. After considering the position of a minority shareholder in a proprietary company, Handley JA said, at 557, 558: "The plaintiff therefore was almost totally powerless. He had no legal right as a shareholder to inspect the company's books of account or financial records. He was entitled to copies of the annual accounts but realistically chose not to exercise it. Those alone would not provide any real guide to the value of his shares. He had no effective right to be informed of the negotiations for the sale of the company's business. The defendant, as the sole effective director, occupied a position of advantage in relation to the plaintiff. He could, if he saw fit, disclose information about the pending negotiations for the sale of the business but could not be compelled to do so. This gave him the capacity to affect the interests of the plaintiff 'in a practical sense' and in the context of the negotiations with him 'a special opportunity' to exercise that capacity to the detriment of the plaintiff who was 'at the mercy' of the defendant and 'vulnerable to abuse' by the defendant 'of his position': [Hospital Products v United States Surgical Corporation (1984) 156 CLR 41] (at 96‑97), per Mason J. After 1983 the defendant did not undertake in any factual sense to act in the interests of the plaintiff, or in the joint interests of the plaintiff and himself. However he continued to occupy an office with the advantages referred to. In my judgment it is open to this Court to hold that the office of a director in a proprietary company is, at least for some purposes, a fiduciary one in relation to the shareholders … . Fiduciary duties are imposed on the holders of such offices by operation of law." That was so because the nature of the office was such that the law prescribed that a shareholder was entitled to expect that the director would act in the shareholder's or their joint interests in matters falling within the ambit of the relationship. 1011 I have quoted at some length from the decision of the Court of Appeal to demonstrate that what gave rise to the duty, in that case, not to deal without disclosure was the character of the relationship between director and shareholder. Although the Court of Appeal did not deal with the question whether, in the statutory sense, the defendant's conduct was misleading or deceptive, it is not difficult to see a basis in the reasoning for a conclusion, consistent with the authorities to which I have referred, that it was. Subject to the comments I make in the next paragraph, the language of reasonable expectation does not, I think, connote anything very different from the reference to a beneficiary's entitlement to expect from a fiduciary a particular standard of conduct (a formulation for which Handley JA cited Professor Finn's paper in Youdan, Equity, Fiduciaries and Trusts (1989), pp 34, 35). But, of course, if the matter were to be looked at in that way, an important (perhaps crucial) element of the context was the defendant's position as controlling director and the plaintiff's as a minority shareholder. 1012 I have referred to the similarity between the language of reasonable expectation and that of entitlement to expect. There is a difference between them which in some cases may be important and might, perhaps, have been significant in Brunninghausen itself had the Court of Appeal been required to consider the statutory wrong. Whereas a reasonable expectation is an actual expectation, a fiduciary's liability does not depend on any actual expectation by the beneficiary of a particular standard of conduct (Brunninghausen;at 558) the question is whether the beneficiary was entitled to expect it, not whether he or she (reasonably) did so. 1013 Senior counsel for Mr Hadid relied (as I have said, in a slightly different context) on a passage in the judgment of Bryson J in which his Honour appears to have put the defendant's liability on a broader basis. Bryson J said, at 223: "A share in a company where the vendor is locked into a minority position, has been for years and appears likely so to remain indefinitely is essentially changed if the company's business is about to be sold and turned into money. In the circumstances there is little indeed which Mr Glavanics was entitled to expect of Mr Brunninghausen, but he was entitled to expect that he would [be] told of such a basic alteration in the company's affairs as was in prospect. In terms of ordinary understanding of behaviour, if someone comes to exchange contracts to purchase a house he must be told if the house burnt down last night, or if it is on fire at the moment, or if the Mine Subsidence Board has asked the occupants to leave while they establish whether there is anything to be concerned about. Some things simply have to be disclosed in sales, however much at arm's length. In my judgment the existence of the negotiations and the advantages which could be expected to flow from them if they were successful were of dominating importance. They entirely transformed the nature of the subject matter which Mr Glavanics and Mr Brunninghausen were talking about; a transformation from selling a locked‑in minority shareholding in a company which was to continue operating entirely under Mr Brunninghausen's control for an indefinite future into a short term prospect of disposition of the entire enterprise, converting [the company] into a box of money. For Mr Brunninghausen, who had the information, to come to terms with Mr Glavanics on the basis of the little which Mr Glavanics could possibly have known about the company's affairs without revealing this fact is in my opinion an astonishing event, an enormity outside the range of conduct which, according to ordinary community standards of behaviour, is regarded as honest, honourable or acceptable. If Mr Brunninghausen feared that Mr Glavanics might use the information wrongly, he could have refrained from telling Mr Glavanics what was going on by putting off his negotiations with Mr Glavanics until some conclusion had been reached with [the purchasers of the business]. In the events that happened, postponement of one and a half days would have been enough. What Mr Brunninghausen decided to do brought with it, in my opinion, an obligation in equity to pay to Mr Glavanics an appropriate part of the advantage coming to Mr Brunninghausen should the prospective transaction actually occur. In my judgment retention by Mr Brunninghausen of this advantage is outside the range of honest dealing according to ordinary community standards and the Court should not permit it … ." 1014 Was it an "enormity", was it dishonest according to ordinary standards or was it misleading or deceptive conduct, on the part of LCI, not to disclose the Australis proposal? The context included the following factors. The parties had been involved for about two months in a shared endeavour (whatever precisely its origin) to find investors in the licences. They had done so on the basis that, if they were successful, they would share a free carried interest in the licence holder. The endeavour had proved fruitless. From the beginning, Australian institutions approached by Mr Heller and Mr Plant made it clear that the presence of cornerstone investments was an essential prerequisite of a fundraising in the Australian markets; and Bain had confirmed that in its letter of 13 October. Licence A would cascade, in the very near future, unless paid for. There was no such constraint in relation to licence B, but there was a fear that if the licence A bid cascaded, at least in circumstances where there was no apparent prospect of licence B being financed, the government might take action possibly involving the termination of the bidding process. The view had been formed within LCI that control must be taken from Mr Hadid and his associates. Mr Plant had come to hold that view firmly and he advocated it forcefully. Mr Lenfest's conduct, at least from 26 October, as well as his evidence, indicates that he accepted that view. By 26 October Mr Hadid understood that Mr Lenfest was making a proposal which involved, among other things, LCI acquiring all the shares in UCOM and New World and UCOM obtaining a 5 per cent free carry only in each licence, with subordinated rights. Mr Hadid understood why Mr Lenfest had made the proposals spelt out fully in his letter of 26 October. I say that, rejecting as highly improbable Mr Hadid's evidence that Mr Lenfest outlined the proposal to him on the telephone, said "that's the deal" and, despite Mr Hadid's insistence upon reasons, refused to give any. Rather, I accept Mr Lenfest's evidence of the conversation as being substantially correct: "I said, 'Albert, your demands for a free carry which is not subject to recoupment and at the 30 per cent level and your insistence in being in the operating company are acceptable to no US cable operator we have approached and your insistence on these demands will make it impossible for us to ever get a US investor, without which we have been told there cannot be a public underwriting in Australia,' so I said, 'We had a minimum of 13˝ per cent in the licence we selected, we are willing to give up that minimum if you will give a 50/50 of whatever we can achieve with US operators, number one they will not give a free carry, not subject to recoupment and number two, none of them want you involved in the operations of the company and your insistence on this will cause us to lose their [sic] deposits." 1015 That closely reflects Mr Plant's recommendation. It is a message which LCI continued to give to Mr Hadid. There is no reason to doubt that the views expressed by Mr Lenfest were genuinely held. Nor, in my view, is there any reason to think they were not reasonably held. Mr Hadid had firmly rejected Mr Lenfest's proposals; matters on which he continued to insist were directly contrary to aspects of Mr Lenfest's proposal which he regarded as essential. So much had been clear before Mr Lenfest met Mr Price, Mr Cosser and Dr Burt in St Louis. Mr Hadid knew - Mr Heller had told him - that LCI was in a position to fund one of the licences but would not fund both. He understood that an element of Mr Lenfest's proposal was that LCI would assume control of fundraising activities, including any underwriting. That was an element of the proposal specifically rejected by Mr Hadid in his letter of 28 October. 1016 In assessing LCI's conduct it must be borne in mind that LCI's proposal, both before and after Mr Heller arrived on 10 November, involved LCI obtaining control of New World and UCOM Australia and funding the acquisition of one of the licences itself. That meant necessarily that, by one means or another, LCI would have to obtain both substantial additional funds (there was a business to start off and finance) and other participants (LCI, as a foreign company, could not simply hold the licence itself). Mr Hadid had been told about what LCI perceived as the stumbling blocks to obtaining investment by United States cable companies. He knew that LCI had been in negotiation with certain of those companies for some time. It could hardly have been a surprise to him if, the stumbling blocks being removed, other United States cable companies had invested as well as LCI and, cornerstone investment being in place, a fundraising in Australia had proceeded. Indeed, there is no reason to suppose that Mr Hadid would have been at all surprised if negotiations between LCI and other United States cable companies had proceeded to the point where a transaction was entered into and announced very soon after LCI acquired control from Mr Hadid and his associates. Mr Heller's statement that no investors had been found must be seen in that light, and his statements about going it alone must be considered in a context where there should have been no reasonable expectation that LCI would necessarily be going it alone for long. 1017 To put it in another way, Mr Hadid could hardly have expected - and he did not give evidence that he did expect - that LCI was likely to be expending the considerable funds necessary to acquire a licence without any clear idea of where it might go from there or without some assurance that it would be able to go somewhere in the reasonably near future. If, for example, an arrangement had been consummated and announced shortly after 17 November under which Cox or Continental would invest and there would then be an underwritten public offer in Australia, it is not easy to see why, having relinquished control in those circumstances, Mr Hadid would have had any cause to complain, whatever effect the transaction might have had, for a short or more extended time, on the market's perception of the value of the licence. And that would have been so, I think, even if the transaction had been in prospect, or even viewed as very likely during the period when Mr Heller and Mr Hadid were negotiating and even if LCI had made a conscious and firm decision not to reveal to Mr Hadid the prospect of the transaction for fear that, if he knew of it, he would "hang up the deal" or seek a higher price than he otherwise might for the shares in the bidder. Mr Hadid could, in those hypothetical circumstances, have asked Mr Heller whether LCI had any transaction in prospect concerning the licence. Mr Heller might have replied "yes" and given detail, might have lied by saying "no" or might have said that he was not prepared to discuss the matter. But, if Mr Hadid did not ask, nothing would be gained by speculating about what Mr Heller would have said if he had. Alternatively, Mr Hadid, recognising that some transaction was likely to be in prospect, whether near or distant, might have asked about a particular possibility which, had it been in prospect, would have concerned him: for example, whether PMT might be an investor. An answer "no" to that question would not have been false, misleading or deceptive. 1018 An element in that process of reasoning is, of course, that Mr Heller's statement that no investors had been found could reasonably be taken as referring only to the process about which the parties had been speaking and corresponding for some time: that is, persons prepared to invest in a licence owner in which LCI and the UCOM shareholders held the interests contemplated by the 29 August agreement and whose business would be operated by a company structured in accordance with that agreement; or, possibly, on terms which would have resulted from acceptance of Mr Hadid's response to Mr Lenfest's 26 October proposal. It could hardly have been thought that Mr Heller was saying that investors could not be found in the sense, for example, that Cox or Continental were not prepared to invest on terms which LCI would accept, but Mr Hadid had made clear that he would not. 1019 No doubt it is dangerous to reason by analogy with hypothetical facts. But the particular hypothetical facts I have considered provide, I think, a useful vantage point for considering the legal consequences of the actual facts. The Australis transaction differed significantly from the hypothetical one. Australis was a listed public company: the market's perception of the value of the licence would be very quickly reflected in the price at which its shares traded after the deal was announced. (There was, in fact, a substantial rise in the market price of Australis shares; a sadly temporary phenomenon, the reasons for which were canvassed at some length during the trial.) Another obvious difference was that Australis had MDS licences covering the major capital cities which the coverage of the satellite would complement (but it will be recalled that the UCOM business plan had contemplated delivery of the satellite licensee's signal via MDS as well). Plainly the Australis transaction came as a great surprise; the hypothetical transaction might not have done. It was a surprise, no doubt, for at least two reasons. Australis had displayed no interest whatever when first approached at the beginning of October; and its prospectus had proclaimed its adherence to a strategy which relied on MDS transmission alone. But I cannot see anything in any of the aspects of the Australis transaction to which I have referred, or in any other aspect of it, which supports a proposition that if such a transaction (rather than one of a less unexpected sort) was in prospect Mr Hadid had a reasonable expectation, in the circumstances, that LCI would disclose it unasked. Equally, I do not think that the existence of the Australis prospect made what Mr Heller said on 11 November deceptive or misleading any more than the hypothetical prospect would have done. Although it has, perhaps, no particular effect on that analysis, it is worth recalling that the proposals discussed between LCI and Mr Hadid all contemplated an arrangement under which the UCOM shareholders would retain some equity in the licence holder. That was so until negotiations at the Regent Hotel on Mr Hadid's deal points proved unproductive, and the parties proceeded to negotiate for a sale and purchase for cash. 1020 If one then turns to the position of Bain and Dr Burt, the relevant context includes these matters. They did not, as I have held, owe to Mr Hadid the fiduciary or contractual obligations pleaded. I have held also that Mr Hadid has not established that Dr Burt made the positive misrepresentations, on 15 and 16 November, attributed to him. I have also accepted Dr Burt's evidence, supported by his note, that early in the discussions on 15 November he informed Mr Hadid that he knew some things (not all things) that LCI were doing and that he had an expectation both of a success fee and of appointment as underwriter. In those circumstances, I can see no legal basis upon which to hold that Bain or Dr Burt had an obligation to disclose what they knew of transactions which LCI had in prospect (even transactions which they themselves had proposed). Nor, I think, is there a basis to hold, given my other findings, that Mr Hadid had a reasonable expectation that if Dr Burt knew that LCI had a transaction in prospect, even in immediate prospect, relating to the licence, he would disclose it.

(d) Pleading of contravening conduct 1021 I think, in any event, that the case made against Dr Burt and Bain is not open on the pleadings. The crucial paragraph of the statement of claim is par 50. It reads: "By reason of the matters pleaded in paragraphs 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42 and 43 above Lenfest Communications and Bain engaged in conduct which was misleading and/or deceptive or likely to mislead and/or deceive in contravention of section 52 of the Act." Paragraph 51 comprises a similar allegation of contravention of s 42 of the Fair Trading Act and adds Mr Lenfest and Dr Burt as alleged contraveners. 1022 Paragraph 24 alleges Bain's initiation of the Project Midsummer proposal, the requirement that the proposal be kept confidential and the contemplation that Bain would receive fees. Paragraph 25 alleges the 3 November "Agreement" and the confidentiality clause in the 3 November letter. Paragraph 26 summarises some of the provisions of the 3 November letter. Paragraph 27 alleges that the respondents agreed to perform tasks allocated in accordance with the action plans. Paragraph 28 alleges mutual agency arising from the Project Midsummer proposal, the 3 November "Agreement" and the action plans. Paragraph 29 alleges knowledge on the part of each respondent that each of the others would, if asked whether Australis was interested, falsely deny or dissemble the true state of affairs and par 30 alleges that "by reason of paragraphs 24, 25, 26, 27 and 28 above" each respondent expressly agreed to keep secret from Mr Hadid "the agreement of Australis and Lenfest Communications to adopt the Project Midsummer Proposal, the Action Plans and the existence of the 3 November Agreement." Paragraph 31 alleges that each respondent knew that LCI had to acquire all or substantially all of Mr Hadid's shares in New World to carry the 3 November "Agreement" into effect; par 32 alleges that each respondent knew that LCI, Mr Lenfest, Bain and/or Dr Burt would seek to procure Mr Hadid to sell its shareholding without knowledge of the Project Midsummer Proposal; and par 33 alleges that each respondent knew that information concerning the existence of the Project Midsummer Proposal was material to Mr Hadid's decision as to whether, and on what terms, he would dispose of his shares in New World. Paragraphs 34 to 37 deal with the "Licence A Representations" and are not relevant for present purposes. Paragraph 38 alleges the "Representations"; par 39 alleges that the Representations were made in order to induce Mr Hadid and other shareholders to sell their shares in New World to LCI at an undervalue; par 40 alleges that the Representations were made in trade or commerce; par 41 alleges action in reliance on the Representations; par 42 alleges loss suffered by Mr Hadid in acting in reliance on the Representations; and par 43 alleges that the Representations were false "in that on or prior to 17 November 1993 Price on behalf of Australis expressed to two representatives of Lenfest Communications an interest in purchasing all or substantially all of the shares in New World." 1023 The pleading is, perhaps, a good illustration of the difficulties that can arise where contravening conduct is alleged simply by reference to what is said in a number of earlier paragraphs. Two things particularly must be borne in mind. One is that contravening conduct is conduct which is misleading or deceptive or is likely to mislead or deceive, and is made in trade or commerce. The other is that a cause of action arises under s 82 of the Trade Practices Act only where loss is suffered "by" the contravening conduct and loss or damage "by" contravening conduct is equally a condition of the availability of relief under s 87; the same is true of the corresponding provisions of the Fair Trading Act, s 68 and s 72. 1024 It may be said broadly of the first group of allegations referred to in par 50 and par 52 of the statement of claim that they refer to matters agreed between the respondents, tasks allocated to respondent, mutual agency as to steps taken following the St Louis meetings and knowledge on the part of each respondent as to what the alleged agreement between them required and as to what each respondent was likely to do as a result of what had been agreed upon. It is not unduly pedantic - especially in a case where fraud is alleged - to regard those paragraphs as alleging conduct preceding, and perhaps explaining, later conduct but not itself misleading or deceptive conduct or conduct likely to mislead or deceive. In any case, the structure of the succeeding paragraphs confirms the correctness of that approach. The only conduct alleged to have been engaged in in trade or commerce is the making of the Representations (par 40). The only conduct alleged to have been relied upon is the Representations. There is no allegation, in the paragraphs referred to, of circumstances giving rise, on the part of Mr Hadid, to a reasonable expectation that if a particular state of facts existed it would be disclosed. 1025 The allegations in par 50 and par 51 should, I think, be taken to pick up the paragraphs referred to read as a whole and having regard to the way in which, by a series of consecutive allegations, they appear to be designed to allege the material facts necessary to found a claim based on particular causes of action. Read in that way, I do not think that they support a case based upon "silence." Certainly nothing in the way the trial was opened or conducted, until closing submissions, suggested, in my view, that Mr Hadid relied on simple failure to disclose the existence of Project Midsummer as misleading conduct on which he relied, so as to suffer loss. That, I think, precludes me from taking the approach approved by the Full Court in Nescor Industries Group Pty Ltd v Miba Pty Ltd (1997) 150 ALR 633. 1026 Precisely the same analysis applies, of course, in relation to the claims made against LCI and Mr Lenfest. Its practical application is, however, a little different in view of the statements actually made by Mr Heller on 11 November. The issue which arises is the one with which I have dealt, that is whether in the circumstances established by the evidence what Mr Heller said was, perhaps because of what was left unsaid, misleading or deceptive. Plainly, in my view, what the pleading did not leave open against LCI or Mr Lenfest was a suggestion that anything said in the correspondence from Mr Lenfest or Mr Heller to Mr Hadid was misleading or deceptive conduct giving rise to loss. The only conduct said to comprise the Representations, referred to in the particulars to par 38 of the statement of claim, is statements made orally "at times on and immediately prior to 17 November 1993." The correspondence takes its place in the context in which Mr Heller's oral statements are to be assessed. There was no suggestion until written closing submissions were delivered - and they are not unequivocal - that the correspondence might be relied on separately as misleading or deceptive conduct.

Conclusion as to claims based on Trade Practices Act and Fair Trading Act 1027 It follows from the reasons I have given that the claims based on allegations of direct contravention of the Trade Practices Act and the Fair Trading Act by LCI, Bain and Dr Burt must fail. The claims under those Acts against Mr Lenfest fail also. Equally the claims, relying on those Acts based on agency or involvement, fail as against all respondents. 1028 The considerations which result in the failure of the case under the Trade Practices Act and the Fair Trading Act result also in the failure of the claims framed in deceit.

Conclusion as to claims of breach of fiduciary obligation, and participation in it; breach of contract and inducement of it; and negligence 1029 Because of my findings that the alleged fiduciary obligations did not arise, the claims based on breach of fiduciary duty fail; so also do the claims based on the alleged participation by respondents in breaches of fiduciary duties by other respondents. Equally, the contractual claims against both LCI (and Mr Lenfest) and Bain fail; so also do the claims that the various respondents induced or procured breaches by other respondents of their contractual obligations. It is appropriate to add this, in relation to Mr Price: his evidence was that, except in the most general sense, he had no knowledge, at any relevant time, of the nature or terms of the relationship between Mr Hadid, LCI and Mr Lenfest or that between Mr Hadid, Bain and Dr Burt. Mr Price knew that companies controlled by Mr Hadid were the successful bidders for the two licences, that LCI or Mr Lenfest had provided the deposits and that UCOM and LCI had been engaged together in a search for investors. But there is no evidence that he knew more than that. Even if I had concluded differently as to the alleged fiduciary or contractual obligations of LCI (or Mr Lenfest) or Bain (or Dr Burt), there is, I think, no basis on which Mr Price could be held liable for participating in any of the alleged breaches of fiduciary duty or for inducing any of the alleged breaches of contract. 1030 My findings about the duties of care alleged against LCI and Mr Lenfest and against Bain and Dr Burt result in the failure of the claims based upon breach of duty of care also.

Conclusions as to conspiracy claim 1031 I have quoted in par 425 the laconic pleading of conspiracy to cheat and defraud. The allegation picks up, among other things, the various duties, fiduciary, contractual and under the law of negligence, said to have been owed by LCI, Mr Lenfest, Bain and Dr Burt; those duties were said to require disclosure to Mr Hadid of the interest of Australis in acquiring the shares in New World. The essence of the alleged conspiracy is that an agreement or arrangement to act in concert was made at St Louis; it included the alleged agreement on the terms of the letter of 3 November and agreement also that each step in the action plans would be taken by the party given responsibility for it. In essence, Mr Hadid was not to be told of Project Midsummer; if he asked, the respondents would lie or dissemble; and active concealment, together with the steps contemplated in the 3 November letter and the action plans, was calculated to put pressure on Mr Hadid and induce him to sell the shares in New World for less than they were worth. 1032 The conspiracy alleged, then, is an agreement to cause economic loss to Mr Hadid (by causing him to sell property at an undervalue) by unlawful means. The agreement, it is said, was performed and Mr Hadid suffered loss. 1033 The findings I have already made as to other alleged breaches of duty mean that it is not necessary to consider whether the allegation of conspiracy adds anything to allegations that the various respondents were joint tortfeasors in relation to deceit, knowing participants in relation to breach of fiduciary duty or persons involved in contraventions of s 52 of the Trade Practices Act or s 42 of the Fair Trading Act (pars 987 to 989: Galland v Mineral Underwriters Ltd [1977] WAR 116; Trade Practices Commission v Allied Mills Industries Pty Ltd (1980) 48 FLR 102; Pancontinental Mining Ltd v Posgold Investments Pty Ltd (1994) 121 ALR 405). 1034 Senior counsel for Mr Hadid argued that, quite apart from liability arising independently under the Trade Practices Act or Fair Trading Act, an actionable conspiracy was established if the means agreed to be employed by the parties involved dishonesty, according to ordinary standards, whether or not any of the parties knew that the means to be adopted involved a breach of duty or themselves regarded the means as dishonest. For those propositions counsel relied on a series of cases on criminal conspiracy (particularly the decision of the High Court in Peters v R (1998) 192 CLR 493) and on Brunninghausen: Brunninghausen being applicable because of what was there said in (it was claimed) analogous circumstances about the character of the failure of a vendor to disclose to a purchaser information, otherwise unavailable to the purchaser, about a matter of direct and important relevance to the value of the property sold. But if there was no independent legal duty to disclose (I have held that none has been established) and if the circumstances were not such as to give rise to a reasonable expectation of disclosure on the part of Mr Hadid (as I have held they were not), then, in my view, the reference to Brunninghausen takes matters no further. In those circumstances the failure to disclose would not be stigmatised as dishonest. Once again, upon analysis, the overlap between what is involved respectively in the allegations of deceptive or misleading conduct and those of conspiracy is virtually complete; and it may be that, even if the matter is approached from the perspective suggested by senior counsel for Mr Hadid, the allegation of conspiracy adds nothing to that of involvement in the statutory wrong. 1035 The conclusion must be that the allegation of conspiracy is not made out. In those circumstances is it not necessary to consider the extent to which Mr Hadid would be required to establish that economic harm to him was among the conspirators' purposes: Williams v Hursey (1959) 103 CLR 30; Lonrho plc v Fayed [1992] 1 AC 448; Womboin Pty Ltd v Reichelt (Supreme Court of New South Wales, Windeyer J, 25 August 1995, unreported) at 32‑38.

(a) Section 1000 1036 Mr Hadid pleads contravention of s 1000 as follows: "67 Lenfest Communications, Gerry Lenfest, Bain, Burt, Australis and Price contravened s 1000 of the Corporations Law, to wit, they themselves or by their agents, in connection with the dealing of securities, induced another person to deal in securities by making a statement that was known to be misleading, false or deceptive, which is to say that there was no other person, apart from Lenfest Communications, interested in investing in, or purchasing, all or substantially all of the shares in New World, or any interest in Licence A or B, when in fact Australis had agreed to purchase all or substantially all of the shares in New World. 68 Lenfest Communications, Gerry Lenfest, Bain, Burt, Australis and Price contravened section 1000 of the Corporations Law, in that they themselves or by their agents, dishonestly concealed from the Applicant a material fact which is to say that Australis had agreed to buy, and Lenfest Communications had agreed to sell, at least 90% of the shares held by at least 75% of the shareholders in New World and to enter into a 5 year management agreement with Lenfest Communications and to cause Lenfest Communications to acquire a 25% interest in Australis." Section 1000 provides: "1000(1) A person shall not: (a) by making or publishing a statement, promise or forecast that the person knows to be misleading, false or deceptive; [or] (b) by a dishonest concealment of material facts; … induce or attempt to induce another person to deal in securities." Paragraph (a) applies only where a person makes or publishes a statement which the person knows to be misleading, false or deceptive. The particular statements relied on are the "Representations." The claims under the Trade Practices Act and the Fair Trading Act having failed, the claim under s 1000 must fail a fortiori. The section is contravened only if the statement both is misleading, false or deceptive and is known to be so. 1037 The dishonest concealment relied upon is the failure to disclose to Mr Hadid Australis' interest in acquiring the shares in New World. But, again, if (as I have held) the failure to reveal that fact was not, in context, conduct, or part of a course of conduct, which was misleading or deceptive, then a fortiori it was not dishonest concealment.

(b) Section 995 1038 The section provides: "A person shall not, in or in connection with: (a) any dealing in securities; … engage in conduct that is misleading or deceptive or is likely to mislead or deceive." The shares in New World were "securities" as defined in s 92 of the Corporations Law. Equally their acquisition under the share purchase agreement fell within the definition of "deal" in s 9. Section 995, unlike s 52 of the Trade Practices Act, applies whether or not a dealing in securities occurs in trade or commerce; but it applies only to conduct in or in connection with a dealing in securities, including the extended categories of transactions included in "dealing" by s 995(2)(b). Subject to those two matters, however, the language of s 995 mirrors that of s 52. In circumstances where both provisions apply the issues for determination, where contravention is alleged, are likely to be substantially the same, and to be resolved similarly, under each: Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 at 463, 464. 1039 In this case, however, contravention of s 995 is pleaded somewhat differently from contravention of s 52: "76A Lenfest Communications, Gerry Lenfest, Bain, Burt, Australis and Price contravened section 995 of the Corporations Law, in that they themselves or by their agents, in connection with dealing of securities being shares in New World Communications, engaged in conduct that was misleading or deceptive, or was likely to mislead or deceive, by: (a) representing to the Applicant that there was no other person, apart from Lenfest Communications, interested in investing in, or purchasing, all or substantially all the shares in New World, or any interest in Licence A or B, when in fact Australis had agreed to purchase all or substantially all of the shares in New World and was interested in the acquisition and/or use of Licence B; or (b) failing to disclose to the Applicant, as was the fact that Australis had agreed to purchase, or was prepared to treat to purchase all or substantially all of the share capital of New World and was interested in the acquisition and/or use of Licence B when it was: (i) misleading not to do so by reason of a material change in circumstances (to wit, the Australis interest) since it was represented that no‑one was interested; or (ii) the duty of Lenfest and Bains to disclose the information to Hadid by reason of their agreement and duties aforesaid." In addition to paragraphs of various affidavits (which may be taken as references to the oral evidence of conversations supporting the Representations) the particulars refer to Mr Lenfest's letter to Mr Hadid of 5 November 1993. 1040 Subparagraph (a) raises issues similar to those which I have considered in relation to the s 52 case. My findings in relation to s 52 are equally applicable to the representations referred to in that subparagraph. Subparagraph (b)(ii) must be taken to refer to the pleaded fiduciary and contractual duties and duties of care. As I have held that those duties did not arise, the failure to disclose Australis' interest was not misleading or deceptive, or likely to mislead or deceive, as a breach of a positive duty of disclosure. What is intended, in subpar (b)(i), by the words "since it was represented that no‑one was interested" is not entirely clear. If "since" is meant to indicate that the interest of Australis arose later than the time when the representations were made, the statement is correct as to what was said to Mr Hadid in late October but incorrect as to the conduct which, apparently, is actually relied upon. Presumably "since" is not meant to signify that a reason or explanation is being offered: if it were, then it is not easy to see what to make of the reference to a material change in circumstances, and the real complaint, once again, would be (as under s 52) that the existence of Australis' undisclosed interest made what was actually said misleading or deceptive. 1041 However one reads the subparagraph, the reasons I have already given require the conclusion that the failure to disclose anything about Australis was not misleading or deceptive conduct on the part of LCI, Mr Lenfest, Bain or Dr Burt. 1042 The allegation against Mr Price must fail also. It is possible to read par 76A of the statement of claim, unlike the allegations of contravention of the Trade Practices Act and the Fair Trading Act, as including a claim that he contravened s 995 directly, as principal. But there is no basis for a finding that Mr Price had a duty to disclose Australis' interest to Mr Hadid, or any reason to attribute to Mr Hadid a reasonable expectation that if Australis were interested, Mr Price would disclose his interest to him. And the claims that he was liable as a result of acts committed by others as his agents or through involvement in the conduct of others raise exactly the same issues as the Trade Practices Act and Fair Trading Act claims, and fail for the same reasons.

(c) Sections 849 and 851 1043 I have described the pleading briefly in par 429. It is desirable, however, to set out the relevant paragraphs in full. "69. Shares in New World are securities within the meaning of section 92 of the Corporations Law. 70. Bain and Burt are securities dealers within the meaning of the Corporations Law. 71. On or about 17 November 1994 Burt, on behalf of himself, Bain, Australis and Lenfest Communications advised the Applicant to sell shares in New World to Lenfest Communications. In the presents, each of those persons are associates of Bain and Burt within the meaning of the Corporations Law, section 849. 72. In giving the advice, Burt failed to disclose that Bain, Burt, Lenfest Communications and Australis would receive pecuniary or other benefits and advantages in connection with the Applicant dealing in the securities as a result of the recommendation, to wit: a) as to Bain and Burt, fees and commissions other than fees and commissions paid by the Applicant; b) as to Lenfest Communications, a management contract with and capital interest in Australis and other benefits that will be described after discovery; c) as to Australis, control of Licence B, Lenfest's management services, foreclosing competition in Pay TV and capital contribution by Lenfest Communications, 73. The benefits aforesaid were benefits that might reasonably be expected to be capable of influencing Burt and Bain in making the recommendation. 74. The conduct aforesaid was conduct in breach of section 849 of the Corporations Law by Bain and Burt for which conduct they are liable to compensate the Applicant by reason of section 852 of the Corporations Law for loss and damage consequent on the Applicant acting in reliance on the recommendation. 75. At the time of making the recommendation to the Applicant that he sell his shares in New World to Lenfest Communications, having regard to the knowledge of Burt and Bain of the investment objectives of the Applicant and the Applicant's particular needs in relation to his dealing with control of Licence A and Licence B, Burt and Bain did not have a reasonable basis for making the recommendation. In particular, in so far as it was a basis for the recommendation to achieve a purpose that included a purpose other than advancing the objectives of and satisfying the Applicant's needs, to wit, the purpose of advancing Lenfest Communications and Australis' interests and advancing Bain and Burt's interests that was not a reasonable basis for recommendation to the Applicant. 76. By making the recommendation without a reasonable basis for it, Burt and Bain contravened section 851 of the Corporations Law and are liable to compensate the Applicant by reason of section 852 for any loss or damage consequent on the Applicant acting in reliance on the recommendation." The claims under s 849 and s 851 are claims against Bain and Dr Burt only. They were at relevant times securities dealers as alleged by par 70. The allegation in par 69 is correct also. 1044 Section 849 provides (and provided at the relevant time): "849. (1) This section applies where a securities adviser makes a securities recommendation to a person (in this section called the 'client') who may reasonably be expected to rely on it. (2) The securities adviser shall: (a) if the recommendation is made orally - when making the recommendation, disclose to the client orally; or (b) if the recommendation is made in writing - set out in that writing, in such a way as to be no less legible than the other material in that writing; particulars of: (c) any commission or fee, or any other benefit or advantage, whether pecuniary or not and whether direct or indirect, that the securities adviser or an associate has received, or will or may receive, in connection with the making of the recommendation or a dealing by the client in securities as a result of the recommendation; and (d) any other pecuniary or other interest, whether direct or indirect, of the securities adviser or an associate, that may reasonably be expected to be capable of influencing the securities adviser in making the recommendation. (3) Subsection (2) does not apply in relation to a commission or fee that the securities adviser has received, or will or may receive, from the client. (4) If by making the recommendation the securities adviser does an act as a representative of another person, then: (a) without limiting the generality of Division 2 of Part 1.2, the other person is an associate for the purposes of subsection (2); and (b) subsection (2) does not apply in relation to a commission or fee that the other person has received, or will or may receive from the client. (5) For the purposes of Division 2 of Part 1.2, the making of securities recommendations is the matter to which a reference to an associate in subsection (2) relates. (6) Despite Division 2 of Part 1.2 and subsection (5), a person (in this subsection called the 'alleged associate') is not an associate for the purposes of subsection (2) merely because of being: (a) a partner of the securities adviser otherwise than because of carrying on a securities business in partnership with the securities adviser; or (b) a director of a body corporate of which the securities adviser is also a director, whether or not the body carries on a securities business; unless the securities adviser and the alleged associate act jointly, otherwise act together, or under an arrangement between them in relation to making securities recommendations." 1045 The claim under that section is based on Dr Burt's conduct as mediator during the negotiations at the Regent Hotel. The first point to notice is that the capacity in which Dr Burt acted during those negotiations is irrelevant to the question whether s 849 applies. "Securities adviser" is a defined term: s 9 provides that it "means a dealer, an investment adviser or a securities representative of a dealer or of an investment adviser." Either one falls within one of those categories or one does not. Both Bain and Dr Burt did. Again, although the word "client" suggests what the legislature had in mind as the common situation in which the provision might apply, its use is of no significance to a consideration of the way in which the section actually operates: a "client" is simply a person to whom a securities adviser makes a securities recommendation and who may reasonably be expected to rely on it. "Securities recommendation" is also a defined term: s 9 provides that it means "a recommendation with respect to securities or a class of securities, whether made expressly or by implication." The word "recommendation" is not itself further defined. 1046 I do not accept the account given by Mr Hadid of strong urging by Dr Burt, amounting to considerable pressure, to do a deal with LCI. Dr Burt's evidence as to what was said when he informed Mr Hadid of LCI's final position was as follows: "I said, 'Look Albert, I think we've got a breakthrough here. Gerry and Don have agreed to pay $13 million which is a lot of money, Albert. They've agreed to the drama consultancy and they have agreed as you know to the unencumbered rights to the A licence. Now what do you think of that?' He said, 'Well it's not bad.' He said, 'It's not a bad night's work, is it?' I said, 'Well, it's a pretty tough night's work but yes, I think we've got there. Are you happy with that?' He said, 'Are they committed to it?' I said, 'Yes, they've told me they're committed to it and I believe they are but are you happy with it?' He thought about it for some time and he said, 'Well it is better than I thought I would do when I walked into this room by a long way.' And I said, 'Well I actually think it is pretty good as well,' and I said, 'It allows you to go on the A and to do your drama and you've got a lot of money.' He said, 'Yes.' He said, 'I am happy, I think can get the A up.'" The deal Dr Burt and Mr Hadid were talking about was an agreement under which Mr Hadid and his fellow shareholders would sell their shares in New World (that is, dispose of securities) in exchange for cash and, as to Mr Hadid, a drama commissioning agency. The conversation was about the terms on which securities were to be disposed of, so that if Dr Burt's remarks (as he recounted them) are properly to be regarded as a recommendation, they were a recommendation with respect to securities and therefore a securities recommendation. 1047 Those concluding remarks are not to be seen in isolation from what went before. Dr Burt, on his own account, had, for instance, encouraged Mr Hadid to stick to his guns on the drama commissioning agency: he promised to "go in to bat" on that. He also actively discussed with Mr Hadid how much LCI might reasonably be expected to pay in cash: "I said, 'Look Albert we are making progress, the Lenfest people agree to give you a drama consultancy which is fantastic news.' He said, 'Really.' I said, 'Yes, they are going to do it so you will be the commissioning agent for 10 per cent drama'; He said, that is great and I said, yes, it is fantastic isn't it? He said yes, but I am surprised but have they definitely agreed to it, and I said yes … . He said, that is great as I never thought they would that is fantastic. I said yes, well, let us keep batting away, they have also offered you 7 million dollars to walk away as a payment, He said, Wayne that is not enough you know that, we have been through this. I said I know we have been through it but it is the best they can do. He said well, it is not enough, if I tell my shareholders that they will cascade these licences, Simon and Stephen would prefer to cascade these licences and get rid of Lenfest and start again and if I go and tell them that then they will do it straight away, they expect 15 and they are not going to agree. We had a protracted discussion about that point, the game went on … . I said well, look we have got the A licence rights, you have got the drama consultancy which is fantastic, you have been offered 7 million, you want 15, let's do the old thing Albert it does not matter whether you are in investment banking or horse trading let's try and split the difference." 1048 According to Dr Burt's evidence Mr Hadid said that he would not be satisfied with that; he wanted at least $12,500,000 or, preferably, $13,000,000. Having obtained Mr Heller's agreement to that, Dr Burt commented that $13,000,000 was "a lot of money" and, having ascertained that Mr Hadid was happy with the deal, he reinforced Mr Hadid's view by saying "Well I actually think it is pretty good as well." I accept that Mr Hadid was a person who might reasonably be expected to rely on a recommendation by Dr Burt. Dr Burt's own evidence was that Mr Hadid took notice of views which he expressed. But that does not answer the question whether anything said by Dr Burt during the Regent Hotel negotiation amounted to a recommendation. 1049 Dictionary definitions of "recommendation" contain nothing surprising. The Macquarie Dictionary 3rd ed, defines it as: "1. to commend by favourable representations; present as worthy of confidence, acceptance, use, etc: … 2. to represent or urge as advisable or expedient: … 3. to advise (a person etc., to do something): … 4. to make acceptable or pleasing: … ." Whether what is said in a particular case amounts to a recommendation involves a consideration of the precise words used and of their context. That, in a case like the present, might be thought an extremely artificial exercise. Two versions of the relevant conversation have been given, one by Mr Hadid, the other by Dr Burt. For reasons already sufficiently explained (which have nothing to do with any particular conviction as to the detailed accuracy of Dr Burt's evidence) I am not prepared to accept Mr Hadid's account. If in those circumstances I was not prepared to accept Dr Burt's account in detail either (for example, because his account is an extraordinarily particular recollection of a long series of conversations several years in the past, and because as to some matters I have preferred the evidence of other witnesses to that of Dr Burt, finding his to be inaccurate) that would be of no help to Mr Hadid. It is appropriate, I think, to accept Dr Burt's account as embodying the finding most favourable to Mr Hadid that I am prepared to make on the evidence and then to ask whether, assuming that account to be accurate, Dr Burt made a recommendation. 1050 My view is that he did not. He ascertained what Mr Hadid was prepared to accept and LCI agreed to it. He went "in to bat" for the drama commissioning agency because he saw that that was a sticking point with Mr Hadid. Dr Burt suggested splitting the difference between $7,000,000 and $15,000,000; Mr Hadid insisted on $12,500,000 or, preferably, $13,000,000. At the end of the negotiation, what emerged could not properly be described as something that Dr Burt had recommended. His remarks to Mr Hadid at the conclusion of the discussion equally, in my view, are not properly to be described as a recommendation: at best, they served as reinforcement of a position which Mr Hadid had taken and which represented, finally, the negotiated deal. For those reasons, in my view, s 849 is not applicable. 1051 This is, however, by no means an entirely straightforward matter and it is desirable that I indicate my conclusions on some other aspects of it which would arise if I were wrong in declining to categorise what Dr Burt said (assuming his account to be accurate) as a recommendation. One is the question whether LCI or Australis was, for the purposes of s 849(2)(c) or (d), an associate of Bain or Dr Burt. It was suggested that Dr Burt and Bain were "representatives" of LCI for the purposes of s 849(4). That, in my view, is clearly not so: the reason why it is not so emerges if one proceeds from the definition of "representative" in s 9 to the definition, in the same section, of "securities representative" and thence to s 94. 1052 The other basis - so far as I can see, the only other basis - on which it might be said that LCI or Australis was an associate of Dr Burt or Bain appears in s 15(1)(a) of the Corporations Law which provides that an associate reference includes a reference to a person in concert with whom the primary person is acting, or proposes to act. "Associate" in that sense would require, I think, that it be established that in relation to the recommendation or, possibly its subject matter, Bain or Dr Burt acted pursuant to a consensual arrangement with LCI or Australis, as the case might be. I do not think that is established in relation to LCI and my earlier findings lead inevitably to the conclusion that it is not established in relation to Australis. 1053 The importance of that matter is that if either LCI or Australis were an associate of Bain or Dr Burt for present purposes, it would no doubt follow that the benefits or advantages required to be disclosed, if there were a securities recommendation, would include those which LCI or Australis might receive: leading inevitably to the revelation of the prospect of a transaction between LCI and Australis in relation to the New World shares. But the question of the adequacy of Dr Burt's disclosure (on his own evidence) would arise equally, if there were a recommendation, even if neither LCI nor Australis were an associate of Bain or Dr Burt. In that case what would be required to be disclosed would be "particulars of" any of the matters referred to in s 849(2)(c) and (d) relating to Bain and Dr Burt. To say merely that Bain and Dr Burt were retained, would receive a success fee and had a prospect of appointment as underwriters is not, I think, to give "particulars": Gantry Acquisition Corp v Parker & Parsley Petroleum Australia Pty Ltd (1994) 51 FCR 554. 1054 On the other hand - and this was not the subject of detailed argument - I do not think that Dr Burt was required by s 849(2)(a) to disclose the prospect of a transaction between LCI and Australis. What would have been required, I think, was disclosure of the amount of the success fee which Bain was to receive upon subscription of the amount required to pay out the licence and of the likelihood that it would be appointed underwriter in respect of an offer of securities in the ultimate licence holder. I doubt that the relevant "particulars" would necessarily include the precise conditions required to be met before the success fee would be payable or the identity of the company whose securities were to be underwritten. That conclusion, I think, is justified having regard to the apparent object of the provision. What is of concern to the "client" is the existence and extent of the adviser's pecuniary interest in the subject matter of the advice given: see the commentary on s 849 in Butterworths Australian Corporations Law Principles and Practice, p 72,145. 1055 In the end, however, and despite some submissions by senior counsel for Bain and Dr Burt, I do not think it matters, if there was a breach of s 849, what precisely it was that Dr Burt was obliged to disclose. Compensation is recoverable under s 852 in respect of a breach of s 849 (or s 851) where (s 852(1)(d)) "the client suffers loss or damage as a result of that act or omission" - "that act or omission" being (s 852(1)(b)) an act or omission in reliance on the recommendation. In other words the question is not, what would Mr Hadid have done had a disclosure of any particular kind been made by Dr Burt on 15 November? The real question relates to the part played by any "recommendation" of Dr Burt in inducing Mr Hadid to sell his shares on the terms of the share sale agreement. Again, there is a degree of artificiality involved in this. No evidence was given by Mr Hadid as to his reliance on a recommendation which might be found to have been made by Dr Burt, on the basis of acceptance of Dr Burt's account of his conversation with Mr Hadid. More realistically, all the evidence of Mr Hadid as to reliance went to what he would have done had he found out about the Australis transaction. If Dr Burt's statements were properly to be construed as recommendations, I do not think that any loss which Mr Hadid claimed to have sustained resulted from his acting on that recommendation. 1056 My reasons in relation to s 849 result equally in the failure of Mr Hadid's claim based on s 851. That section provides: "851 (1) A securities adviser who: (a) makes a securities recommendation to a person who may reasonably be expected to rely on it; and (b) does not have a reasonable basis for making the recommendation to the person; contravenes this section. (2) For the purposes of subsection (1), a securities adviser does not have a reasonable basis for making a securities recommendation to a person unless: (a) in order to ascertain that the recommendation is appropriate having regard to the information the securities adviser has about the person's investment objectives, financial situation and particular needs, the securities adviser has given such consideration to, and conducted such investigation of, the subject matter of the recommendation as is reasonable in all the circumstances; and (b) the recommendation is based on that consideration and investigation. (3) A person who contravenes subsection (1) is not guilty of an offence." Again, the section applies only if there is a securities recommendation. In my view, for the reasons already given, there was none. Nor, again for the reasons already given, was any action in reliance on the recommendation causative of any loss which Mr Hadid claims to have suffered. The considerations are precisely the same as those which arise in relation to s 849.

19. Overall result of findings; some comments on the evidence 1057 The result of the findings I have made is that Mr Hadid's claim fails in its entirety and will be dismissed. I shall, nevertheless, deal briefly with some other issues raised both by the statement of claim and by the defences, because findings on those matters may be helpful if any of the conclusions I have reached are held to be wrong. In view of the range of theoretically possible findings, however, it is not practicable to do so comprehensively. 1058 This case is, of course, of great importance to the parties. Very considerable resources, both private and public, have been lavished upon it. The consequences, to any party, of success or failure must be very significant; not only the financial consequences. No doubt the parties have attempted resolution by means other than litigation fought, at great length and at enormous expense, to a conclusion. Hints or suggestions, made during the hearing, that that might be a sensible course had no perceptible result. 1059 That provides an important element of the context, I think, in which it is appropriate to consider suggestions made, particularly and strongly by senior counsel for Bain and Dr Burt, that to a large extent Mr Hadid's case - and the evidence led in support of it - was a collaborative concoction. It should be said immediately that counsel did not seek by that submission to impugn by any means all witnesses called by Mr Hadid. But the submissions did extend at least to the evidence of Mr Hadid himself, and to that of Dr Gadir, Mr Noah, Mr Egan, Mr Cooper and, if only to a very limited extent, Mr Blanks. A number of particular matters were relied on in support of the submission. They included Dr Burt's evidence of Mr Hadid's soliloquy, during the Regent Hotel negotiations, about the way in which he conducted litigation; the evidence of Mr Egan and Mr Cooper as to Mr Hadid's requirement that they deliver to him their documents concerning the transaction; aspects of Mr Hadid's evidence which, it was said, established that, having received other people's documents, he pored over them in the way he described to Dr Burt (an example was the correspondence between Mr Cooper's file note of the conversation with Mr Elliott on 18 November and the apparently resulting discrepancies between Mr Hadid's evidence about that conversation and Mr Cooper's account of it); evidence of Mr Hadid, Dr Gadir and Mr Blanks about discussion between them of certain of the events of which evidence was given; and a suggestion that certain of the evidence of Mr Noah should be taken to represent an attempt, after all other witnesses to the facts had come and gone, to remedy gaps or deficiencies which had been exposed in their accounts. If the collaborative concoction hypothesis were right, of course, it would provide a ready explanation of such matters as the broadly consistent evidence of a number of witness that, on or about 11 November, Mr Heller made significant representations which he denied having made. 1060 But the hypothesis involves a very serious charge against several people, including two who have particular duties to the Court and it would be a remarkable thing indeed for Mr Hadid to mount, and the other witnesses to agree to support, litigation such as this which - on senior counsel's hypothesis - all knew to be founded, largely if not exclusively, on lies and which they all conspired to support by giving false evidence. Equally remarkable, perhaps, would be the circumstance that, having thus conspired (and Mr Hadid having devoted large resources to the endeavour), they then proceeded to carry out the conspiracy so inexpertly. If one accepted the hypothesis, some discrepancies might be expected; discrepancies either deliberately introduced to give verisimilitude or arising accidentally because of the imperfection of all human endeavour; but surely not such matters as Mr Noah placing at critical meetings people said by no one else to have been there or giving evidence of critical representations made by Mr Heller during visits to Stanmore which no one else said he made; or the evident lack of coordination between Mr Cooper and Mr Hadid as to the circumstances of the telephone conversation with Mr Elliott on 18 November. A finding of contrivance of the kind submitted would, I think, be made only if the Court were persuaded to a strong conviction that it had happened. Despite all the matters to which I have referred in dealing with credit, I am not so persuaded. 1061 The evidence does establish, in my view, that Mr Hadid was generous to those who supported him (there was evidence of substantial payments, usually in exchange for deeds of release) and attracted both loyalty and belief. A striking example, I think, of the latter characteristic is the evidence of Mr Blanks that, despite everything that others had said to the contrary and the actual continuing failure to attract investment, he believed in the correctness of Mr Hadid's assertion that a 30 per cent free carry was attainable. The evidence establishes that there was discussion about critical events, as it is natural that there would have been. I do not think it is profitable to attempt to form a view, much less express a finding, as to the extent to which particular parts of the evidence might have been false to the knowledge of the witness or might, on the other hand, have been a product of genuine recollection, however that recollection may have come to be formed or held. In my view it is sufficient to do as I have done: that is, to consider aspects of the evidence of the witnesses bearing upon the confidence one may have in it when it is deployed, even where corroborated by other witnesses whose evidence is subjected to a similar examination, in support of the serious allegations which Mr Hadid has made against the respondents. I have stated the result of that process, as I have undertaken it. I do no think it is necessary or appropriate for me to go further. 1062 There is one other matter relating to credit. Because it has not been necessary for me to do so in order to reach the findings which I have made, I have not discussed the submissions made in relation to Mr Price's credit. It is appropriate, however, that I deal briefly with those submissions. Mr Price was among those whose credit was attacked on the basis of the Meridian negotiations. For reasons given in relation to other witnesses, that attack fails. Several miscellaneous matters were referred to which, it was suggested (perhaps relatively mildly), demonstrated a willingness to prevaricate. There are not many of them and I shall deal with them in the order in which they appear in the submissions on behalf of Mr Hadid. · Refusal to accept the St Louis document was an agreement 1063 I have found that the document did not represent a concluded agreement. The comment is, in any event, a very brief and incomplete summary of an extended section of Mr Price's cross‑examination. I have re‑read the transcript of it. Mr Price's answers were direct and unequivocal. I do not see any prevarication. · Denial that he was aware of code names - the Australis instructing solicitor's file name was "Lent Acquisition" 1064 Again I have re-read the section of the transcript referred to. Again I see no evidence of prevarication. The solicitors' file was opened on 12 November. There is no evidence that Mr Price gave the instructions. Nor is there any obvious reason why, if he did know the code names, Mr Price would have seen any need to lie about it, or any point in doing so. · His active involvement in implementing Project Midsummer, his contact with Dr Burt and Mr Heller from 5 November 1993 to 14 November 1993, and his urgent flight to Philadelphia 1065 Once again, I have read the transcript references. I am afraid that the point sought to be made eludes me. There is no doubt that Mr Price, prompted possibly by Mr Cosser as well as Dr Burt, was actively involved in the negotiations with Mr Neil Brown leading to the Meridian transaction. It is equally clear that he had dinner with Mr Heller on one occasion and met Dr Burt at least once or twice. I have found that by the latter part of the period referred to, Australis, and equally Mr Price, had undoubtedly formed the view that the satellite licence was well worth pursuing. Where the evidence of prevarication is to be found in Mr Price's evidence, in that context, I do not know, unless it is in his denial (consistent with the evidence of the other participants) that he was aware of the detailed progress of negotiations between Mr Heller and Mr Hadid. But I see no reason to disbelieve that evidence. The answers given by Mr Price in the sections of the transcript referred to have the same characteristics as those which I have already discussed. · His evidence that he expected Lenfest would tell Mr Hadid about Project Midsummer provided a confidentiality agreement was arranged 1066 I have already made findings about that matter. · His refusal to answer questions frankly about whether he expected Lenfest would tell Mr Hadid about Project Midsummer 1067 The assumption behind the comment is, I think, that this is a matter which Mr Price must necessarily have thought about and formed a clear view of at the time. For reasons already given, I am not convinced that that is so. It was not a matter in which he had a direct concern. His dominating concern, in my view, was that nothing should be disclosed which would prejudice Australis, as a public company, in the marketplace. · Denial that he ever had a copy of the St Louis agreement 1068 Australis, by some means, undoubtedly obtained a copy of it, which was discovered. Mr Price gave unequivocal evidence that he did not receive a copy. His recollection might be incorrect. Again, however, it is not at all easy to see why he would lie about it. There is no doubt that he signed the document. There is equally no doubt that he renegotiated some of its terms in West Chester. It does not matter whether he had obtained a copy or not. · Denial that he saw the 1 November 1993 Project Midsummer/Bains' fees letter, which must have been annexed to the letter of 3 November 1993 1069 For reasons already given, I think the clear likelihood is that the "fees letter" was not annexed to the letter of 3 November 1993. · Assertion that no other documents were received by him 1070 The same response is, I think, appropriate. What does it matter? Why would Mr Price lie? · His attempt to convey "disinterest" in Project Midsummer. His actions subsequent to St Louis confound such an idea. Two firms of solicitors acting for Australis are briefed; the Brown agreement is signed. There is contact between himself and both Mr Heller and Dr Burt 1071 I have already indicated that in my view, at least from 5 November, Australis and Mr Price demonstrated no lack of interest in the satellite licence. My difficulty, however, is in knowing what is intended by the reference to an attempt to convey "disinterest" in Project Midsummer: no transcript references were given in the submission. Presumably what is referred to at least includes Mr Price's evidence, corroborated by Dr Burt, that he did not expect that, in the cold light of day, LCI would provide the very substantial sum necessary to take up the licence. There is no necessary inconsistency, however, between that sentiment, expressed immediately following the St Louis meetings, and the attitude taken by Australis, and by Mr Price himself, following Mr Price's return: that is particularly so, perhaps, once Mr Price discovered that negotiations with Mr Hadid were being pursued by Mr Heller, on LCI's behalf, in Sydney. That is the period during which the Meridian negotiations occurred, Mr Price had his meetings with Dr Burt and serious activity on the part of the solicitors seems to have begun. 1072 Those being the matters urged against Mr Price's credit, the attack does not succeed; and I see no reason why I should regard Mr Price's evidence as unreliable. Again it is striking - and the point is worth making - that by comparison with the serious matters raised in relation to Mr Hadid and a number of witnesses called by him, the matters asserted against the credit of the witnesses called by the respondents are, for the most part, relatively trivial. It should be said also that where potentially more serious matters were raised - the best example, perhaps, being the submissions about the drama commissioning agency and the negotiations of 15 and 16 November - the attack was significantly blunted by the fact that the proposition asserted, being itself somewhat remarkable and, if true, highly discreditable, was not squarely put (in some instances not put at all) to those involved.

(a) Documentary releases 1073 LCI, Mr Lenfest, Bain and Dr Burt all relied on releases contained in the two agreements executed on 17 November 1993, one being the agreement for sale and purchase of the shares in New World, and relating to licence B, the other relating to licence A. The parties to each are LCI and Dr Burt, described as "Purchasers" and Mr Hadid and the other shareholders of New World or UCOM Australia, as the case may be; they are described as the "Shareholders." Each agreement incorporates broad indemnities and releases. As a matter of construction the indemnities are, I think, of no significance for present purposes: the indemnities by the Shareholders relate to claims against New World or UCOM Australia. The releases in the New World share sale agreement are expressed as follows: 10.1 Each party hereby unconditionally and irrevocably releases the other from any claim, demand or cause of action (whether based in contract, tort, fiduciary obligation, statute or otherwise) arising prior to the signing of this Agreement. 10.2 The Shareholders hereby unconditionally and irrevocably release the Purchasers and their nominees, successors and assigns from any claim demand or cause of action (whether based in contract, tort, fiduciary obligation, statute or otherwise) arising at any time (whether before or after the signing of this Agreement): (a) in respect of any act, matter or thing done or omitted to be done in relation to Licence B up to the signing of this Agreement including, without limit to the foregoing, the manner in which capital (loan and/or equity) is raised in future by New World, the exploitation of Licence B and the conduct of business pursuant to the exploitation of Licence B …" (The balance of clause 10.2 is not relevant). The terms of 10.2(a) reveal some haste in their composition. There is an obvious curiosity about a release in respect of past acts, including, without limitation, future acts. But that is by the way, because it is past acts which are in question and the terms of clauses 10.1 and 10.2 are about as broad as they could be. 1074 The releases in the other agreement, relating to licence A, are drawn somewhat differently but are also very broad: "1.3 Each party hereby unconditionally and irrevocably releases the other from any claim, demand or cause of action (whether based in contract, tort, fiduciary obligation, statute or otherwise) arising prior to the signing of this Agreement or arising out of the letters of 29 August 1993 referred to in Recital D. 1.4 The Shareholders hereby unconditionally and irrevocably release the Purchasers and their nominees, successors and assigns from any claim demand or cause of action (whether based in contract, tort, fiduciary obligation, statute or otherwise) arising at any time (whether before or after the signing of this Agreement) in respect of any act matter or thing done or omitted to be done in relation to Licence A up to the signing of this Agreement." 1075 But for any possibility that either agreement might be set aside in equity or, perhaps, varied by way of relief under s 87 of the Trade Practices Act, the terms of those provisions are, I think, plainly apt to release the claims pursued by Mr Hadid in this proceeding. That release, equally plainly, operates in favour of LCI and Dr Burt. It is by no means clear, however, that it operates to release anyone else - particularly, Bain or Mr Lenfest. Clauses 10.1 and 1.3 are expressed only to release the parties. There is no provision in either document defining the parties to include nominees, successors or assigns. Clauses 1.4 and 10.2 purport to release, among others, "nominees" of the Purchasers as well; but there is, so far as I know, no evidence of any nomination; the documents are not expressed to be deeds or to be executed under seal; and it is by no means clear how a nominee would obtain enforceable rights under either agreement in respect of wrongs which it (as opposed to one of the Purchasers) might have committed. That matter was not the subject of substantial argument, and I shall say no more about it. 1076 Bain and Dr Burt relied also on the mediation agreement. Both Bain and Dr Burt are parties to that document. By clause 2, UCOM, its shareholders and LCI appointed "Burt as agent for Bains as the Mediator …. ." Clauses 3 and 6, so far as they are relevant, provide as follows: "3. Acknowledgment The parties acknowledge and agree that the Mediator shall be under no obligation to disclose any information to any of [New World], the Shareholders or [LCI] during the course of any mediation under this Agreement. [New World], the Shareholders and [LCI] further acknowledge and agree that they will not dispute any mediated settlement nor take any action against the Mediator if it transpires that there was information in the possession, custody or control of the Mediator, the Mediator did not disclose that information to any of [New World], the Shareholders or [LCI], and any of them did any act or omitted to do an act which it would not have done were it aware of the information. Further each of [New World], the Shareholders and [LCI] shall indemnify and keep indemnified the Mediator against any and all liabilities, claims, demands, actions, suits, proceedings, costs, damages and expenses arising out of or in relation to the non‑disclosure of that information. … 6 Liability 6.1 Except in the case of fraud, the Mediator shall not be liable to the parties or any of them upon any cause of action whatsoever for anything done or omitted to be done by the Mediator pursuant to this Agreement and [New World], the Shareholders and [LCI] jointly and severally hereby release and indemnify and keep indemnified the Mediator against all actions, suits, proceedings, disputes, differences, accounts, claims, demands, costs, expenses and damages of any kind whatsoever (including for, but not limited to, defamation, bias or other misconduct), whether: (a) under or in any connection with contract; (b) in tort for negligence, negligent advice or otherwise; (c) otherwise at law (including by statute, to the extent that it is possible to so exclude liability) and in equity generally, including without limitation for unjust enrichment." If my findings as to the absence of fraud are correct, then there is no obvious reason why those provisions would not apply in accordance with their terms. If I accept, as I do, Dr Burt's evidence about the circumstances in which Mr Hadid signed once only, the provisions bind Mr Hadid personally. If I am wrong in my conclusion as to the absence of fraud then, at least if the fraud related to the mediation, clause 6.1, no doubt, would not apply. In any event, the provisions are limited, I think, to the course of the mediation itself. If, for example, Bain or Dr Burt was under an obligation to disclose information about Australis, then I do not think the mediation agreement would excuse them for breach of such an obligation. Equally, there would be at least a question as to how far the mediation itself extended. It may not, for example, have covered events during the afternoon of 16 November or on 17 November. Again, these matters were not the subject of argument. 1077 The real problem is that if Mr Hadid did not suffer loss, or is not likely to suffer loss, by reason of a contravention by any of the respondents of the Trade Practices Act or the Fair Trading Act, the respondents do not need to rely on the releases. If, on the other hand, Mr Hadid suffered, or was likely to suffer, loss because of a contravention, then a question would arise whether, as a matter of discretion, Mr Hadid should have relief under s 87 of the Trade Practices Act or s 72 of the Fair Trading Act: such relief might include a declaration that the releases were void or an order varying the agreements by omitting them. Counsel for LCI and Mr Lenfest argued that relief under s 87 would not in any event be granted to Mr Hadid because, having been advised that he was entitled to rescind the share sale agreement, he elected instead to affirm it and to receive the promised benefits under it; and, at the same time, he himself relies on the releases, among other matters, to defeat LCI's cross‑claim against him. Those are strong considerations. Having made the findings I have made, however, it is not appropriate for me to attempt to indicate how the discretion under s 87 might have been exercised had other findings (involving the question, which particular findings?) been made.

(b) Alleged oral release of Bain and Dr Burt 1078 This defence is based on Dr Burt's evidence of a conversation he had with Mr Hadid on 1 December 1993 (par 374). What is said is that Mr Hadid agreed to take no legal action against Dr Burt or (by inference) Bain in exchange for Dr Burt's agreement to help by way of introducing a potential investor in licence A. Dr Burt effected an introduction; the agreement accordingly, it is said, precludes Mr Hadid from maintaining this proceeding against Bain or Dr Burt. The critical words said to have been spoken by Mr Hadid are "It's all behind us now, I have forgotten about it all, I'm not going to sue you, I'm not going to take any legal action and you should be comfortable with that" and "… you have got my undertaking that I harbour no ill‑will towards you, I don't want to sue you, I have got no interest in legal action and I'll never take any against you." 1079 Mr Hadid denied that he said any such thing and gave an entirely different version of conversations which he claims to have had with Dr Burt at about that time, evidence which in turn was denied by Dr Burt (see pars 371 to 373). I do not accept that the conversations took place in the terms alleged by Mr Hadid: particularly, I do not believe Dr Burt would, a short time after 19 November, have denied that until 18 November he had knowledge of discussions with LCI and Australis: a denial which, he would have realised, the terms of the Australis Stock Exchange announcement would have made incredible. Even if he had attempted such a denial, it is, I think, almost inconceivable that Mr Hadid would not have asked for further explanation. If Mr Hadid's handwritten letter of complaint to Dr Burt makes anything clear, it is that Mr Hadid had no doubt that Dr Burt was intimately involved in what had happened. As for Mr Hadid's evidence of a later conversation, during the same period, in which he declined to give a release, saying "it's your duty to try and assist us because you promised to do Licence A for us anyway", followed by Dr Burt's immediate agreement to see what he could do, that is a reference, no doubt, to Mr Hadid's evidence - which seems to me strikingly contrary to the probabilities - that during the Regent Hotel negotiations Dr Burt promised to underwrite licence A at a free carry of 30 per cent. The difficulty with Mr Hadid's evidence about that conversation is that if Dr Burt had made that promise, but nevertheless in a conversation about assisting with licence A had insisted upon a release, it is scarcely conceivable that either would have let the other off the hook so easily. 1080 That, however, does not conclude the matter in favour of Bain and Dr Burt. It was common ground that the acceptability of Dr Burt's evidence alone was the issue in relation to this defence: if it were accepted, the defence would succeed; if not, it would fail. 1081 The genesis of the conversation between Dr Burt and Mr Hadid was undoubtedly Dr Burt's conversation with Mr Lynch on 24 November. The evidence is set out in pars 366 to 368. I have no hesitation in accepting Dr Burt's account of that conversation. His handwritten note supports the substance of it; his account was not challenged. Mr Lynch (plainly in Mr Hadid's camp) was not called; and the substance of what was said is summarised in a letter which Dr Burt wrote to Mr Hadid the following day. Curiously, given the terms of the letters of complaint and Mr Hadid's attitude a little later (see par 387), the conversation with Mr Lynch and Dr Burt's letter to Mr Hadid suggest that Mr Hadid's real complaint, at that stage, was against LCI; the complaint was not that Mr Hadid had been actively misled but that he believed that LCI had undertaken to keep him fully informed and had failed to do so; and the practical help requested of Dr Burt was to be directed, in part, towards making peace between Mr Hadid and LCI. The critical part of Dr Burt's letter to Mr Hadid reads as follows: "I am happy to help you if I am able, but you should know that the threats and allegations that have been made by yourself and Ucom recently are upsetting and unhelpful. If you and the shareholders are genuinely prepared to stop making threats against Bain and me, to confirm you have abandoned any actions that may be contemplated, and would honestly like me to do what I can to raise the necessary deposit, please sign and return a copy of this letter to me. I will then promptly open discussions with Gerry on the basis that last week's allegations are all behind us. On this basis I will try to act as a peacemaker and assist you in the deposit on 'A' but, as before, you must understand that I cannot act as your adviser, and I cannot guarantee results. I look forward to meeting with you to put some of the events of last week behind us." 1082 Mr Hadid did not sign and return a copy of the letter. But plainly and understandably Dr Burt was seeking to make any assistance he might give conditional on a release and it would be surprising indeed if, in his later conversation with Mr Hadid, that topic was not pursued. 1083 Events shortly after the conversation are important also. The events are described in pars 376 to 380. What is particularly important about the evidence on which the account I have there given relies - that of Mr Hadid, Mr Johnston and Mr Elliott - is what the witnesses say about a requirement, and the withdrawal of the requirement, that a release be signed. It is necessary to look at the evidence in a little detail. Mr Elliott said that he was instructed by LCI to attend the meeting on 3 December 1993; he believed that his instructions came from Mr Morris, LCI's general counsel. His purpose in attending the meeting was to obtain a deed of release. He was to obtain it "through" Mr Johnston. He did not recall Mr Hadid being called to the telephone to speak to Dr Burt; he did not recall Mr Hadid and his colleagues leaving the room, followed shortly by Mr Johnston. He left the meeting, however, without a signed release; and he was aware that the licence A transaction proceeded and that the funds remitted to pay the deposits were released. It may reasonably be inferred, though Mr Elliott did not give evidence of this, that Mr Elliott received some instructions, by some means, to the effect that what happened was not flatly contrary to LCI's requirements. 1084 Mr Johnston gave evidence that Dr Burt told him that "Gerry wanted a release before he would release his money." He believed that a form of release was provided by "our solicitors, … Clayton Utz". Mr Johnston's understanding of what was to happen appears clearly enough from the following exchange: "In any event the plan was, was it, that as you understood it, that Mr Elliott was also to attend with the release so that Mr Hadid was to sign the letter which had been received from Uncanny and he was to sign the release document which was to be brought up by Clayton Utz and thereafter you were at liberty to make the payment to the Government? - Thereafter I was to talk with them to get authorisation to make that payment, yes." 1085 Mr Johnston's evidence was that the Uncanny documents were discussed, there was some delay involving discussions between Mr Hadid and Dr Burt (on the telephone) about the documents and some necessary common seals were retrieved. Mr Johnston then said that "as part of the funding proposal we wanted a release to be signed and the release was tabled". What happened next, according to Mr Johnston, appears from the following somewhat lengthy, but important passage in his cross‑examination: "Yes, what happened then? - Albert and his advisers read the release; Albert said it was unacceptable, he wouldn't sign it; they talked about it for a short time and then decided that that wasn't part of the deal; we talked with Wayne on the phone - I talked with Wayne then Albert talked with Wayne who said that we wanted - Wayne said that he wanted it and I conveyed the message as well. But Dr Burt was insistent on the execution of the document, was he, as part of the arrangements? - Yes. You relayed that to Mr Hadid? - Yes, then Albert and Martin Cooper and Robert Lynch said that that was it, the deal was off and packed their bags … Could I just stop you for a second before you go on? Did you say, relaying Dr Burt's words, that unless the document was signed there is no deal? Did you say words to that effect? - Yes. Did Mr Hadid respond, very well, no deal it is, words to that effect? - Correct. Rose and left with his people? - Yes. Then what did you do? - I told Wayne. Dr Burt was still on the phone? - Yes. You said, well, I've told him that and he and his advisers have left? - Yes. Dr Burt presumably said, get after him and bring him back and tell him that we'll sign without the release? - No, he said I'll have to go and talk to the others. Did you know from your conversations who the others were? - I can't recollect specifically. Well, what is your understanding of who he had at his end of the show? - I assumed he was talking to Lenfest, Gerry Lenfest, or his advisers and to Gallagher. That's your assumption? - Yes. Then what happened? Was there a significant pause while that apparently occurred? - There was a delay and then Wayne I think rang back and said, well, go and tell Albert he doesn't have to sign the release. So what did you do then? - So I went downstairs and went looking for Albert. Where was he? - He wasn't that far away. Where was he? - He was just in front of Grosvenor Place, the building in which our offices are. Still with his advisers? - Yes. … And you approached the group and you said what? - I believe Wayne says you don't have to sign the release." According to Mr Johnston, the party then returned to Bain's offices and the settlement proceeded. 1086 Mr Johnston's account of those events is substantially consistent with Mr Hadid's. It is somewhat odd that Mr Elliott, if he remained at the meeting throughout those events, had no recollection of the circumstances in which the release was first insisted on and then waived. He believed that "it must have been indicated to me some time during the evening that the release would not be forthcoming but I don't recall any specific, any discussions at all about it". He did not recall informing LCI that the release had not been signed; nor did he make a note about it. There can be no doubt, however, on the evidence I have recounted, that he went to the meeting with a form of release expecting it to be signed; it was not signed; the fact that it was not signed was not a matter of concern; he must have been satisfied, by something that occurred during the evening, that it was no longer needed. 1087 Dr Burt's only recollection of conversations which he had with Mr Hadid on 3 December was: "I had a couple of conversations with Mr Hadid about that time because the Century people were keen to progress and I negotiated with Mr Hadid on behalf of Century - I was advising Century in that matter - an arrangement, and that would've been talked about." That was followed by this evidence: "Did the assurances given to you on 24 November by Mr Lynch and the assurances given to you by Mr Hadid on 1 December to the effect that Mr Hadid would not take legal proceedings against you have any influence on your subsequent conduct, and if so what? - Yes, both groups of assurances had the most important influence on me. In what respect? - I considered that the allegations were withdrawn and that there would be no further threats or action in regard to them, and that everyone had calmed down and settled down and was happy with the state of play, and on that basis I was happy to become involved in this second deal, so I moved the A licence forward." A little later he gave this evidence: "… Mr Hadid has testified to a conversation on or about 3 December, … in which you said to him, 'Albert, now we're getting close to signing the deal, before we complete the deal I want you to sign the releases, the one which Rowan has given you'? - No. He's testified … that he said to you, Wayne, you and I've discussed this before, I'm not signing any releases? - No. He's testified that you said, 'In that case there is no deal'? - No." Matters were clarified somewhat in cross‑examination: "On 3 December you understand that there would be a number of persons gathered together to implement the arrangements which you had reached with Mr Hadid? - Yes that I had reached with him amongst others, yes. … Right. Did you have representatives of any of the various interests whom you have represented at different times present at the meeting in question, let us start with Australis? - Yes, I didn't cause them to be there but I understand that Mr Crase was there. So far as Lenfest was concerned, was there any representative there on their behalf? - Yes I'm aware Mr Elliott was there and I assume he was there on their behalf but I'm not certain … What interest did you understand Lenfest to have in the matter? - Cooperation agreement that was being entered into by this transaction. Bains, was there any representative there of Bains? - Yes, my colleague Mr Johnston, and perhaps some of the other colleagues of ours were there, Mr Johnston was running the meeting as it were. You yourself were in touch with the meeting by telephone? - Yes I was occasionally in touch by telephone. And was the basic reason for your maintaining contact with the meeting as it progressed your anxiety about a signing of a release document by Mr Hadid? - No. Was it not something that you had required or asked be put to Mr Hadid at the meeting as part of the arrangements in question? - I don't think I initiated it. I was aware that Mr Hadid was being asked for a release. Were you aware that Mr Hadid was being told that the whole arrangement was contingent upon him signing a release? - But he didn't sign one. … Is it not abundantly clear, Dr Burt, that you were having Bains approach Mr Hadid to seek to obtain a release at a point in time when he might be thought to be vulnerable to pressure of this kind? - No, I had had three days of dealing with Mr Hadid. If I wanted a release, I would have made it - a written release, I would have made it a condition of introducing him to these people." 1088 There is, of course, no necessary discrepancy between the evidence of Mr Elliott and that of Dr Burt. Indeed, Mr Elliott's evidence might be taken as providing some support for Dr Burt's account: if events such as Mr Johnston and Mr Hadid described occurred in Mr Elliott's presence, it might be expected that he would remember them. But equally there was no suggestion that Mr Johnston was not a truthful witness and, as I have said, I accept that he was truthful. It is difficult in the extreme to believe that his evidence of the events is a figment of his imagination or results from some trick of memory. The effect of his evidence is that while Dr Burt may not have been the person principally insisting upon a release, and then dispensing with the requirement, he was the person who transmitted the successive instructions to Sydney. I accept Mr Johnston's account as substantially correct; that necessarily involves at least a failure of recollection on the part of Dr Burt (in circumstances where, if he were merely the transmitter rather than the initiator of instructions, a failure of recollection might be less surprising than at first sight appears). 1089 That brings me back to the conversation on 1 December. Dr Burt identified a handwritten note of the conversation. His evidence of it was typically long and detailed. It is divided into two quite distinct parts. There is an introductory part dealing with the question of releases and whether Mr Hadid would sue. There is then a section dealing with the substance of ideas which Mr Hadid had in mind and ways in which Dr Burt might assist. That latter part is recorded in the note; the former part not at all. Dr Burt's evidence of the former part was as follows: "With the assistance of this file note would you tell his Honour what, as you recollect, was said in this conversation? - There had been no reply to my letter and I said to Mr Hadid, 'Albert, it's Wayne, I'm travelling, how are you going with the A?' He said, 'Oh, well, we're struggling along.' And I said, 'Have you received my letter?' He said, 'Yes, but I'm not going to reply.' And I said, 'Well it would be quite useful if we could put all this behind us.' And he said, 'Well, we have, haven't we?' And I said, 'Well, that's what I thought with our conversation with Mr Lynch.' And I said, 'That's why I sent you the letter in fact based on that conversation.' And I said, 'You should sign it and send it back.' He said, 'Look, Wayne, don't ask me for a release and I won't ask you for an apology.' And I said, 'What do you mean?' He said, 'Well, look it's all behind us now, I have forgotten about it all, I'm not going to sue you, I'm not going to take any legal action and you should be comfortable with that.' And I said, 'Well, is that your firm assurance because that's the one that's been given to me by Mr Lynch?' And he said, 'Yes, you have got my undertaking that I harbour no ill‑will towards you, I don't want to sue you, I have got no interest in legal action and I'll never take any against you.' And he said, 'But would you be prepared to help me?' And I said, 'Well, if you sincerely mean those assurances then I'd look at it.' And he said, 'Yes, I do, I mean them.'" That is another striking example of a conversation recalled in detail without the support of any contemporaneous writing. I use that general term, because there is no document in evidence which records assurances such as those which Dr Burt gave evidence. Plainly, and naturally, Dr Burt was concerned to be assured that he and Bain would not be sued. His letter (which shows signs, I think, of legal assistance in its preparation) is clear evidence of that. But, not for the first time in this case, one is led to wonder why, particularly in the case of a reasonably prolific note taker, if Dr Burt sought written assurances on a matter which he regarded as very important and failed to get them - was met, indeed, with a flat refusal to provide them - and chose in the circumstances to rely on oral assurances, he did not record them. And the point is reinforced by the concluding paragraph of the letter of 9 December 1993, which I quoted in par 381, in which Mr Hadid expressed to Dr Burt his doubts and concerns about the role of Century. The concluding paragraph should be repeated: "I like, and am very happy for Gerry and I hope he makes many millions. I will not consider signing any releases. Why do you keep pushing this point? Don't ask for a release and I won't ask for an apology." No doubt it is possible that Dr Burt noted mentally, without seeing any need to provoke Mr Hadid by telling him so, that Mr Hadid's protestations were in vain because he had already, for good consideration, agreed not to sue. But I am unconvinced that that is probable. I am not satisfied that the conversation took place in the terms recollected by Dr Burt and in my view the defence of oral release, if Bain or Dr Burt needed to rely on it, would fail. 1090 I should add a footnote. It is that the parties were content, apparently, to proceed on the basis that relief under s 87 of the Trade Practices Act would not be available in relation to the oral agreement not to sue. At least as a matter of principle, I am not convinced that that is right. The contracts which may be affected by orders made under the section are not in terms limited to those entered into immediately in consequence of contravening conduct which has given rise to actual or likely loss. I do not see why, in appropriate circumstances, relief should not be available in respect of a later release of liability, or a covenant not to sue in respect of, the contravening conduct. As a matter of discretion, of course, no doubt the Court will be slow to interfere with a release given by a competent person who has an appreciation of what it is that is being released. Because on my findings the issue does not arise and because the question was not argued, it is inappropriate to go further.

(c) Acquiescence 1091 This was a defence relied on by all respondents in answer to Mr Hadid's equitable claims. In substance, the question is if (contrary to my findings) any of those respondents breached one of its alleged fiduciary duties to Mr Hadid, would Mr Hadid's claim for compensation for loss or damage resulting from the breach be defeated by acts amounting to laches or acquiescence? 1092 In brief, the facts said to support the defence are that Mr Hadid, having been advised on or shortly after 18 November 1993 that he had the right to rescind the share sale agreement, nevertheless elected to affirm and to receive benefits under it; he took advantage of the added value which the Australis transaction in relation to licence B gave to licence A; he solicited and obtained assistance from Dr Burt in funding the deposit on licence A; during 1994 he continued to assert a right to a drama commissioning agency; and he delayed in commencing the proceeding until January 1995. 1093 The respondents relied on the well known statement of the law in Lindsay Petroleum Company v Hurd (1874) LR 5 PC 221 at 239, 240: "Now the doctrine of laches in Courts of Equity is not an arbitrary or a technical doctrine. Where it would be practically unjust to give a remedy, either because the party has, by his conduct, done that which might fairly be regarded as equivalent to a waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases, lapse of time and delay are most material. But in every case, if an argument against relief, which otherwise would be just, is founded upon mere delay, that delay of course not amounting to a bar by any statute of limitations, the validity of that defence must be tried upon principles substantially equitable. Two circumstances, always important in such cases, are, the length of the delay and the nature of the acts done during the interval, which might affect either party and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy." 1094 Reliance was placed also on the observations of Knight Bruce LJ in Clegg v Edmondson (1857) 8 De GM & G 787 at 814, quoted with approval and applied in Warman International Ltd v Dwyer (1995) 182 CLR 544 at 561: "A mine which a man works is in the nature of a trade carried on by him. It requires his time, care, attention and skill to be bestowed on it, besides the possible expenditure and risk of capital, nor can any degree of science, foresight and examination afford a sure guarantee against sudden losses, disappointments and reverses. In such cases a man having an adverse claim in equity on the ground of constructive trust should pursue it promptly, and not by empty words merely. He should shew himself in good time willing to participate in possible loss as well as profit, not play a game in which he alone risks nothing." 1095 In principle, there is no reason why discretionary equitable defences, including the defence of laches or acquiescence, should not be available in answer to a claim for equitable compensation for breach of an equitable duty. I know of no case, and counsel referred me to none, in which a court has considered such a defence to such a claim. But the principle seems clear enough; in his paper "Compensation for Breach of Fiduciary Duty" in Youdan, Equity, Fiduciaries and Trusts 1989, the Hon Justice Gummow wrote (p 88): "In addition to cases governed by the need for the plaintiff to do equity, some items of loss may be treated in equity as irrecoverable because there is an equitable defence such as laches or acquiescence applicable in the particular case or because the loss was not caused, in the necessary sense, by the breach of duty." What the author there emphasises, as do the authorities to which I have referred, is that requirements of practical justice are considered having regard to the particular remedy sought and to the circumstances of the case. Conduct which precludes rescission will by no means necessarily provide a defence to a claim for compensation. Equally, circumstances which render an order for an account of profits inequitable might not similarly affect a claim for compensation for loss resulting from breach of duty. It is not, I think, sufficient, in circumstances where there is no actual release or its equivalent (for example by estoppel), that a party having the right to rescind a transaction induced by breach of duty elects not to do so, but instead chooses to receive entitlements under it, continues to deal with other parties on the basis that the transaction stands and delays for a period (which is by no means exceptionally long) in commencing proceedings. It is not easy to see why circumstances merely of that kind should be held to deprive a party of a right to be compensated for loss resulting from breach, as opposed to some other remedy which may be substantially inconsistent with the election or which, given the affirming conduct, may have inequitable consequences (the quoted passage from Clegg provides an obvious example). 1096 If, therefore, I were wrong as to the existence and breach of fiduciary duty, and it were established that loss resulted from the breach, I do not think that a claim for compensation for the loss would be defeated by the defence of acquiescence.

(d) Estoppel 1097 This is a defence on which Bain and Dr Burt rely. The circumstances are those relied upon as establishing the alleged agreement not to sue. I have quoted the evidence of Dr Burt said to establish reliance. But no estoppel could, I think, arise simply from the conversation with Mr Lynch because plainly Dr Burt was not content to rely upon that. The defence, therefore, depends on acceptance of Dr Burt's account of his conversation with Mr Hadid on 1 December. For the reasons I have given in relation to the other defence, I would not hold that the defence of estoppel succeeds.

(e) Want of parties 1098 This defence, on which all respondents rely, is to the effect that duties pleaded against the respondents were owed to other persons in addition to Mr Hadid; those persons were not joined; therefore the proceeding is improperly constituted and Mr Hadid is not entitled to relief. The defence plainly, I think, is not applicable to the claims under the Trade Practices Act or the Fair Trading Act. And it was not suggested that the alleged duties, if they were owed, were owed to Mr Hadid jointly with other persons rather than severally or, perhaps, jointly and severally. No application was made at the trial to join other parties. I do not know whether any such application was made during the interlocutory course of the proceeding and, if so, with what result. But I do not think there is any reason why, in the circumstances, O 6 r 7 of the Federal Court Rules should not be given its plain and full effect. Once again, given my findings on the substance of the case, this conclusion does not matter. It may matter if the case goes further and my findings are found to be incorrect.

21. Damages 1099 The breach of contract alleged against LCI and Mr Lenfest, and also against Bain, is their "failure … to disclose to the Applicant any expression of interest by Australis, the Project Midsummer Proposal, the Action Plans and/or the 3 November Agreement or any other expression of interest by Australis in the acquisition of, or investment in, Licence B." That failure is alleged also to have been a breach of the duty of care owed to Mr Hadid by LCI, Mr Lenfest and Bain and to have been a breach of the fiduciary duty owed to Mr Hadid by LCI, Mr Lenfest, Bain and Dr Burt. There are also more particular allegations of breach of fiduciary duty but the particulars all appear to relate to the non-disclosure, placing duty and interest in conflict by dealing in circumstances of non-disclosure, profiting (presumably through that same dealing) and making the alleged fraudulent representations. Conceptually, therefore, the damages for breach of contract would be those flowing from the failure to disclose. That equally would be so in relation to the allegation of negligence. There might be a question, which I need not pursue, and on which I heard no argument, as to what precisely, if the alleged fiduciary duties arose, amounted to a breach of those duties and, particularly, when the breach occurred: if, for example, the orthodox view, that the fiduciary's obligation is not to disclose but rather is not to deal in the absence of disclosure, is correct (and that orthodox view has, I think, considerable support in Breen and also, despite some submissions to the contrary, in Brunninghausen), then it might be that breach of fiduciary duty occurred later than breach of contract, leading to different approaches to the calculation of damages, or compensation, resulting from each. 1100 In relation to the Representations, the statement of claim pleads a lost opportunity, as follows: "42 As a result of acting in reliance upon the Representations as aforesaid the Applicant lost the opportunity to: a) seek to deal directly with Australis in relation to the exploitation of Licence A and/or Licence B; b) seek to enforce the Joint Venture Agreement in relation to a dealing with Australis by Lenfest Communications;

c) seek to have any other investor approached to compete with Australis as to the terms upon which that investor might be permitted to exploit either, or both, Licence A or Licence B; and in particular: d) maintain his free-carried interest as described in the Joint Venture Agreement or negotiate the nature and extent of some other free-carried interest in the entity that would exploit the licences; e) negotiate for a continuing role in, and provision of, management services in the operation of the licences or an interest in the operator entity; f) negotiate for more extensive involvement in the provision of drama content programming and thereby the opportunity to earn more extensive fees from production of and/or procuring of drama; g) negotiate for the provision of equipment and services by sale or lease to either or both of the operator of the licences or subscribers of Pay-TV services; h) negotiate for rights as franchisee of regional broadcasting within the Pay-TV network established under the licences or either of them, with Australis or any other investor." That pleading, no doubt, covers the causes of action both under the Trade Practices Act and the Fair Trading Act and in deceit. There was no suggestion that the allegation of conspiracy produced any additional complications in relation to the claim for compensatory damages. Because counsel for Mr Hadid did not press separately for any component of damages arising from the "Licence A Representations" (and for reasons already given in relation to them), it is unnecessary to say more about that aspect of the case. 1101 In essence, then, Mr Hadid's claim is that each of the alleged wrongs done to him resulted in the loss of an opportunity to deal, in ways other than those in which he ultimately dealt, with his rights (as controlling shareholder and director of the two successful bidders) in relation to the two licences. He gave evidence as to ways in which he would have approached the exploitation of his rights, including in negotiations with LCI, if Australis' interest had been disclosed to him at various times from late October until 15 or 16 November 1993. 1102 The opening of the case on behalf of Mr Hadid and the evidence of experts whose reports he tendered suggested that the claim for damages was a very large one indeed, under several heads. Though, as will appear, that evidence played almost no part in final submissions on behalf of Mr Hadid, it (and evidence in response to it) occupied a good deal of time during the trial and it is appropriate that I describe it briefly and refer to difficulties with it which may well explain why it played so slight a part in the case on damages which senior counsel for Mr Hadid ultimately sought to make. 1103 Mr Ian Ferrier (Mr Ferrier), a senior and experienced chartered accountant, provided several reports. In his first report, he made what amounted to an estimate of the losses suffered by Mr Hadid as a result of his loss of the opportunity to deal with the two licences. Mr Ferrier valued the two licences using the discounted cash flow method, substantially on the basis of a UCOM business plan of October 1993. He applied a discount rate of 20 per cent. Mr Ferrier assumed, or accepted, the availability of a free carried interest of 30 per cent in each licence. Otherwise, though he carried out some testing, he proceeded on the basis that the assumptions of the model which he used were correct: assumptions, for example, as to the effect of competition from cable or MDS, penetration rates and "churn" rates (that is, loss of subscribers). He took no account of events after 17 November 1993. On that basis, he valued licence A at $627,000,000 and licence B at $599,000,000. That led to two possible outcomes for Mr Hadid, depending upon whether he retained a 15 per cent free carried interest in licence A or licence B. If the latter, Mr Hadid's interest in licence B was worth $90,000,000, his 2 per cent retained interest in licence A was worth $13,000,000 and (according to the report) Mr Hadid would have sold a 26 per cent interest (total available free carry of 30 per cent less 4 per cent free carry retained, as to half each, by Mr Hadid and LCI) having a value of $163,000,000. Thus the worth of Mr Hadid's interest would have been $266,000,000. If, on the other hand, Mr Hadid had retained 15 per cent of licence A, a similar calculation would have produced $262,000,000 as the value of his interest. In each case there should be deducted the total amount ($33,000,000) which he actually received in respect of each of the two licences, so the damages would be either $233,000,000 or $229,000,000. Mr Ferrier accepted that those figures required adjustment to take account of the interests of minority shareholders. 1104 What is immediately apparent is that the exercise which Mr Ferrier was asked to undertake resulted in a valuation of Mr Hadid's interest assuming that both licences were paid for at the current bid prices, that transmission would commence in July 1994, that equity investors would be found who would provide the necessary working capital (the projections contemplated negative cash flow for three years) and that a 30 per cent free carried interest would be available in the holder of each licence. The history of the search for investors up to late October 1993, makes it plain, I think, that some, at least, of those assumptions were heroic. 1105 That, however, is by no means the end of the matter. Mr Ferrier's valuation also depends largely on the validity of the assumptions underlying the model on which he based his work. A number of those assumptions were attacked by an expert witness called by the respondent and defended by Mr Peter John Cox (Mr Cox), a consultant to the media industry, called by Mr Hadid, whose experience in the industry extended over twenty years. Mr Cox was concerned, in summary, to do two things: first, to give an opinion as to the reasonableness of the assumptions on which the UCOM model used by Mr Ferrier was based and, secondly, to offer explanations, given the value of the licence acquired by Australis, for Australis' failure. The actual history of Australis from late 1993 can, I think, be fairly summarised as one of continuous but unsuccessful struggle against substantial odds, leading, in 1998, to its failure and liquidation. Mr Cox attributed the failure of Australis largely to what he characterised as a series of misguided decisions which it made. 1106 Unfortunately, Mr Cox's evidence exemplified, in a number of respects, the failings which the Court's practice direction, incorporating guidelines for expert witnesses, seeks to eliminate. Those guidelines, it should be said, were published after Mr Cox prepared his report, but they represent a common understanding of the proper role of an expert witness. It is plain that Mr Cox regarded his role as that of an advocate for the party by whom he was called. That approach vitiated a number of the opinions he expressed both as to the assumptions behind the model and as to decisions made by Australis. An example of the former may be found in his evidence about penetration rates (that is, broadly, the number of potential subscribers who, in a given period, became actual subscribers). In a series of paragraphs dealing with an opinion expressed by Mr Wayne Lonergan (Mr Lonergan), an expert accountant called by LCI and Mr Lenfest, to the effect that the penetration rates assumed in the model were unduly optimistic, Mr Cox referred to various models prepared by others and concluded: "46 UCOM/Lenfest's projected penetration of Australian households is more conservative than major Australian stockbrokers. 47 The statement of Mr Lonergan that 'Mr Ferrier has overestimated the likely rate and timing of market penetration by New World (UCOM/Lenfest)' is unsupported and incorrect as at November 1993 and for a considerable time thereafter." In cross-examination Mr Cox gave this evidence: "Would you not agree generally that the penetration rates depicted in this model were optimistic in the extreme? - I don't think necessarily in the extreme but they were certainly optimistic. Unrealistic, would you agree? - With the benefit of hindsight. Unrealistic assessments to be made in November 1993 of the penetrations to be achieved by this business over the ten years to which the model relates, do you not agree? - Well, a number of parties made those assessments and they all believed them realistic. Could you answer my question? - You mean in my opinion? I want your view, whether you would regard … ? - I would regard them as optimistic. Unrealistic? - Unlikely. Improbable, do you agree? - To achieve the full amount, yes. Not penetrations which you have advised were commercially realistic in November 1993, would you agree? - Correct." A little later, after suggesting that he had been "badgered" into some of his earlier answers, Mr Cox gave this evidence: "What you agreed with, Mr Cox, was that these penetration rates were commercially unrealistic. Do you want to withdraw that evidence? - The commercial - I think you were associating the word commercial with unrealistic. Are we drawing conclusions from the unrealistic on commercial or are we saying that they're unrealistic, the penetration levels? I can't draw a conclusion that as a result of them being unrealistic, that they're therefore not commercial which I think is what you're trying to draw all the time and I certainly, your Honour, if I have said that did not mean it to be that way. You understood Mr Lonergan to be saying quite plainly … that these rates were too high? - Yes. And that is a proposition you yourself agreed with, is it not? - Yes. Well, then how was it that you were able to swear, as you did … that you could not find a valid proposition of fact or assumption by Lonergan which undermined the validity of the assumptions in the UCOM model if that was the case? - Because on the whole basis of this report being done as to what other people thought the penetration rates should be, they weren't unrealistic. The UCOM/Lenfest ones I didn't consider to be unrealistic in those terms. But you agreed with Lonergan's criticism, did you not? - I personally think that they may be too high, yes. But you thought you should conceal that view from the Court, did you? - Well, as we found with yourself, we don't express all views each time. …. If you were telling in your affidavit and your report, the truth, the whole truth and nothing but the truth on the topic of penetration rates you would have had to, would you not, reveal your own personal view that the penetration rates recorded in the UCOM model of 5 October 1993 were too high? - If I was giving my view, yes, I would have had to. If you were telling the truth, the whole truth, and nothing but the truth you would have had to reveal that fact, would you not? - In expressing my own personal view I may have. I don't believe that I have to present all views though on all subjects. I don't see that as my responsibility." A similar problem emerged in relation to Mr Cox's opinion as to the likelihood, in November 1993, of competition from cable operators and in relation to rates of churn. 1107 There are similar problems also with Mr Cox's evidence about decisions made by Australis. Two striking examples were evidence which Mr Cox gave about the availability of particular types of decoders ("set‑top boxes") at the time when Australis was attempting to start its business, and his evidence about the way in which Australis conducted negotiations with suppliers of programs. It is not necessary to go further into detail. As to the matters with which Mr Cox dealt, I prefer the evidence of Mr Lonergan and other witnesses called by the respondents, notably Mr Stanley Gunn and, on Australis' negotiations with the movie studios, Mr Kenneth Ziffren (as well as evidence which was given by both Mr Heller and Mr Price). 1108 For those reasons, which go to the assumptions upon which Mr Ferrier's evidence was based and the particular enquiry he undertook, I would not accept his evidence as a reliable guide in considering whether any, and if so what, loss was suffered by Mr Hadid as a result of a lost opportunity to deal with the licences other than in the way he did. Mr Ferrier provided a separate report as to the value of the "franchisee market": that is, the right to distribute Australis' subscription television services in areas of Australia not directly serviced by Australis itself. In that respect, however, Mr Ferrier does not - because the information he had did not enable him to - estimate any particular loss suffered by Mr Hadid. I do not accept Mr Hadid's evidence that he sought to negotiate, with LCI, arrangements in relation to franchising or equipment leasing. Mr Heller denied it and there is no suggestion in any of the contemporaneous notes or other documents that either matter was a topic discussed between Mr Hadid and Mr Heller. In any event, senior counsel for Mr Hadid made it clear in final submissions that no damages were sought specifically in relation to franchising or equipment leasing. 1109 Expert evidence was given also specifically in relation to the drama commissioning agency. Mr Hadid gave evidence that had he been negotiating under less pressure and had he realised that Australis was involved he would have negotiated an agency on a more advantageous basis. He would have sought to negotiate directly with Australis; he would have sought a longer term; and he would not have agreed to be tied exclusively to Australis. Mr Hadid tendered a series of reports of Mr Ian Bradley (Mr Bradley), a drama producer with long experience in the Grundy organisation. The essence of Mr Bradley's reports was that Mr Hadid, as owner of the drama commissioning rights, would be able to build upon them a business of producing and distributing Australian dramas through which he would earn substantial revenues. He used as his "template" a model based on a budget of $5,000,000 annually available from Australis and the use of Film Finance Corporation funding. That, in Mr Bradley's opinion, was a conservative approach and other methods of financing were available, the use of which might increase the return to the producer and distributor. 1110 Mr Bradley did not, however, quantify any results which might be achieved by alternative approaches to financing, and the approach on which he based his template was subjected to detailed attack by two expert witnesses called by the respondents, Mr Matthew Carroll (Mr Carroll) and Mr John Borglund (Mr Borglund), both of whom had substantial experience in the field and were impressive witnesses. In the result, I would not find that Mr Hadid suffered a quantifiable loss, attributable to any of the wrongs alleged against the respondents, through being unable to proceed in the manner proposed by Mr Bradley. I appreciate that that is a brief and summary way of dealing with a question which involved a good deal of detailed and complex evidence. But there is, I think, little purpose to be served in selecting a mid‑point between that treatment and a detailed discussion of the evidence. And the latter course is not warranted, in my view, because no attempt was made in closing submissions of senior counsel for Mr Hadid to suggest a basis on which I would prefer the evidence of Mr Bradley over that of Mr Carroll and Mr Borglund or to suggest a basis on which I might hold, on that body of evidence, that Mr Hadid had, as a result of any of the alleged breaches of duty by the respondents, suffered a loss which could be quantified. 1111 There was a submission that the evidence indicated that, if one had an effective drama commissioning agency, one had the capacity to use the fees flowing from the agency "against the production of product directed toward not only satisfying the Australian content requirement but also to optimising the capacity of the product to be sold elsewhere". But that proposition does not advance matters far in suggesting an answer to the question whether Mr Hadid would have sought to obtain and, if so, would have obtained from LCI (let alone Australis) an agreement which would have permitted activities of the sort contemplated by Mr Bradley, rather than an agreement of the much more limited kind contemplated by the heads of agreement attached to the share sale agreement. It is not insignificant that Mr Cooper offered advice to Mr Hadid as to what he saw as deficiencies in the terms of the drama commissioning agency; and there is no evidence that Mr Hadid either himself took up, or instructed Mr Cooper to take up, any of those matters with LCI. 1112 The case put in final submissions was that if Mr Hadid had known about Australis' interest he would have been able to negotiate with LCI for a substantially better result than the one which, in the event, he obtained, and would have done so: a substantially better result both in relation to the terms on which he ceded control of licence B and as to the benefits obtainable from his control over the existing holder (UCOM Australia) and subsequent bids for licence A. The argument did not draw upon any of the expert evidence called by Mr Hadid, though it did claim some support in a report of Mr Mark Bryant (Mr Bryant), an expert accountant called by Bain and Dr Burt (though, it should be said, it reached a conclusion substantially at odds with that propounded by Mr Bryant). It was to the effect that LCI proceeded on the basis that the transaction with Australis was of great value. It would provide benefits to LCI - particularly, it would release a "premium" - which LCI, rather than lose entirely, must rationally have been prepared to share with Mr Hadid and the other UCOM shareholders. If Mr Hadid had known about the possibility or likelihood of a transaction with Australis, he would have pressed demands for much larger benefits than he actually obtained; and, because it would have appeared to be in the interests of LCI to do so, LCI would have substantially conceded those demands. When the matter is looked at in that light, it was said, later events are irrelevant. What mattered was LCI's perception in November 1993. Thus, for example, LCI's rational perception must have been that the technical services agreement which it had negotiated in principle with Australis was of substantial value; the fact that, in the event, no money was ever paid under that agreement and the fact that it was terminated are of no significance; nor are the actual struggles and ultimate demise of Australis of any significance. What matters, and all that matters, is the way things rationally appeared in November 1993. 1113 It may be said immediately, I think, that if the damages claimed represent the loss of an opportunity to negotiate a better deal with LCI, then senior counsel for Mr Hadid was right in submitting that future events, not in contemplation in November 1993, are not relevant. The case is not analogous to one in which what happens in the conduct of a business after its sale may throw light on its true value at the date of sale (Kizbeau Pty Ltd v W G & B Pty Ltd (1995) 184 CLR 281) or one where what, at the time of an accident, appeared as a possible or probable consequence has, by the time of the trial of an action for damages, either become fact or, on the other hand, ceased to be possible (Willis v The Commonwealth (1946) 73 CLR 105 at 109 per Latham CJ and at 116 per Dixon J). Nor, though there were numerous references in argument to Sellars v Poseidon Ltd (1994) 179 CLR 332, do I think that the principles stated in that case have much direct application to this. This is, after all, not a case in which, on Mr Hadid's argument, one is required to ascertain, first, on the balance of probabilities whether, in the absence of actionable conduct, a transaction would have been entered into in the past and then, by assessing the relative likelihood of various events which might have occurred had the transaction been entered into, to assess the damage sustained by reason of the loss of the opportunity to enter into it. The exercise here is, in a sense, much more straightforward: it is to ascertain how much more Mr Hadid might have demanded had he known all the circumstances and how much LCI would have conceded in order to gain the shares in New World and, then, enter into the transaction with Australis. 1114 Nor does the argument depend on Mr Hadid having been able to participate, in any way, in the transaction with Australis. Though it was not conceded that I should accept Mr Price's evidence that he would not be interested in a transaction which involved any continuing participation by Mr Hadid, the effect of the argument was that it did not matter whether I accepted that evidence or not: the benefits contended for would have come from LCI and would not necessarily have involved Mr Hadid having any continuing interest in the owner of licence B. 1115 The argument relied also on the 29 August agreement and on the correspondence between the parties as to how benefits might be shared if the shares in New World were sold. That aspect of the argument was expressed in oral submissions as follows: "… so far as the Lenfest side of the negotiation or indeed the Ucom side of the negotiation is concerned the logical upper limit that Mr Lenfest would sensibly be likely to pay is simply that amount that Mr Hadid and his fellow shareholders [were] entitled to get anyway [if] the 29th agreement applied to the transaction in contemplation. That on the face of it is the 50/50 split of the benefits in crude terms because the transaction in contemplation does not envisage the use of free carry in the classic sense. It's using the surrogate of allowing any benefit to be released in an increase in the value of the shares." The argument proceeded as follows. The value of the technical services agreement was equivalent, in LCI's collective mind, to the premium at which LCI acquired its Australis securities over the price at which those securities traded on the market. That was made explicit, it was said, in Mr Plant's memorandum to Mr Lenfest of 11 January 1994: "For our investment of $A138 mm we received approximately 180 million shares of Australis at a buy in rate of $A.75. While Australis' stock was then trading at $A.52, we paid a premium in return for a technical services agreement providing revenue over 10 years on a formula basis." Thus if the market's perception of the value added to Australis by its acquisition of licence B is reflected by the increase in the price at which Australis shares were traded in the period shortly following the acquisition, then the "premium" released to LCI was one-half (treating LCI as a 50 per cent shareholder of Australis) of the increase in Australis' market capitalisation; and one-half of that premium was what Mr Hadid, together with the other UCOM shareholders, was reasonably able to expect, having regard to the terms of the 29 August agreement. If one took 11 January 1994 (the date of Mr Plant's memorandum) as the appropriate date for ascertaining the premium, its amount was $234,000,000. If it were objected that the parties could not know, in mid-November, precisely what the premium would be, the answer was that the parties would have negotiated a "wait and see" arrangement under which Mr Hadid would receive his appropriate share of whatever the premium should in fact turn out to be. 1116 Alternatively, it was said, one might take as a guide to LCI's appreciation of the value of the licence a version of the UCOM business plan and projections. One might reasonably use that as a guide because of the substantial part played by the LCI representatives, particularly Mr Heller, in its development and refinement; and from the circumstance that LCI was prepared to use that document as the basis of its presentation to Cox and Continental. If one took a version of the business plan produced on 4 October 1993, it attributed to a business based on licence B a net present value of $190,000,000. That figure might rationally have been taken as the likely premium, one half of it ($95,000,000) being attributable to LCI and available to be shared with the UCOM shareholders, giving them $47,500,000. 1117 Other aspects of the evidence were referred to as supporting the proposition that LCI must have seen the licence as having, in Australis' hands, a value much greater than the sum LCI paid to acquire it. There was an extremely optimistic valuation issued by BT Securities Australia Ltd, a version of which was received by Mr Lenfest and a more detailed version by Mr Plant, at the beginning of October. Secondly, there was Mr Dougherty's proposal. A draft agreement was submitted by Mr Dougherty's company, Pankhan, to Mr Hadid, and a copy was sent to Mr Heller, on 15 October 1993. By that agreement Pankhan would have bought the shares in New World for $15,000,000. It would have provided the following additional benefit: "The purchaser will on the written request of the vendor (a) cause the vendors' nominee or nominees to receive 5% of the issued shares in the company; (b) pay to the vendors' nominee or nominees the sum of $15,000,000.00 at the discretion of the vendor such option or payment not to be exercised or required before the expiration of three years from the date of issue of the licence." 1118 The argument seems to assume that the 5 per cent shareholding and the additional payment were cumulative, rather than alternative, benefits. I am by no means sure that that is right. In any event, the argument relied upon Mr Plant's written suggestion that Mr Dougherty's offer be pursued "without panic" and his evidence that, after discussions with BBY, he regarded the offer as having some credibility. Reliance was placed also on the circumstance that on 16 November BBY stated in writing that it was prepared to enter an underwriting agreement "subject to terms and conditions to be agreed … to assist in raising the required amount of capital for the B Licence". The submission was that LCI must at least have regarded the Australis transaction as having a greater value than Mr Dougherty's offer, to the extent that LCI was prepared to part with a very large sum of money in order to bring the Australis transaction about (the Pankhan transaction, of course, would not have required LCI to part with any more money at all). 1119 In reliance on Mr Hadid's evidence, it was submitted also that Mr Hadid, if forewarned about the Australis transaction and having ascertained beyond doubt that LCI would not finance the acquisition of licence A, would have both resumed the search for investors in licence A and also have negotiated (successfully) with LCI, as a fall-back, for the provision of a deposit on the next bid should the current bid cascade, so that Mr Hadid would then have been in the position to negotiate in relation to licence A without time pressures and would thus have been able to obtain greater benefits than he did in relation to the bid the deposit on which was paid on 3 December. 1120 I am not inclined to place much weight on the Pankhan proposal. Mr Lenfest gave evidence that towards the end of October he believed that "it was a common understanding that that was not a real proposal …"; Mr Heller's note of the meeting on 12 November with Mr Hadid, Dr Gadir, Mr Blanks and Mr Cooper recorded a statement by him, in response to a question by Mr Hadid, that Mr Dougherty "wasn't for real". The 16 November letter from BBY, even if LCI knew about it, was hardly calculated to inspire confidence. 1121 One difficulty - and a considerable one - with the way in which the damages case was put is that none of those involved - particularly Mr Lenfest - was directly confronted with any of its elements. I have discussed already (pars 672 to 681) the question whether, in the circumstances of the actual negotiations, Mr Lenfest was prepared to offer more than $13,000,000 (particularly $15,000,000) and found that he was not; and I have referred to the fact that he was not challenged, in cross-examination, about his evidence that he authorised Mr Heller to offer no more than $13,000,000 and instructed him, if that was not accepted, to "come home". That finding, and the considerations on which it is based, provide obvious difficulties in the path of the present argument. It does not, however, theoretically rule out the possibility that if confronted with a knowledgeable, and accordingly more aggressive, Mr Hadid, Mr Lenfest might have taken a different approach. It is not easy, however, to conclude that he would have done so where the circumstances which, it is said, would have activated him have not been put to him for comment. For that and for several other reasons, to which I shall come, I do not think that Mr Hadid's argument is made out. 1122 I accept that, if he had known about the Australis proposal, Mr Hadid would very likely have increased his demands and been more persistent in them. He might well have taken an optimistic view of the likely worth, and of market perception of the worth, of licence B in the hands of Australis. And Mr Lenfest himself was clearly of the view that if Mr Hadid were informed about Australis he would demand more money; he would take an "unreasonable" approach to negotiations; he would "hang up" the deal. But I have already referred at length to Mr Heller's notes and his communications with Mr Lenfest during the November negotiations. There is no sign in that material of any perception on the part of either Mr Heller or Mr Lenfest that, if only they could acquire New World from Mr Hadid and his fellow shareholders, they would have possession of a gold mine. The "pull out" and "come home" evidence and notes suggest not an artificial constraint resulting from a deliberate decision to keep Mr Hadid in the dark but a real limit on what LCI was prepared to pay or provide in order to acquire the New World shares. 1123 And the indications as to what LCI might reasonably be expected to think do not all point in the direction for which Mr Hadid contends. Hi Vision and UCOM both bid at levels well in excess of the amounts tendered by established media organisations. Both Cox and Continental had expressed the view that the prices bid for both licences were too high. Mr Heller made a note recording that reaction as late as 29 October 1993. Time Warner had, earlier, reacted similarly (par 155). Mr Lenfest and Mr Heller approached Dr Malone seeking assistance from TCI on 6 October. Mr Lenfest attributed this response to Dr Malone: "We think … Hadid paid too much for the licences. I don't think you'll be able to get the US investors, and I think you made a mistake and I'm not interested." There is no reason to doubt Mr Lenfest's evidence on that matter. Dr Malone's reaction, when asked to provide his written consent as a director in November, amply corroborates it. Mr Price gave evidence that at St Louis he thought, and said, that "most of the critics of the process were indicating that the prices that were being talked about were absolutely outrageous". When at West Chester he discovered that the total amount expended was $138,000,000 rather than $130,000,000, he said that he told Mr Lenfest that "I thought he was off his mind". I accept that evidence. Obviously, what was said at West Chester merely reinforced what had been said earlier: it was too late to have any effect on LCI's conduct of its negotiations with Mr Hadid. 1124 Then there is the Meridian option. I have referred to the calculations made by Mr Heller both before and during the Regent Hotel negotiations. It was submitted on behalf of Mr Hadid that little weight should be attributed to the Meridian option. Though it was in fact the next bid for licence B, and though it was generally thought likely to be the next in line, Mr Heller (and hence LCI) did not know that that was the case. Additionally, however, the New World bid was not about to cascade (time had not begun to run) and there must have been at least some room for doubt about what Mr Hadid might have been able to achieve in relation to the New World bid and, for that matter, what claims he might have made in relation to the Meridian bid. Those are potentially significant considerations. There are, however, in my view two problems with them. One is that, again, they were given no investigation in evidence; they were not explored with Mr Lenfest or Mr Heller. The other is that, whatever the logic of it might have been, Mr Heller's notes and his recommendations to Mr Lenfest treat a deal with the UCOM shareholders and exercise of the Meridian option as true alternatives, so that it made sense to compare the respective costs of taking each course. As I have commented previously, I find the evidence about the approach taken by Mr Lenfest and Mr Heller at the time of the negotiations a good deal more persuasive than inferences which might be drawn from ex post facto justifications prepared by Mr Plant largely, apparently, for the benefit of Dr Malone or anything that might be inferred, for example, from documents prepared by LCI's bankers. 1125 Other matters were referred to by counsel for LCI and Mr Lenfest. It was said, for example, that it was not appropriate to suppose that LCI would regard the division of "premium" as appropriate to be done by analogy with the 29 August agreement. The crucial difference was that that agreement - and subsequent correspondence about the division of sale proceeds - did not contemplate LCI outlaying, in cash, the full amount required to pay up the licence. It was said on behalf of Mr Hadid that the cash outlaid, or part or it, might have been recouped from the subsequent underwritten offering of Australis shares (Mr Plant accepted, in his evidence, that such a transaction was a possibility). And bank documents indicate that at least in discussions between LCI and its bankers the possibility of a return of capital from an initial public offering was contemplated (but this clearly arose from negotiations commenced before the suggestion of Project Midsummer: the proposal was that the $85,000,000 facility might be used by LCI to finance the purchase of either or both licences and that: "In the event that the Borrower receives return of capital from any initial public offering of equity or other offering of equity raised in connection with one of the Licenses, such return of capital shall be used to permanently prepay outstandings under the Facility. However, if the Borrower intends to use such return of capital for the purchase of the other License, the foregoing shall not apply." There is no suggestion in the Project Midsummer proposal or the St Louis document which suggests that it was specifically contemplated in relation to the Australis transaction. Indeed, Dr Burt's letter of 1 November contemplated raising funds from the public "to fund the start up cost of Pay TV by satellite and MDS" and the 3 November letter prepared by Mr Heller spoke of a public offering "to raise additional capital for the operation of the company". In short, there is no evidence of any contemplation, in the context of the Australis transaction, that capital contributed by LCI would be returned; and in fact it was not returned. (Mr Lenfest gave evidence that, far from actually making a profit, LCI ultimately lost more than $US132,000,000). 1126 Counsel for LCI suggested also that, having regard to the amount outlaid by LCI, one half of the supposed premium was by no means such a windfall that LCI should readily be supposed to be likely to share it equally with the UCOM shareholders: when the uncertainties of a new and untried business are taken into account, as well as the size of LCI's capital commitment, that submission has obvious force. And even the agreement actually reached with Mr Hadid required a greater cash outlay than the facility arranged by LCI permitted. Mr Lenfest borrowed $US5,000,000 personally to make up the difference. 1127 In the end, I think, and perhaps at the risk of oversimplifying, there are two alternative ways of viewing the situation. One is that LCI saw in Project Midsummer the prospect of great profit, a prospect which it concealed from Mr Hadid so as to ensure that it would pay as little as possible for the New World shares, thus maximising its own profit; but in circumstances where it knew it would have had to pay more, and would have done so, had Mr Hadid, fully informed, insisted upon it. That is the view propounded by Mr Hadid. The other is that LCI saw in Project Midsummer a means of protecting and capitalising upon the investment (in the form of the deposits) which it had already made, offering greater certainty than any other transaction in prospect and worth pursuing if the New World shares could be obtained at a price which LCI, in addition to the other money it had already outlaid and would outlay, was prepared to pay: but that it was unlikely that Mr Hadid would agree to terms which LCI considered reasonable - particularly, would accept the maximum that LCI was prepared to offer - if he knew that New World would be acquired by Australis. That is the view that LCI propounds and it is, in my view, the view which is, on the evidence, substantially the more probable. It is sufficient to find, as I do, that LCI would not have agreed to pay more than it did. 1128 There remains the question of licence A. I see no ground in the evidence to think, however, that Mr Hadid would have succeeded in attracting investment in licence A in time to fund UCOM Australia's bid. The history of the unsuccessful attempts to find investors over many months suggests that such an outcome would have been extremely unlikely, even if the prospect that licence B would be funded (and transferred to Australis) were known. The reasons already given preclude, in my view, a finding that Mr Lenfest would have agreed to provide a deposit on the next cascade of licence A. Additionally, it must be remembered that he refused to do so during the actual negotiations; and he refused, once the Australis transaction was known, to advance the date for payment of the $13,000,000 due to the UCOM shareholders in order to enable a deposit to be paid. In any event, I would not conclude, on the evidence, that Mr Hadid could or would have achieved an outcome, in relation to licence A, better than that which he in fact achieved with Uncanny and then Century. I do not think there is any reliable evidence supporting a finding that he might have done better. 1129 For those reasons, in my view, even if I am wrong as to liability, Mr Hadid's claim to compensatory damages, or equitable compensation, is not made out. It is inappropriate, in the circumstances, that I consider the claim for exemplary damages. Such a claim would succeed only if, in several respects, findings were made very different from those I have made; and nothing is to be gained by considering what those findings, or their result, might be.

22. Cross‑claim by LCI and Mr Lenfest 1130 The cross-claim is described in pars 445, 446 and 448. It alleges three misrepresentations by Mr Hadid, all relied on also by way of defence to Mr Hadid's claims against LCI and Mr Lenfest. The first misrepresentation is that an underwriter had agreed to underwrite the capitalisation of the holders of licence A and licence B, subject only to the deposit on the licences being paid. I have indicated, in par 652, that I am not satisfied that this representation was made. The second is that MDS technology had been prohibited by Commonwealth legislation from competing with subscription broadcasting services until July 1997. I have already found (par 631) that, following his late August conversation with Mr Hadid, Mr Lenfest believed that MDS could not compete until July 1997. The question is, how did Mr Lenfest (and Mr Heller) acquire that impression? Mr Lenfest gave evidence that Ms Combs told him, during their conversation on 27 August, that "there was no pay television in Australia, no cable, no broadband MDS and that it appeared to be a very exciting opportunity to be the first to deliver pay television [to] the Australian market". Mr Lenfest also said that Mr Hadid told him that MDS was restricted to narrowcasting until 1 July 1997. Mr Heller made a note of the discussion with Ms Combs: "DBS: 2 licences 4 channels of Pay TV each Window for a number of years." It was contended on behalf of LCI and Mr Lenfest, in written submissions, that Ms Combs was to be regarded as the agent of Mr Hadid. It is sufficient to say, I think, that there is no evidence establishing an agency of the kind that would be required. It seems to me highly unlikely that Mr Hadid would say, knowing it to be false, that MDS broadcasting was prohibited until July 1997: he would have realised that the falsehood would have been promptly discovered. It is not clear how Mr Lenfest and Mr Heller obtained the impression which they did obtain. I am not satisfied, however, that Mr Hadid made the misrepresentation attributed to him. No submissions were made in support of the third misrepresentation and there is no evidence that Mr Hadid made a representation to that effect. 1131 The result is that the cross-claim fails. It would in any event fail, I think, by reason of the releases in the 17 November agreements, on which LCI and Mr Lenfest rely for other purposes.

23. Conclusion 1132 The result of these lengthy reasons is that the application will be dismissed and the cross-claim of LCI and Mr Lenfest will be dismissed also. Orders will be made accordingly on publication of these reasons. Mr Hadid should pay the costs of the proceeding, except in relation to the cross-claim of LCI and Mr Lenfest, of LCI, Mr Lenfest, Bain, Dr Burt and Mr Price. LCI and Mr Lenfest should pay Mr Hadid's costs of the cross-claim. I shall make orders to that effect on publication of these reasons but, because I have heard no argument in relation to costs and it may be that the parties may have particular submissions to make on that subject, I shall order also that the orders for payment of costs not be entered before 15 February 2000. In the light of the findings I have made, I do not think any other orders are required; nor do I think that there are any other issues between the parties requiring further consideration. Lest I be wrong about that, however, and in order to accommodate any argument about costs, I shall grant the parties liberty to apply on five days' notice. I certify that the preceding one thousand one hundred and thirty-two (1132) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lehane.

Counsel for the Applicant: Mr R J Burbidge QC with Mr N A Cotman SC and Mr D A Caspersonn

Solicitor for the Applicant: Garrett Walmsley Madgwick

Counsel for the First and Second Respondents: Mr P G Hely QC with Mr R M Smith

Solicitor for the First and Second Respondents: Clayton Utz

Counsel for the Third and Fourth Respondents: Mr T E F Hughes QC with Mr L G Foster SC and Mr J V Nicholas

Solicitor for the Third and Fourth Respondents: Phillips Fox

Counsel for the Sixth Respondent: Mr M J Slattery QC with Mr T D Castle

Solicitor for the Sixth Respondent: Freehill Hollingdale & Page

Dates of Hearing: 2 - 5, 9 - 13, 16 - 19, 23 - 26 February 1998; 10 - 13, 16 - 20, 23, 24, 26, 27, 30, 31 March 1998; 1, 2, 6 - 9, 15 - 17, 20 - 24, 27 - 30 April 1998; 1, 4, 5, 7, 8, 11 - 15, 18 - 22, 25 - 29 May 1998; 1 - 5, 9 - 12, 15 - 17, 19, 22 - 25, 29, 30 June 1998; 1 - 3, 6 - 10, 13 - 17, 20 - 24, 27 - 30 July 1998; 3 - 7, 24, 25, 27, 28, 31 August 1998; and 1 - 4, 7 - 11, 14 - 18, 21 - 25, 30 September 1998

Date of Judgment: 24 December 1999