NINE NETWORK PTY LTD v KENNEDY MILLER TELEVISION PTY

PRACTICE - REFERENCE BY COURT - APPEAL - A judge of the Commercial Division referred a contractual dispute to a referee for assessment of damages. The referee's report was made and adopted. On appeal to the Court of Appeal the appellant argued that any error of fact or law that could be shown to exist in the referee's report vitiated the judge's decision and could therefore be relied upon on appeal.

The appeal was from the decision of the judge, not the referee.

The appellant had to show error on the part of the judge.

Having regard to the principles enunciated in Homebush Abattoir Corporation v Bermria Pty Ltd (1991) 22 NSWLR 605 and Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549 such error might be

(b) error in the exercise of discretion as to the adopting of the referee's report;

(c) if the primary judge had made decisions of fact, error of fact.

It was not enough for the appellant to show error on the part of the referee.

In any event, in the present case no such error had been shown.

Gleeson CJ This appeal raises for decision the question of the nature and scope of an appeal from a judgment of a member of a Division of the Court adopting, and giving effect to, the report of a referee appointed pursuant to Pt72 of the Supreme Court Rules. That question was identified in Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 649 at 658, but it did not arise for determination in that case, and was not the subject of argument. It was, therefore, left unanswered.

The respondent, Kennedy Miller Television Pty Ltd, is a producer of mini-series and films for television, and of feature films. The appellant, Nine Network Pty Ltd, was, at the materials times, the controller and licensee of the Channel Nine Television Network We were informed in the course of argument that there was a change of control of the appellant during the course of the events giving rise to this litigation, and that was said to be of some practical significance in relation to the dispute that arose.

In 1990, the parties entered into a contract under which the respondent was to produce and deliver to the appellant "24 hours of mini-series drama". The respondent had the right to determine the number of mini-series to be made under the agreement, and the length of each. Further details of the agreement will be mentioned below when discussing the merits of the issues still in contention between the parties. The contract gave the respondent certain valuable rights in relation to the exploitation of the mini-series following production.

The contract was repudiated by the appellant and subsequently terminated by the respondent. The lawfulness of that termination was originally in dispute, but it subsequently became common ground. There arose the issue of damages. In March 1992, the then Chief Judge of the Commercial Division, acting under Pt72 of the Supreme Court Rules, referred the matter of the quantification of damages to a referee, the Hon Gordon J Samuels AC QC. After a hearing before the referee, in the course of which a substantial amount of evidence was taken, the referee made a report dated 29 July 1993. In his report, the referee identified the issues which had been isolated by counsel as arising for decision, and in respect of each issue canvassed the arguments of fact and law that had been advanced, made the necessary findings of fact on the evidence before him, stated his views on the applicable legal principles, and expressed his conclusion as to the amounts to which the respondent was entitled under each head of claim. He left it to the parties to agree upon the precise amount of damages that followed from his conclusions. There were two brief subsequent reports made at the request of the parties for the purpose of elaborating the referee's opinion on particular issues.

In October 1993, the solicitors for the respondent, pursuant to Pt72 rl3, filed a notice of motion, seeking an order that the report of the referee be adopted, and that there be judgment in favour of the respondent for a certain sum, together with an order for costs. The matter came before Giles J, who gave a brief judgment. His Honour recorded that the appellant had informed him that, whilst it wished to contend that there were certain errors in the report, it did not wish to make any submission to his Honour in opposition to adoption of the report, or the consequential judgment, but, rather, proposed to raise its complaints before the Court of Appeal. His Honour made an order adopting the report (together with the supplementary reports) and entered judgment for the respondent for an amount of $8,100,211, including interest. He also made an order for costs.

The appellant then filed a notice of appeal. Some of the grounds of appeal have been abandoned. It is of interest to note the form of the grounds of appeal that have been pursued. They are as follows:

1. The Referee erred in accepting the evidence of Mr Heads as to the sales value of the proposed mini series in territories other than the United States of America.

2. The Referee erred in accepting the evidence of Mr Heads as to the sales value of the proposed mini series in the absence of an opinion from Mr Heads as to the likely sale price of each proposed mini series in each territory.

4. The Referee erred in accepting the evidence of Mr Heads as to the sales value of the proposed mini series in that the valuation did not enable a calculation to be made of the 'clawback' in accordance with the proper construction of cl6.3 of the Licence Agreement.

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7. The Referee erred in finding that the Defendant had failed to establish that the Plaintiffs rejection of the substitute Mini Series Agreement amounted to an unreasonable failure to mitigate its damages.

8. His Honour erred in adopting the reports containing the errors set forth (above)".

One of the reasons why that manner of stating the grounds of appeal is of interest is that all that Giles J had before him, and all that this Court has before it, was, and is, the report of the referee. Mr Heads, the person referred to in a number of the grounds of appeal, was an expert called to put a value upon the respondent's loss of the opportunity to exploit the mini-series that would have been produced if the contract had been performed. Except to the extent to which the referee in his report mentions certain features of the evidence of Mr Heads, we do not have that evidence before us. For that matter, we do not even have before us the whole of the relevant contract. Those parts of it regarded by the referee as material to his reasoning are either quoted or summarised in his report. Except to that extent, we have not seen the contract. Similarly, in relation to the complaint about mitigation of damages, the report sets out the facts recorded by the referee as material to his decision on that question, but that is all we know about what went on between the parties in relation to the matter of a substitute agreement.

It is accepted by both parties that the nature of the task to be performed by Giles J was as described in Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (above). However, the parties are in disagreement as to the nature of the task to be performed by this Court. The appellant submits that, having adopted the report of the referee and entered judgment on the basis of that adoption, Giles J has adopted any errors that can be shown to have affected the reasoning in the report, and the judgment is open to challenge on appeal on the ground of any such errors, whether of fact or law, as can be demonstrated. In other words, whilst it is accepted that the proceedings before Giles J were not a rehearing of the proceedings before the referee, it is argued that, pursuant to s75A of the Supreme Court Act 1970, this is an appeal by way of rehearing, and what is being reheard is the whole of the dispute between the parties on the quantification of damages except, of course, to the extent to which the appellant is now content to accept the adjudication of the referee on any particular issue. On the other hand, the respondent contends that this is an appeal from Giles J, not the referee, and the grounds upon which the judgment of Giles J can be called in question on appeal can only be understood in the light of a proper understanding of the function which his Honour was performing. On that approach, the manner in which the judgment of Giles J is open to challenge on appeal is correlative to the nature of his task.

The historical background to Pt72 of the Supreme Court Rules is important, but it is unnecessary to repeat it. It is examined in Super Pty Ltd v SJP Formwork (Aust) Pty Ltd, and in such cases as Buckley v Bennell Design & Constructions Pty Ltd (1978) 140 CLR 1, Astor Properties Pty Ltd v L-union des Assurance de Paris (1989)17 NSWLR 483, and Homebush Abattoir Corporation v Bermria Pty Ltd (1991) 22 NSWLR 605.

"(2) The rules may make provision for or with respect to -

(a) the cases in which the whole of any proceedings or any question or issue

arising in any proceedings may be referred by the Court to an arbitrator or referee for determination or for inquiry and report;

(b) the appointment of a Judge, master, registrar or other officer of the Court or other person as an arbitrator or referee;

(c) the fees to be paid to such an arbitrator or referee;

(d) the persons by whom the whole or any part of any such fees are payable;

(e) the consequences of a determination or report by an arbitrator or referee;

(f) the manner in which such a determination or report may be called in question,

(g) whether or not, or to what extent, a determination or report may be called in question on a matter of fact or law;

(h) the provision of the services of officers of the Court and the provision of court rooms and other facilities for the purpose of a reference of any proceedings or any question or issue arising in any proceedings to an arbitrator or referee; and

(i) any other matters associated with such a reference".

Pt72 provides, in r2, that the Court may, in any proceedings, on application by a party, or by its own motion, make orders for reference to a referee appointed by the Court for inquiry and report by the referee, on the whole of the proceedings, or any question or questions arising in the proceedings. Pt72, r8 provides:

"8. (1)Where the court makes an order under r2, the Court may give directions with respect to the conduct of proceedings under the reference.

(a) the referee may conduct the proceedings under the reference in such manner as the referee thinks fit;

(b) the referee, in conducting proceedings under the reference, is not bound by rules of evidence but may inform himself or herself in relation to any matter in such manner as the referee thinks fit.

(ii) shall, if the referee so requires, be given on oath or affirmation or by affidavit.

(4) A referee may take the examination of any person.

(5) Each party shall, within a time fixed by the referee but in any event before the conclusion of evidence on the inquiry, give to the referee and each other party a brief statement of the findings of fact and law for which the party contends.

(6) The parties shall at all times do all things which the referee requires to enable a just opinion to be reached and no party shall wilfully do or cause to be done any act to delay or prevent an opinion being reached".

"13 (1) Where a report is made, the Court may, of its own motion, after notice to the parties, or on application by any party, on a matter of fact or law or both-

(a) adopt, vary or reject the report in whole or in part;

(b) require an explanation by way of report from the referee;

(c) on any ground, remit for further consideration by the referee the whole or any part of the matter referred for a further report;

(d) decide any matter on the evidence taken before the referee, with or without additional evidence, and shall give such judgment or make such order as the Court thinks fit.

(2) Evidence additional to the evidence taken before the referee may not be adduced before the Court except with the leave of the Court".

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It is of particular importance to note the relationship between s124(2)(f) and Pt72 rl3. The rule determines the manner in which what the referee has decided may be called in question. It is that subject that was considered in Homebush Abattoir Corporation v Bermria Pty Ltd and Super Pty Ltd v SJP Formwork (Aust) Pty Ltd.

In Skinner & Edwards (Builders) v Australian Telecommunications Corporation (1992) 27 NSWLR 567, Cole J made certain observations concerning the practice that is adopted when matters are referred to a referee. He pointed out that the rules do not provide for the court to receive the evidence upon which the referee has formed the opinion contained in the report, although by implication that evidence would be available to the court if it desired. He also observed that evidence tendered before a referee is not, on that account, evidence in the proceedings before the judge dealing with a motion to adopt or reject the report, but that it may become evidence if it is tendered and received by the court. As it happens, the present cases provides a good illustration of this.

The provisions of Pt72, r8(2) are of significance. The fact that the referee may conduct the proceedings in such manner as the referee thinks fit, and is not bound by rules of evidence, is consistent with the underlying purpose of these provisions. As it happens, the referee in the present case was a lawyer and, indeed, a former judge of this Court. In many cases, however, the referee may not be a lawyer, and may be a person chosen for technical knowledge or expertise which the parties expect to be brought to bear on the resolution of their dispute. It is not uncommon, for example, for a building dispute to be referred to an architect or an engineer. It may be appropriate for the referee to determine issues of fact, or resolve conflicts of opinion, taking into account his or her personal knowledge or experience.

Stephen J observed in Buckley v Bennell Design & Constructions Pty Ltd (above, at 15) referring to the precursor of the present provisions, that what is here involved is a special mode of trial of issues. In Buckley (at 7) Barwick CJ pointed out that the common law did not presuppose that there would be an appeal from any finding of any tribunal. For example, there was, and remains, only a limited capacity to call in question a decision made following a very ordinary mode of trial, that is, trial by jury. It would be wrong to approach a problem such as the present with the preconception that all decisions of fact or law must be open to full appellate review by one means or another. That would be to ignore history.

The powers available to be exercised by Giles J in the present case were those set out in Pt72 rl3. In the events that occurred, he adopted the report in whole and gave judgment accordingly. On the authority of Homebush Abattoir Corporation v Bermria Pty Ltd and Super Pty Ltd v SJP Formwork (Aust) Pty Ltd, he would have been obliged to consider and determine afresh any material question of law arising out of the referee's report which either party desired to agitate. Subject to that obligation, he had a discretion as to the extent to which he would re-consider, and determine for himself, matters upon which the referee had reached a conclusion and reported. The approach to be taken to the exercise of that discretion is dealt with in Super Pty Ltd and in the cases there discussed.

As to any question of law raised before Giles J, and considered and determined afresh, his decision either to adopt, vary or reject the relevant part of the report would necessarily raise a potential ground of appeal for a party aggrieved by that

decision. The decision would be governed by his own view on the point of law involved, and that view would be open to challenge and potential correction on appeal.

In the present case the appellant contends that its grounds of appeal raise questions of law, or mixed fact and law. However, the course that was taken before Giles J was simply to mention that it was claimed that the referee's report was affected by errors which would, in due course, be ventilated in the Court of Appeal. This has produced the consequence that we may not have before us all the factual material upon which resolution of any legal issues would depend. The proper course would have been to raise and argue the issues of law before Giles J, and tender any evidence necessary for that purpose.

The approach that was taken before Giles J was consistent with the appellant's submission to this Court as to the nature of the appeal. If it be right that, by adopting the referee's report as the basis of his judgment, Giles J thereby produced the result that his judgment was affected by any error that could be shown to exist in the report and that, on appeal, the appellant would be unconfined in seeking to demonstrate such error, then there was a certain logic in taking the approach that there was no purpose in occupying the time of Giles J in debating these issues. However, I am unable to accept the premise. My reasons are as follows:

1. It appears to reflect the preconception mentioned above, ie. that all determinations of fact or law, following any mode of trial, are open to appellate review on the merits.

2. A reference to a referee involves a special mode of trial which, like other special modes of trial (eg: trial by jury) carries with it its own consequences as to review of the referee's decision.

3. The procedures for calling in question the referee's decision are those provided for in Pt72 rl3. It is the judge of the relevant Division (in this case Giles J) who has the power of review, which is to be exercised in accordance with the tules as construed and explained in the authorities.

4. It is not for this Court to review the referee's report, if there is to be such a review. This is emphasised by the provisions of the rules relating to the evidentiary material that may or may not be available. As what has occurred in the present case shows, this Court may be ill-equipped to review the report.

In the exercise of the power of review given by the rules, the judge at first instance may fall into appealable error. If that can be demonstrated to the Court of Appeal, then ordinarily the judgment at first instance will be set aside and consequential relief granted. However, what the Court of Appeal is concerned with is error on the part of the judge. If the judge's decision to adopt (or vary or reject) the referee's report in whole or in part cannot be shown to be based upon a material error on the part of the judge, then there will be no ground for attacking the judgment based on that decision. If, on the other hand, that decision can be shown to be based upon a material error on the part of the judge then a different result will follow. If the point at issue is one of law, it may not be difficult to demonstrate such error. If the judge can be shown to have made an error in the approach taken to the exercise of the discretion conferred by the rules (as was contended unsuccessfully in Super Pty Ltd v SJP Formwork) then that also may constitute a ground for setting aside the judgment. It may even, in a given case, be possible to demonstrate that the judge's decision to adopt, or vary, or reject, the report was based upon an appealable error of fact made by the judge. An example might be a case where the judge embarked upon a consideration of new

URINE NETWORK PTY LTD v KENNEDY MILLER TELEVISION PTY LTD (Gleeson CJ) 7

evidence, or a fresh consideration of evidence that was before the referee, and could be shown to have reached a wrong conclusion. The important point is that it is the judge at first instance who reviews what the referee did; the Court of Appeal, within the limits of the ordinary rules governing appeals, reviews what the judge did.

As will appear from the above, I do not suggest that it will only ever be possible to argue in the Court of Appeal that the judge at first instance has made an error of law, or that his or her discretion has miscarried. It is possible to imagine cases in which the judge may be shown to have made, himself or herself, an error of fact. However, if the judge, in the proper exercise of the discretion given by the rules, declines to consider afresh questions of fact that have been decided by the referee, then it is not open to the party aggrieved to invite this Court to re-visit those questions on the basis that, by virtue of the adoption of the referee's report, the judge's decision is vitiated by any errors in it.

Senior counsel for the appellant took the approach that what appeared on the face of the report was adequate to demonstrate error of law, or mixed fact and law, on the part of the referee. To take an analogy from another area of discourse, he argued the matter as though setting out to demonstrate error on the face of the record. For the reasons mentioned above, the approach that was taken when the matter was before Giles J makes it difficult to contend that Giles J himself fell into any material error, either of fact or law, or in the exercise of his discretion. However, in dealing with the merits of the points the appellant wishes to argue, I shall assume, for the purposes of the argument only, that any errors of the kind allegedly made by the referee can be attributed to Giles J.

The grounds of appeal are set out above. Grounds 1, 2 and 4 were argued together, and concern the manner in which the referee approached the question of computing lost foreign earnings.

In order to deal with these grounds, it is necessary to say something more about the facts of the case, and the evidence insofar as it appears from the report.

The agreement was that the respondent would produce and deliver to the appellant "24 hours of mini-series drama". The respondent had the right to determine the number of mini-series to be made under the agreement, and the length of each, and was required to notify these details to the defendant, together with the title of each mini-series. There were to be no more than 6 mini-series, and not less than 3, each series was to comprise an even number of television hours, no series would be less than 4 television hours, and no series was to be more than 10 television hours. When the respondent notified the details mentioned above in respect of a particular mini-series, the parties were then deemed to have entered into an agreement in respect of the licensing and funding of that mini-series, on the terms of a certain form of licence agreement. The appellant agreed to pay the respondent, in respect of each hour of mini-series, a licence fee of $850,000 per hour, with the prospect of a clawback by the appellant of up to $350,000 per hour.

"The Network will not interfere in the manner in which the Producer carries out its obligations under this agreement nor in particular in the programme content, production schedule or production of the Mini Series".

In cl6.1, the respondent agreed to produce the mini-series to a standard satisfactory for television transmission in Australia, in accordance with the relevant requirements of the Australian Broadcasting Tribunal and certain Television Programme Standards. Cl6.3 provided that the Network would be entitled to receive the first $350,000 per hour received by the Producer from the exploitation of the mini-series, including exploitation in the United States of America, and elsewhere overseas.

One of the heads of damages claimed by the respondent was loss of earnings from sales of the mini-series outside Australia.

"The inquiry must seek to ascertain for how much per television hour each of these mini series could be sold in a particular foreign market. It is necessary to consider separately the different markets, that is to say the different territories in which there might be buyers for such a product, because, clearly enough, the prices to be obtained will differ. At all events, this was the approach which was made by the four experts who undertook this task. In order to furnish an answer to the inquiry, it is necessary to establish a nice balance between objective appraisal in the light of experience of both the product and the potential market and the subjective evaluation of the same elements which cannot wholly be excluded. The plaintiff called Mr B L Heads to give evidence of the exploitation prospects worldwide and Mr R Devillier to express an opinion limited to the market available in the United States of America. The defendant called Mr Donald Wear and Mr N J McMahon, both of whom expressed opinions as to the saleability of this product anywhere in the world".

It is common ground in this Court that the general principles relevant to the computation of damages of this kind are those set out in cases such as The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 and Poseidon Pty Ltd v Adelaide Petroleum NL (1994) 68 AWR 313. It is not contended that the referee was in error in his understanding of those principles. Rather, the contention was that he fell into error in basing his conclusion upon an acceptance of the evidence and methodology of Mr Heads, which, it was submitted, was flawed in its approach.

The referee accepted that Mr Heads was properly qualified to express opinions on the matter, and it is not argued that this involved an error. In relation to exploitation in the United States market, Mr Heads and Mr Devillier arrived at almost identical figures by way of likely return, and this is not a point of present contention.

It is the manner in which Mr Heads dealt with the other overseas markets that gives rise to the difficulty. This was a difficulty acknowledged by the referee, and it was obviously the subject of a good deal of debate in evidence and argument before him. Mr Heads did not attempt to value each contemplated mini-series separately. He gave the following evidence which is set out in the report:

"A reference in this statement to the average market price in a particular territory is a reference to the price which in my opinion is the market price paid in 1992 for mini series of average quality. The screened mini series are of better than average quality. While I believe that the proposed mini series would probably also have been of better than average quality I have adopted a conservative basis of valuation which is why 'average' prices have been applied.

In expressing my opinion as to such average market prices I have relied upon my knowledge of individual markets. I have considered the likelihood of achieving a sale of the proposed mini series in each market as well as considering

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the average price which I consider likely to have been paid in each market. Average prices referred to throughout this statement are therefore in each case my estimate of what would be achievable in the relevant territory".

The appellant objected, before the referee, and complains in this Court, that such an averaging approach was inappropriate. It made it difficult to test the witness's estimation by reference to any particular proposed mini-series, and it also made it difficult to apply the clawback provisions. The referee said that he himself had been troubled by the approach taken by Mr Heads but, after consideration, came to the conclusion that it was an entirely practical one. He said:

"After all, it is notoriously a matter of difficulty for an entrepreneur to predict with certainty the success of a theatrical or artistic product. If it could be done, then there would be more millionaires operating in that market than there are, so far as I am aware. Mr Wear, for example, based the whole of his evidence upon assumptions as to which of the mini series would be taken up, and in which territory, and which would not. Although it is possible to embellish such a conclusion with a veneer of objective rationalism, in the end it comes down to a subjective decision, influenced, certainly, by the extent and depth of one's experience. I am not suggesting that these are matters of guessing alone or that the untutored opinion is as valuable as one formed on the basis of experience and daily decision making in the same field. However, it is no bad thing, it seems to me, to keep fixed in one's mind the great difficulty of determining which of these mini series, for example, would be likely to succeed or to fail, here or there. Mr Heads' approach, as far as possible, excludes this as a factor, and, starting from his assumption, which he put explicitly, that a well made mini series will sell anywhere, and assuming further that what he was being asked to 'sell', as it were, was a number of well made mini series... informed himself as to what the going rates were in various territories and formed his conclusions from those premises".

The referee adopted Mr Heads' averaging approach, made an allowance for contingencies, and subtracted the necessary clawback, basing the figure for subtraction on the averaging assumption.

Isee no error of principle in the reasoning in this part of the report. The referee took an approach that appears, on the limited part of the evidence available to us, to have been open to him.

The other ground of appeal concerns an argument about mitigation of damages. This, again, seems to have been the subject of a good deal of evidence and debate before the referee, and it is dealt with at some length in his report.

In essence, the argument turns upon the respondent's failure to accept a substitute agreement that was offered to it after the repudiation by the appellant of the original agreement. It was suggested in argument in this Court that the background to the relevant events had something to do with the matter of the change of control of the appellant adverted to earlier. What were described as the Packer interests took over from the Bond interests, and there seems to have been an apprehension that they were seeking a greater measure of control over the content and quality of the proposed productions than had been bargained for in the original agreement. I express that with some diffidence, because no attempt has been made to put before this Court, even in a summary form, a picture of the commercial background of this dispute. However, glimpses of it can be gained from a reading of the referee's report.

The key point concerned a clause in the substitute agreement into which the appellant indicated it would be willing to enter, and which contained the following provisions:

"The details of the title, character breakdown and synopsis will be subject to the approval of the Network (such approval not to be unreasonably withheld) and the Network shall notify the Producer of its approval or otherwise of such details within 1 month of notification of same by the Producer to the Network in accordance with cl1.2. If the Network does not so approve such details then the Producer may refer such details to the President for the time being of the Council of SPAA for a determination as to whether a mini series produced in accordance with such details would meet the requirements of C16 of this Agreement and the terms of a licence agreement in terms set out in Schedule 1 of this Agreement".

The corresponding provision in the contract that was repudiated is set out earlier in this judgment.

There is no issue as to the question which the referee posed for himself in considering this argument. He asked whether, on the evidence and in the circumstances, the respondent had acted unreasonably in failing to accept the substitute agreement, and thereby mitigate its damages. That, I might interpolate, seems to me to be a question of fact. The referee answered the question in the negative.

In part, the argument for the appellant suggested that the referee based his conclusion upon a misinterpretation of the provision of the substitute agreement quoted above. This, it was said, led the referee to a false idea of what the appellant was seeking to achieve by the new provision, and of the reasonableness of the respondent in refusing to accept it.

A reading of the report discloses no error of fact or law on the part of the referee in relation to this matter. A comparison of the terms of the agreement that was repudiated, and the provisions of the substitute agreement, indicates that there was a significant difference between the degree of artistic independence that would have been enjoyed by the respondent under the respective agreements. The referee pointed out that there was a large area of potential dispute as to whether the specified standards were satisfied by a particular mini-series. He went on:

"These were questions which were to be in the first instance decided by the defendant according to the substitute agreement, and if approval was withheld, decision upon them was to be delegated to the 'expert' identified in the substitute agreement. The consequence of this seems clearly to me to be that an artistic decision was potentially removed from the plaintiff or, let it be conceded by all means, from the product of argument between the plaintiff and the defendant, and assigned to the decision of a third person who might, or might not have the capacity to deliver a sound judgment upon it.

I am of the opinion that the plaintiff correctly recognised the variations in the substitute agreement as intended to subject it to an artistic veto which it was reasonably entitled to reject.

In my view, for the reasons I have given, I think that the defendant has failed to establish that in rejecting the substitute agreement the plaintiff acted unreasonably; and the defence of mitigation fails".

Once again, on the limited material available to us, I see no error in this process of reasoning.

URWNE NETWORK PTY LTD v KENNEDY MILLER TELEVISION PTY LTD (Handley JA)I1

Conclusions The appeal should be dismissed with costs.

Meagher J I agree with the Chief Justice. 5 Handley JA I agree with Gleeson CJ.

Counsel for the Appellant: J D Heydon QC and P Jacobson Solicitors for the Appellant: Landerer & Company

Counsel for the Respondent: P G Hely QC and N C Hutley

15 Solicitors for the Respondent: Mallesons Stephen Jaques