Media Ocean Limited v Optus Mobile Pty Limited [2009] FCA 1319 | Case summary

REASONS FOR JUDGMENT 1 This is a notice of motion by the applicants in these proceedings for orders that an additional party, Sound Advertising Limited (Sound Advertising), be joined as an applicant and for leave for the applicants to amend both the second further amended application and second further amended statement of claim. 2 The proposed amendments, including the joinder of Sound Advertising, are disclosed in a draft third further amended application and third further amended statement of claim, copies of which are annexed to the notice of motion which was filed in Court today. 3 The notice of motion is supported by an affidavit from the solicitor on the record for the applicants, Nathan Mattock of Marque Lawyers, as well as a further affidavit which was read in support of the notice of motion by William Vickery, and the tender of various documents. From the point of view of the respondent, Optus Mobile Pty Limited (Optus), the evidence primarily comprised an affidavit of Lindsay Powers of Minter Ellison Lawyers, the solicitor for Optus in these proceedings. 4 The applicants' case in support of the proposed amendments can be briefly summarised as follows. 5 The applicants claim that up until the filing of Optus' further amended defence, in or about mid September 2009, both the applicants and Optus were operating on the basis of an error of fact, the error of fact being that Optus had forwarded a text message to various customers of the applicants on 24 December 2008, being a date before the applicants decided to block access to Optus' customers in terms of the use of the applicants' service. 6 In its second further amended statement of claim, in para 10, the applicants pleaded the sending of the said text message on 24 December 2008. In the further amended defence to the second further amended statement of claim, Optus admitted that the text message had been sent on the date pleaded. However, in the further amended defence filed pursuant to leave which I granted on 18 September 2009, that admission was withdrawn and instead Optus admitted that it had sent the said text message on 25 December 2008. The applicants said that they then realised that the text message could not have caused the applicants to have blocked the access to the service because, in short, the timing sequence simply does not work. Consequently, the applicants took further instructions from various people, including one of the principals of the applicants, Michael Charlesworth, and thereafter obtained for the first time, according to Mr Mattock's evidence, precise details of the actual sequence of events that occurred between 22 and 25 December 2008. As a result of obtaining those precise details, the applicants say that they were instructed to seek leave to amend the claim so as to plead a series of representations that Optus is said to have made directly to the applicants, which representations are claimed to be misleading and deceptive. 7 At the same time, the applicants were also dealing with the expert evidence of Goodwin Gower, filed on behalf of the respondent, who pointed out that the applicants appeared to be claiming damages on behalf of Sound Advertising in circumstances where the applicants had not joined Sound Advertising as a party to the proceedings. Between mid to late September 2009 and 29 October 2009 (being the date on which the applicants first notified Optus of its proposed amendments to the application, the statement of claim and the joinder of Sound Advertising) Mr Mattock was involved in meetings with his clients, the taking of instructions, the obtaining of additional evidence from Mr Charlesworth, in particular, and the redrafting of the proposed third further amended application and third further statement of claim. 8 Vodafone Network Pty Limited (Vodafone) (which is a party to two related cross-claims in the proceedings) and Optus objected to the applicants being granted leave to amend the application as proposed, including the joinder of Sound Advertising. They also opposed the proposed amendments to the second further amended statement of claim. 9 Optus made a series of submissions which I will summarise briefly. Optus submitted that the applicants have already had more than an adequate opportunity to make their case. As Mr Powers' affidavit showed, there have been a series of amendments to the pleadings already, including an application to substitute applicants, at which time, according to Optus, the position of Sound Advertising ought to have been considered. Optus emphasised that it was grossly unfair in the circumstances of this case for the applicants to be given the leave they seek a mere four weeks out from the hearing date because the applicants at all times have pressed for expedition of the proceedings. According to Optus, it was unfair for the applicants simply now to say they abandon expedition because, on Optus' version of events, the applicants have come up with a new case based on facts that the applicants knew all along. 10 Optus said the proposed amendments plead a whole new case. Mr Powers described in his affidavit the further inquiries Optus will need to make and the further evidence that Optus will need to obtain in order to address the representations proposed to be pleaded by the applicants. In addition, and contrary to Mr Mattock's suggestions in his evidence that all discovery has been completed, Optus says it is clear that there will need to be additional discovery by the applicants. Mr Powers' affidavit notes that there has been an order for security for costs in Optus' favour in the amount of $300,000 in circumstances where already the costs substantially exceed that amount, apparently being in the amount to date of approximately $580,000. 11 Mr McHugh SC, counsel for Optus, submitted that if the existing case that the applicants seek to run is hopeless because causation cannot be proved, then the applicants should start again and Optus should get all of the costs of the proceedings. If the case, as it currently stands, is not hopeless then the applicants should be held to their existing case. 12 Optus emphasised not only the newness of the pleadings but the inadequacy of the explanation as to why the amended case was not pleaded originally. This is based on evidence, particularly emails that were tendered and which appear on their face at least to show that in January 2009 William Vickery, now one of the principals of the applicants, was aware that the blocking of access occurred before Optus sent the text message in question. This led Optus to submit that either a tactical decision had been made to run the case in a particular way, or the decision that was taken to focus on the text messages as causative of the blocking is completely inexplicable given the evidence of Mr Vickery and what must have been the knowledge of Mr Charlesworth. 13 In addition, Optus said the prospects of the new case are not particularly strong. There is evidence where Mr Charlesworth describes the very matters which are now relied upon as causative of the applicants' decision to block access as mere weak assertions. According to Optus it is obvious that the real reason that the blocking occurred was because Optus had stopped paying the applicants; that, according to Optus, has nothing at all to do with the representations which are now alleged in the proposed third further amended statement of claim. Optus pointed out that Mr Charlesworth affirmed an affidavit before Optus filed its defence. In this affidavit, Mr Charlesworth asserted a reliance on the text message of 24 December 2008 as the reason for the decision to block access. Accordingly, and contrary to the applicants' suggestion, Optus said that it could not have been in any way caused by Optus' pleading. 14 In addition, Optus said that the period of about six weeks between mid-September 2009 and 29 October 2009 (being the date on which the applicants first let Optus know about the proposed amendment) is simply too long, particularly in a case where an applicant has received, as these applicants have, an expedited hearing. 15 Optus thus submitted that the case is analogous to the circumstances in Aon Risk Services Australia Limited v Australian National University (2009) 258 ALR 14; [2009] HCA 27 (Aon) leading to the conclusion that it would be well within a proper exercise of discretion to refuse the amendment. 16 From its point of view, Vodafone also pointed to the prejudice to it if the hearing date is vacated (as the applicants accepted it must be) if leave to amend is granted. 17 There has been a great deal of evidence traversed both in support and against the granting of leave to the applicants to amend their application and their statement of claim. There are certainly some inadequacies in the applicants' explanation for the circumstances which have led to the position today. Imperfection of explanation, however, is not the same as lack of explanation. Nor is imperfection of explanation the same as the making of a deliberate tactical decision to run a case in a particular way only to later alter a tactical decision when it is no longer seen to be beneficial. The evidence does not allow me to draw any inference against the applicants that they made a deliberate tactical decision to frame their case, initially on the basis of an allegation of reliance on the sending text messages as the reason for blocking access only to change that position when confronted with an obvious difficulty that the text messages appear to have been forwarded after the decision to block was already taken. 18 At worst, the evidence seems to me to suggest that in an imperfect world imperfect decisions are sometimes taken with respect to the best way in which to frame pleadings. In this regard I particularly have in mind Mr Mattock's evidence. Despite his cross-examination, Mr Mattock did not waver from the fact that he was unaware of the relevant sequence of events until sometime in mid to late September 2009. 19 While it might be possible, on the basis of the few emails and other pieces of information I have, to draw some inferences that there has been at least a significant and not particularly well-explained change of evidentiary position on behalf of Mr Charlesworth, I am mindful of the fact that while his affidavit and certain emails have been tendered there is, no doubt, a vast number of documents in this case. Presumably I have been taken to only a few of them. 20 Ultimately, as Mr Kunç SC (counsel for the applicants) submitted, I do have an explanation for why things were run the way they were. This is not the time for me to consider or rule upon the plausibility or otherwise of Mr Charlesworth's attempted recollections of why he took certain actions as set out in his affidavits. By this, I understand Mr Kunç's submission to mean that what I know from Mr Mattock's evidence is why the litigation has been run as it has been to date. What I know from his evidence is that the applicants at least appeared to have been operating under some misapprehension as to the relevant sequence of events. Whether or not it was reasonable for them to be operating under such a misapprehension is a separate point. They clearly were operating under that misapprehension which has now been clarified by reason of the events of mid to late September 2009. 21 It appears to me therefore that many of the circumstances on which Optus relies to oppose the grant of leave do not carry the weight that Optus would like me to place upon them. I accept that the applicants sought and obtained expedition. I accept that there has been a period of six weeks between when it appears that the applicants knew that they had a difficulty with their case as currently pleaded and the first intimation on 29 October 2009 to Optus of the need for the applicants to amend their application and their statement of claim. Insofar as it was suggested, I do not accept that the applicants simply sat on their hands and did nothing within that six week period. From Mr Mattock's evidence, it is apparent that considerable work was done by the applicants in that six week period to put them in a position to have the proposed third further amended application and third further amended statement of claim available for the purposes of the hearing of this notice of motion. 22 I also do not accept that the amendments can be described as an entirely new case. I accept in part the amendments involve a new case, but it is not a wholly new case in the sense of being completely outside the scope of what was originally pleaded. As Mr Kunç said, the allegations that are now made are connected with the allegations of illegality that are already on foot. Moreover, they are also connected to the web of events that are already pleaded and are the subject of dispute in the proceedings. I accept that it cannot be thought with any degree of confidence that discovery by the applicants is complete. Mr Mattock's evidence made that clear. Undoubtedly, discovery remains incomplete and further work will have to be done. I accept also the fact that these proceedings appear to have involved numerous interlocutory appearances by the parties (apparently, more than sixteen occasions since 23 April 2009) and multiple applications by both the applicants and Optus, as set out in para 20 of Mr Powers' affidavit. 23 While these matters might be regrettable, they do not undermine the fact that the essential issue on an application to amend such as this is the interests of justice, having regard, of course, to the position of both parties and the capacity for costs and delay to be incurred as a result of an application made four weeks before a hearing date and which, the applicants accept, will lead to the hearing's vacation. Nevertheless, I do not think that it would be just in the circumstances of this case to hold the applicants to their existing pleading. 24 I am also not in a position to conclude with any degree of confidence that the case the applicants now wish to run is as weak as Optus would have me think. It seems to me, at least, prima facie on the material as pleaded, the case is an arguable one. Accordingly, the issue of the prospects of success does not weigh in the balance against the applicants. 25 In terms of the issue of security for costs, essentially I am unable to deal with the issue now because, understandably, Optus has not yet been able to put forward its position on security. It is relevant that there is existing security in place and that the costs already exceed that security, but I do not think that fact can outweigh the fact that the applicants have identified at least a prima facie arguable case which they wish to put. 26 Ultimately, I do not accept that this case is on all fours with the circumstances in Aon. In Aon, the circumstances were briefly explained by French CJ in [4] when his Honour described the unduly permissive approach at both trial and appellate level to allow an application for amendment which was made extremely late, was inadequately explained, necessitated the vacation or adjournment of the dates set down for trial and raised new claims not previously agitated apparently because of a deliberate tactical decision not to do so. His Honour said that in such circumstances the person making the application bears a heavy burden to show why, under a proper reading of the applicable court rules, leave should be granted. 27 In this case, the application is not made as late as the application the subject of Aon. In Aon, the application was made on the third day of the period actually set down for a four-week hearing. In this case, the application is being made before the hearing but in circumstances where it is accepted that the consequence will be the vacation of the hearing date. 28 Again in contrast to Aon, I do have an explanation of the reasons for the lateness of this application. I accept the distinction which Mr Kunç has drawn between an explanation for why the litigation has been run as it has been and an explanation about Mr Charlesworth's changes in his evidentiary position. I have the former explanation and, ultimately, although this shows imperfections in the way that the applicants have put together their case, an application to amend is not an opportunity to punish an applicant for not getting everything right the first time around. It is true that this will lead to the adjournment of the dates set down for trial and it is true that some new claims, at least, are raised. But, as I say, it is not the case here that the applicants made a deliberate tactical decision to plead their case in a particular way from the outset. 29 For these reasons I propose to grant the leave to amend because, essentially, I accept the principal submissions made on behalf of the applicants that I have no real basis for finding any deliberate tactical decision by the applicants which have led to the current position. I also accept the nature and importance of the amendments to the case which the applicants wish to run and that if they are not granted leave to make the amendments then their claim for damages, at least for the period between 24 December 2008 (when the decision to block access was made) and the end of March 2009 (which is apparently when Optus, itself, blocked access) may not be available. This, I am prepared to infer, would be a significant part of the damages case that the applicants wish to make. 30 Further, I accept that the applicants have acted reasonably expeditiously since they became aware of the true situation. In this regard, I take into account that Mr Charlesworth resides overseas and attended Australia, according to Mr Mattock, in or about the first week of October 2009, at which time Mr Mattock took the opportunity to take detailed face to face instructions from Mr Charlesworth. 31 I also give weight to the factor that the applicants have pointed out to me in their written submissions in paras 22 and 23 - that is that the hearing date in this matter was fixed before all of the evidence had been filed and before the respondent's evidence had been filed. The hearing was fixed because of the expedition that the applicants sought and obtained on the basis of their view that corrective advertising was an essential element of righting the wrong that they alleged had been done to them. However, some of the urgency of the case has been removed, at least from the applicants' perspective, because Optus, itself, is now blocking the access to the call system. For these reasons I cannot conclude that it would be in the interests of justice to give greater weight to the position of the respondent and its proper expectation that the matter would proceed as quickly and with the greatest degree of efficiency as possible than the interests of the applicants to ensure that the case that they wish to run is able to be run so that the real issues between the parties can be heard and determined. 32 If I need to say so, I do not accept the applicants' submission that I have no discretion because Order 13, rule 22 of the Federal Court Rules is engaged, but this is a moot point, given that I have reached the view that leave should be granted in any event. 33 I also note that I do not accept a submission that the principles established in Aon are inapplicable because of the absence of a rule in this Court equivalent to the rule under consideration in Aon. But, again, I do not need to determine that conclusively in this case. Nor do I need to determine the question whether Aon effectively overrules Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146; [1997] HCA 1 (J L Holdings) or involves a different emphasis from J L Holdings. Even having regard to the principles as espoused in Aon, I am of the view that in this case the importance of the amendments to the applicants demands that leave be granted. Such leave, obviously, will be on the basis that the hearing date will need to be vacated. The applicants agree that they should pay the costs occasioned by the vacation of the hearing date and the granting of amendment. The applicants also agree that I should not make consequential orders at this stage, because all the parties need to consider their position. I accept this is the case. 34 The one outstanding issue that I can resolve today is whether the applicant should also pay the costs of the notice of motion filed today in Court. Optus relied on what it says is standard principle as reflected in the commentary on the Federal Court rules at [40,455.5] in Butterworths. Practice & Procedure: High Court and Federal Court of Australia. Sydney (2000), loose-leaf service (last updated October 2009 Service 198), to the effect that the terms that are usually imposed on a party in amending a document are that he or she must pay the costs of the application for leave to amend and/or occasioned by and thrown away as a consequence of the amendment. However, if an opponent unreasonably opposes such an application, he or she may be ordered to pay the costs of the motion for leave to amend. It is my understanding that the basis of this general principle is that an applicant seeking leave to amend has an independent obligation to satisfy the Court that leave should be granted, irrespective of the position that the respondent takes. That is, even if the respondent does not oppose an application for leave to amend, such leave will not automatically be granted. The person seeking to amend must come to the Court with sufficient material and submissions to persuade the Court that leave should be granted. Accordingly, the parties would have to attend Court for that purpose anyway. 35 Mr Kunç for the applicants said that Optus' opposition to leave was unreasonable. I do not accept that submission. Optus has been unsuccessful in relation to its opposition to the motion, but the matters it raised were relevant to the exercise of the discretion and it was entitled to raise them as matters I should consider. Mr Kunç said that the costs should be costs in the cause. However, the applicants have made a late application to amend which Optus was entitled to challenge. Its challenge was reasonable in all of the circumstances and it does seem to me that the costs of the amendment application are part of the price that the applicants have to pay for the position that they find themselves in. Accordingly, I order the applicants pay Optus' and Vodafone's costs of the notice of motion filed 5 November 2009 as agreed or taxed. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot.

Media Ocean Limited v Optus Mobile Pty Limited

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