Sagacious Procurement Pty Ltd v Symbion Health Ltd

Supreme Court of NSW|2013-04-10|Before: Hammerschlag J

INTRODUCTION 1HIS HONOUR: The plaintiff ("Seven") and the third defendant ("Nine") are rival national commercial television stations. 2The first defendant is a successful and in demand show business personality who uses the show name Mel B. She was a member of a popular all female singing and dancing group known as the Spice Girls, in which capacity she performed under the name Scary Spice. I shall refer to her as Mel, with no disrespect intended. 3The second defendant ("Osiris") is a company controlled by Mr Stephen Belafonte, a film producer and manager. Stephen Belafonte and Mel are married and reside in Los Angeles, California. In dealings with Seven, Osiris has at all times represented Mel and Stephen Belafonte has at all times represented Osiris. 4Seven has over the last few years broadcast two talent shows, Dancing with the Stars and X Factor. Each show involves contestants, whose performances are judged, and who succeed by progressing through various competition rounds until a winner is identified. In Dancing with the Stars the contestants dance and in X Factor they sing. Both shows employ celebrity judges. Sometimes the contestants go on "home visits" to a judge's home or recording studio, customarily overseas. The X Factor judges also act as mentors to the contestants. The rights to X Factor are owned by an organisation called FremantleMedia. 5Nine broadcasts a talent show called Australia's Got Talent. It is along similar lines to X-Factor, except that the contestants do not only sing or dance but perform other acts. The rights to Australia's Got Talent are also owned by FremantleMedia. The various talent shows compete hotly for the same television audiences. 6In 2011 and 2012 X Factor had four judges and Mel was one of them. By all accounts she was a big drawcard. In 2012 she appeared pursuant to a written agreement between Seven, Osiris and her dated 16 February 2012 and signed 20 February 2012 ("the Agreement"). Osiris provides her exclusive services and she guarantees performance. 7Under the Agreement Seven had an option for Mel's exclusive television services from 1 February 2013 to 31 January 2014. 8Seven says that it exercised that option and that it is contractually entitled to Mel's services, and Mel is obliged to provide them, on an exclusive basis until 31 January 2014 in Australia. 9However, on 14 March 2013 Osiris and Mel entered into a written agreement with Nine under which Mel agreed to act as a judge in Australia on Australia's Got Talent in 2013. Although it is contemplated that she will not be required to spend as much time in Australia as she would have had she performed the role on X Factor as originally contemplated, she has apparently had no difficulty in obtaining the necessary visa. 10On 20 March 2013 Seven moved the Court for, and obtained, an interim order restraining Mel and Osiris from performing any agreement with any person other than Seven for Mel to appear on television in Australia at any time before 31 January 2014, pending a claim for a final injunction. 11On 25 March 2013 the matter was fixed for final hearing to commence on 3 April 2013 on an estimate of two days. The hearing in fact took five days. Evidence was lead orally. Stephen Belafonte gave evidence via video-link. 12Given the commercial urgency of the matter, I have endeavoured to deliver this judgment at the earliest possible opportunity.

background 13Mr Brad Lyons is Seven's Director of Production. Ms Therese Hegarty is Seven's Head of Production and Rights Management. Ms Jane Oswald is an in-house lawyer with Seven. 14Stephen Belafonte and Mel have an 18 month old daughter, Madison. Mel also has two other daughters, Angel, 6, and Phoenix, 14, with different fathers. She has sole custody of these daughters, whose respective fathers live in America.

The Agreement 15On 20 February 2012 Seven and Osiris entered into the Agreement. Under it, Seven obtained the exclusive television services of Mel in connection with X Factor and Dancing with the Stars for an initial period from 1 February 2012 up to and including 31 January 2013 for substantial remuneration. Relevant terms of the Agreement appear below. Dollar amounts have been redacted from the quoted provisions, as well as other documents later referred to. The dollar figures are not relevant for present purposes. 16The introduction to and cl 1 of the Agreement provide: This letter confirms the agreement between Seven Network (Operations) Limited (ABN 65 052 845 262) ("SNOL"), on behalf of the Seven Network and Osiris, Inc (the "Company" - Federal ID 37-1547339) for the exclusive television services of Melanie Brown a/k/a Mel B (the "Artist") in connection with the television series' entitled "THE X FACTOR" ("X Factor") and "DANCING WITH THE STARS" ("DWTS") collectively the "Series" . 1. The Company will supply the Artist's services as an on-camera co-host for the production and broadcast of ten (10) episodes of DWTS for the 2012 broadcast year, and as an on-camera judge/mentor for the production and broadcast of episodes of X Factor for the 2012 broadcast year, and as such will render such services as are customarily rendered by on-camera co-hosts and judges/mentors of first class programming in the international television industry and/or skills competitions, as required by SNOL. In addition, the Company will also supply the Artist's services to appear as a guest on "Sunrise" and/or "The Morning Show" and/or for an on-air campaign for a Seven channel or for Yahoo7 during the Term (collectively referred to as "Other Services"). Except as otherwise set forth hereunder and subject to clause 7 below , the Artist's television services in Australia ( the "Territory") will be exclusive to SNOL for a period commencing on February 1, 2012 through and including January 31, 2013 (this period and any extension in accordance with clause 4 is the "Term") although SNOL acknowledges that the Artist may travel to the US in December 2012 and/or January 2013. The Artist's services on DWTS and X Factor will be required on days for rehearsal and production during the Term on dates as outlined in the production schedules attached hereto (which excludes time for travel) and such dates are subject to change as notified to the Artist by SNOL. The Artist may be required to travel outside of Australia for X Factor. The Artist is also required to record a profile package, title shoot, promotions, publicity calls, and wardrobe fittings, as reasonably requested by SNOL for the Series during the Term. The dates of all other services will be advised to the Artist by SNOL. 17Clause 2 of the Agreement provides: 2. The Artist's role as an on-camera co-host/judge/mentor on the Series will primarily involve the Artist appearing in the Series as well as participating in the on-air promotion and publicity of the Series and Seven Network generally, as reasonably requested by SNOL. 18Clause 3 of the Agreement provides: 3. In consideration of the Company entering this Agreement and supplying the Artist's services to SNOL, SNOL will pay the Company an all inclusive total guaranteed fee of [$ ] for the Artist's exclusive television services which comprises the following allocations: [$ ] for X Factor; [$ ] for DWTS; [$ ] for Other Services; [$ ] for expenses and [$ ] for airfares. The above fees will be paid upon receipt of an invoice as follows: [$ ] on January 30, 2012 for expenses and airfares (receipt of which is acknowledged); [$ ] for DWTS payable in 5 monthly instalments of [$ ] from February 2012 through June 2012; [$ ] for X Factor payable in 6 monthly instalments of [$ ] from June 2012 through November 2012; [$ ] for Other Services payable upon signature of the Agreement. 19Clause 4 of the Agreement provides: 4. The Company agrees that SNOL will have an option on the Artist's exclusive television services as an on-camera co-host/judge/mentor for episodes of DWTS, X Factor as well as Other Services during the period February 1, 2013 through and including January 31, 2014 on the same terms and conditions as this Agreement, except for this clause 4 and except that the total guaranteed fee in clause 3 above will increase to [$ ]; provided however, if SNOL does not recommission DWTS, the guaranteed fee will decrease to [$ ]. SNOL must exercise its option on or before January 1, 2013. If SNOL exercises its option, SNOL will provide production schedules to the Artist for the Series in 2013. The guaranteed fee will be allocated as follows: [$ ] DWTS; [$ ] X Factor; [$ ] Other Services; [$ ] Expenses and [$ ] Airfares; and payable on similar time periods during 2013 as outlined in clause 3 above. 20Clause 14 of the Agreement provides: 14. This Agreement is entirely conditional on the Artist securing an appropriate visa to allow the Artist to provide the Artist's services within Australia with sufficient time for SNOL to arrange flights, accommodation and publicity in relation to the Series. SNOL shall provide all reasonable assistance in relation to the Artist's visa application to the Australian Department of Immigration and pay all costs in regards to the application and visa or work permit. In the event that the Artist is unable to secure the appropriate visa for them to be able to enter Australia to perform the services on the Series, then at SNOL's entire discretion, SNOL may terminate this Agreement by written notice to the Company with no sums payable by either party to the other. The Company undertakes to procure that the Artist will submit his application for said visa as soon as practicably possible thereafter. 21For 2011 and 2012 Mel was granted special entertainment visas to work in Australia and for the time she was here, the children and Stephen Belafonte were with her. She also brought a nanny. Jane Oswald assisted in obtaining these visas.

Later events 22On 4 December 2012 Mel lodged an application for permanent residency in Australia. Mel retained specialist immigration lawyers to assist. The application included her three children. There is no suggestion that Seven knew about this application. 23On 14 December 2012 the immigration lawyers informed Mel and Stephen Belafonte that the Australian Department of Immigration had requested documentary evidence that both biological parents of the two elder children had given their permission for them to migrate. They advised that if it was not possible to obtain a signature, a court order specifically stating that the child was able to migrate to Australia was required. 24Brad Lyons says that on or about 17 December 2012 he had a telephone conversation with Stephen Belafonte in which Stephen Belafonte asked him what was happening with "our deal". He says that Stephen Belafonte told him they had been offered a job in the UK and were anxious to get back to Los Angeles for Christmas. According to Brad Lyons, a conversation to the following effect took place: LYONS: Well look, we are very keen to exercise Mel B's option on X Factor. She's done a great job. BELAFONTE: What is happening with Dancing with the Stars? Is Daniel MacPherson involved? LYONS: Look, Dancing with the Stars is up in the air at the moment because of timing issues but it is going to be coming back and Daniel will be a part of that. Look, I know Mel wasn't happy on that show and she didn't have a good experience so why don't we drop Dancing with the Stars and just say that Mel can do X Factor for the increased amount in the option. BELAFONTE: Mel wouldn't really be keen on doing Dancing anyway if it didn't come back in a different form. So are you saying just one show for the increased figure, being X Factor, instead of two? LYONS: Yeah, that's what I'm saying. BELAFONTE: That sounds great, let's do it. 25He says that they had a very brief conversation later that day just to confirm the figures. 26He says that he then asked Therese Hegarty to exercise Seven's option. He says that he saw the exercise document before he left on holidays that day. 27Therese Hegarty says that on 17 or 18 December 2012 Brad Lyons came into her office and informed her that he had just had a phone call with Stephen Belafonte and asked her to execute the relevant documentation. 28On 19 December 2012 Therese Hegarty emailed Stephen Belafonte as follows: Following your conversation with Brad, I would like to confirm the fee of [$ ] for Mel for next year of X Factor. We will get a detailed amendment document to you in the next day or so, but in the meantime if you have any queries please don't hesitate to let me know. Look forward to working with you and Mel in 2013. 29Stephen Belafonte responded later that day as follows: Thanks. 30Therese Hegarty says that after her first email, Stephen Belafonte rang her and informed her that their nanny had overstayed her previous visa in Australia, that they were having difficulty getting a visa for her to come to this country again and that Seven needed to employ and sponsor the nanny to enable her to obtain a visa into Australia. Therese Hegarty says that she responded that she was not familiar with the requirements of sponsoring the nanny into Australia and that she would refer the matter to Jane Oswald, Seven's lawyer. She requested Stephen Belafonte in the meantime to send through the nanny's curriculum vitae. Jane Oswald gave evidence that Therese Hegarty told her about Stephen Belafonte's request and that she thereafter discussed it with Mel's immigration lawyers. 31On 20 December 2012 Therese Hegarty emailed Stephen Belafonte as follows: As promised, enclosed is a document confirming the fee etc. I've included the payment schedule we discussed, just let me know if any issues or problems. If all OK send me through an invoice for the first instalment so I can get it into the system when the office reopens in January. Also enclosed is a more detailed set of dates. Our lawyer who handles the sponsorships is going to talk to your immigration lawyer and see what can be quickly sorted out when she's back from leave on the 7th January. Hope that all makes sense, give me a buzz if not. 32This email enclosed a document, being a letter dated 20 December 2012 from Seven to Mel and Osiris in the following terms ("the option exercise letter"): Option exercise This letter confirms that, pursuant to Clause 4 of the agreement dated 16 February 2012 between Seven Network (Operations) Limited (ABN 65 052 845 262) ("SNOL") and Osiris Inc (the "Company") for the services of Melanie Brown (the "Artist") (the "Agreement"), SNOL hereby exercises its option on the Artist's services for the period 1 February 2013 to 31 January 2014. As discussed, the total fee payable pursuant to Clause 3 of the Agreement will be increased to [$ ] and will be paid on receipt of invoice as follows: (a) [$ ] on 1 February 2013; and (b) the remainder in 11 equal monthly instalments of [$ ], commencing on 1 March 2013. As the Artist's services will not be required for 'Dancing with the Stars' ("DWTS") in 2013 all provisions under the Agreement relating to DWTS will no longer apply. I have enclosed a copy of the current schedule for 'X Factor' for your reference. We look forward to another successful series of 'X Factor' in 2013. 33Still later that day, Stephen Belafonte responded as follows: Can you please send me the last deal to reference, as I don't wanna wait for Los Angeles to open. 34Stephen Belafonte's version of the conversation with Brad Lyons differs in a material respect. Stephen Belafonte says that on this occasion he told Brad Lyons that there was a "looming issue" with respect to the children's visas, which "although it wasn't anything major at that time, it could possibly become major because if the kids weren't allowed in the country, Mel would not be doing the show". 35Stephen Belafonte's evidence about the children's visas having been discussed was led, no doubt, in support of a contention (which was ultimately correctly abandoned) that the parties had agreed explicitly or implicitly that any agreement for Mel to return to Australia was conditional upon her obtaining visas for her children. 36Brad Lyons denies that there was any reference to the children's visas in their discussion. 37I prefer Brad Lyons' evidence. 38Brad Lyons and Stephen Belafonte gave conflicting evidence about a number of conversations between them. They both gave evidence in chief and were cross-examined on each of the conversations. There are some respects where the difference is material. Where their evidence is in conflict on any matter of substance, I prefer that of Brad Lyons. Brad Lyons was a plausible witness who emerged from cross-examination unscathed. In contrast, Stephen Belafonte was an unsatisfactory witness. He was evasive and unclear and gave inconsistent evidence. He displayed a propensity to say inaccurate things on the spur of the moment. Brad Lyons' evidence sits comfortably with the contemporaneous objective material and the inherent commercial probability, whereas Stephen Belafonte's evidence does not. It is not feasible to reproduce the entirety of the evidence pertaining to these conversations. 39On 20 December 2012 Therese Hegarty emailed Brad Lyons as follows: Stephan rang me and wants seven to sponsor their nanny. They will pay for her, but they want seven to be the sponsor because they are having trouble getting the documentation through. He said to tell you brad that's its particularly important we make this work. Anyway he's gong to send through a job description (not as a nanny but as a business manager) and jane will take a look and see what's possible. He also wants the seven sponsorship extended to allow Mel to do other work such as radio shows and club openings. Jane is also looking into this. 40Also on 20 December 2012 Therese Hegarty received the nanny's curriculum vitae by email from Ms Katherine Griffiths, an assistant to Mel. 41The exchange of emails makes no reference to the children's visa issue, which one might have expected had it been discussed. Therese Hegarty's evidence was that the children's visa issue was not mentioned to her by Brad Lyons. Her credit was not challenged. There was also no reference to it in her discussions with Jane Oswald at that time. The option was exercised in terms making no reference to the suggested impediment. 42On 2 January 2013 Mel's immigration lawyer received notification from the Australian Department of Immigration that two US Court Orders (presumably giving her custody of the two older children), which had been provided by Mel, were not sufficient to meet the Department's requirements. Therese Hegarty went on holiday on 21 December 2012 until early January 2013. The probabilities favour the children's issue being raised only after 2 January 2013 and after Therese Hegarty had returned. Stephen Belafonte also gave confused evidence about having spoken to a Seven lawyer in December 2012, which he accepted was incorrect and could not remember the conversation with Therese Hegarty about the nanny's visa in December 2012, the occurrence of which the objective documents clearly support. Finally, when Stephen Belafonte raised the children's visa issue by his email in reply to Therese Hegarty's email referred to immediately below, he did so in terms which are more consistent with it then being raised by him for the first time. 43Therese Hegarty's next communication with Stephen Belafonte was on 16 January 2013, when she emailed him as follows: Don't forget that we need your invoice before the due date in order to get it processed and into the system in time. 44She received a reply from Stephen Belafonte shortly thereafter as follows: Please hold on everything as I'm dealing with a visa issue. 45There was then a brief exchange of emails about setting a time to talk. She says that she had a conversation with Stephen Belafonte the next day during which he said to her: I've got a problem at my end. Mel's children's fathers won't sign the documentation to enable Mel's two older children to come to Australia. It's a big problem. It's costing me many thousands of dollars. 46She says she responded by commiserating and asking him if there was anything Seven could do. She says she already knew about this visa problem because Brad Lyons had shortly before come into her office and told her of a conversation he had had with Stephen Belafonte. 47Brad Lyons returned from holiday in mid January 2013. He says he received a telephone call from Stephen Belafonte during which a conversation to the following effect took place: BELAFONTE: Look, there are some problems looming with visas for Mel's kids. Her two children to her two other fathers, or two other dads, are not happy with her residing in Australia for such a long period of time and they are not willing to sign consent forms for them to get visas. I'm fighting custody battles in LA and London and it is costing me a great deal of money. Would Seven help? Because it's looking increasingly likely that Mel won't be able to, or will have to live and work in LA and won't be able to work on the X Factor. LYONS: Are you saying she physically can't be in Australia? BELAFONTE: That is looking likely. LYONS: Well, you need to understand that we have an agreement in place and if she can physically work in Australia then she is bound under Seven's agreement. But we are not going to tear her away from her kids and force her to do it. But you know, understand that if she can, we want her to work on the X Factor. BELAFONTE: Yes, yes, of course buddy. We are Seven people through and through. We want to do the X Factor but she has to live in LA. LYONS: Look, maybe we can work something out and, you know, where we can shoot something. BELAFONTE: Look, I've got to go to London for another court battle. Can I let you know in a week how we go? But can you please put something in writing to me to the effect that I can start looking for work in LA? LYONS: Look, I will speak to the lawyers and see what we can do. 48Brad Lyons says that he walked into Therese Hegarty's office and told her of the visa problem. 49Stephen Belafonte denies that he said he was fighting custody battles in LA and London. He says he was not fighting any such battles. He agrees that there was a conversation about Mel not being available to be in Australia. He denies that Brad Lyons said there was an agreement in place and if Mel could physically work in Australia, she was bound under Seven's agreement. He agrees that Brad Lyons said that Seven would not tear Mel away from her children and force her to come to Australia. He denies having said that they were Seven people through and through. He denies having asked for anything to be put in writing because there was nothing to stop Mel from working. He denies that Brad Lyons said he would speak to the lawyers and see what he could do. 50An indication of Stephen Belafonte's confusion and inconsistency is that he first denied that Brad Lyons said there was an agreement in place. Thereafter, he conceded that he has virtually no memory at all of any conversations with Brad Lyons in January 2013, but also agreed that in the course of the conversation that took place in January 2013, Brad Lyons reminded him that Seven also believed there was a contract in place. As appears below, on 25 February 2013 Brad Lyons sent an email to Stephen Belafonte referring to the request by Stephen Belafonte for something in writing, a statement with which Stephen Belafonte did not take issue in any response. 51On 3 February 2013 Mr Bruce McWilliam, Seven's CEO of Production, was informed by Seven's external lawyers that they had been asked by a New York law firm if they could work for a well known entertainer adverse to Seven and Fremantle. Bruce McWilliam and Brad Lyons exchanged emails which reveal that they thought it was Mel and that she had an offer in the UK. Bruce McWilliam asked when the deadline for exercising the option was and said they had better start thinking about a replacement. Brad Lyons responded as follows: We have exercised the option already. And I know we can't make her stay. Its a grab for cash which we might have to pay. I reckon couple of hundred thousand. 52Bruce McWilliam answered: We'll blow that in legals so we should be realistic if we want to keep her. But sounds like they want to make a point if they've gone to lawyers. Will freemantle kick in, or are judges our problem 53Brad Lyons says he did not have any communication from Stephen Belafonte until 7 or 8 February 2013, when he had a telephone conversation with him to the following effect: BELAFONTE: There's no way the kids' other fathers are going to grant permission to get visas so Mel can't come and work on the X Factor. She has to be based in LA. LYONS: Well, that's a shame, you know. We really wanted her. But maybe there's a way that we can look at, when she gets a new schedule or gets a new job over in LA, we can look at a way that we can still factor her into the X Factor. BELAFONTE: Look, that sounds good. What form would that be? LYONS: Look, it's a little bit too early because it is all fresh news and schedules will all change now. Look, I really wouldn't want it out there now that she can't physically be in Australia. So do you mind not saying anything? BELAFONTE: Absolutely I won't say anything. In fact, if you want me to I will tweet to Mel's fans that she can't wait to get down to Australia to perform on the X Factor if that helps out. LYONS: Well, let me have a think about that. 54Stephen Belafonte gave evidence that he explained that "Mel wasn't going to be able to come back in and do the deal because she wasn't going to come there without her children, our children". He says that Brad Lyons said "I couldn't force you to and I wouldn't if I could, forcing you away from your children". Stephen Belafonte says that Brad Lyons asked whether it was a question of money and he said no, it was not. He gave evidence as follows: And I said there is nothing we are going to be able to do with this, we are not going to be able to do this deal this time around. And he said well, I don't know, I would like for you guys, I would like for Mel to do something with X Factor, you know, home visits, or, he was thinking about rejigging it where there was another judge that comes in, or whatever it was. And I told him I was totally fully down with that and he would have to send that over as it would be a new deal or whatever. He said he would. He also talked, and I told him, I had asked Brad myself, I said Brad, you know, we need to make up, you know, a PR release, and, you know, press release. And Brad said, you know, it is a very touchy subject. I don't want, you know, the other judges, we got to keep this under wraps because he didn't want the other judges from X Factor to kind of gouge him for price and stuff. And Brad seemed quite nervous about the fact that Channel 9 had just, I guess, brought Ricky Martin over, or announced Ricky Martin, I don't know what it was. (I was informed from the Bar table that the expression "totally fully down with that" connotes - contrary to what I might have expected - satisfaction.) 55Under cross-examination, Brad Lyons agreed that Stephen Belafonte said words to the effect that a release from one of the fathers was not possible, that it was hopeless and that the option was not going to work. He agreed that he may have asked whether it was a question of more money and if there was anything that they could do. He agreed that Stephen Belafonte said it "wasn't about money" and that his wife was not going to come out to Australia without her family for five months and that they just could not come to Australia and work for that length of time without the kids. He agreed that he said words to the effect that it was a shame that Mel could not do the show but maybe they could do something else for X Factor. He agreed that he said words to the following effect: We will try to get something to you. I guess that's it then, not much we can do. We understand that Mel would not want to leave her family and obviously we wouldn't force her to come out here and do the programme. We probably wouldn't want it in the press that she had left them in the US anyway. 56He accepted that he said to Stephen Belafonte that they should both hold off for a week before making any announcement so as not to affect negotiations with other possible judges. It was put to him and he denied, however, that Stephen Belafonte said this "would be a new deal so obviously we would need to see the specifics". He also denied that Stephen Belafonte said "we can't go ahead with the deal" and that "we will probably need some kind of press release or some other joint document so everybody knows what has happened". 57Stephen Belafonte denied having offered to tweet to Mel's fans that she couldn't wait to get down to Australia to perform on X Factor if that would help and that Brad Lyons said he would have to think about it. I prefer Brad Lyons' version. A basis for Mel to come to Australia was still being sought. Consistent with his earlier denial of having said he was fighting custody battles in LA and London, he denied having said that things hadn't gone well in London. At the time of the earlier conversation he was, however, going to London and by the time of this conversation he had returned. There was also clearly some controversy with respect to the children's visas with their natural fathers. 58On 12 February 2013 Stephen Belafonte emailed Brad Lyons informing him that a Mr Jonathon Summerhayes (an executive producer from FremantleMedia) had asked whether Mel was coming back to do the show this year. Brad Lyons responded by requesting Stephen Belafonte to keep it under wraps for as long as possible and Stephen Belafonte replied that he had his word. 59Brad Lyons and Stephen Belafonte had another telephone conversation on about 21 February 2013, about which, again, they are in dispute. According to Brad Lyons, Stephen Belafonte asked what was happening with Mel's role on X Factor, to which he responded: We are still endeavouring to work out what we could do. We are looking at a fifth judge scenario but it is very difficult until we know what Mel's schedule is. 60He said that Stephen Belafonte asked to be kept in the loop and then offered names of possible replacements for Mel on the show. Stephen Belafonte's version of this conversation is that it was in the context of "Mel's schedules getting really packed" and that he conveyed that if Brad Lyons still wanted Mel to do something with X Factor, he needed "to get it over" (that is, he wanted to see what the deal was). 61On 22 February 2013 there was an announcement that Mel was doing America's Got Talent. 62On 24 February 2013 Brad Lyons emailed Stephen Belafonte as follows: Dear Stephen, Good to chat last week. As discussed can you give me a rough schedule for Mel as we want her to feature in some way in the Australian X Factor, at the very least "home" visits. To formalise the release, we agree 1. you can do America's got talent in US so long as you 2. don't work in Australia during our original period and "tail" or if you do it is with the Seven network. 3. do promos for x factor 4. don't do Australia-targeted promos for your US show given it is to be shown in Australia , or for any other Australian television network or channel (free or pay) during the continuance of our original agreement and option I think this is all common ground between us but it would be good to nail it down 63On 26 February 2013 Stephen Belafonte replied as follows: Brad what release are you talking about? I'm confused?? 64Later that day Brad Lyons emailed Stephen Belafonte as follows: Hi mate, When this all started you requested something in writing from us and we too need to formalize the situation. We mean releasing you from the option which as you know we had exercised.We want to be clear that should Mel become available to work in Australia during the relevant period, it is with the Seven Network. And as we discussed we will find her a role in this year's XF.I am working to give you what you want but I would look pretty silly if we let her out + she appears on a rival network! We know this isn't the intention and that you can see we're trying to help you. 65Stephen Belafonte replied as follows: trying to call u to discuss. What number are you at? 66A conversation then took place between Brad Lyons and Stephen Belafonte. Brad Lyons' evidence of this conversation is as follows: BELAFONTE: Look, in your email you have said that Mel B can't work in Australia. That means that, you know, she can't come down to do an ad, for example, or she couldn't do a Jenny Craig campaign or an appearance. You can't do that. LYONS: Okay, I understand what you are saying. What I mean is that she can't work for any other network other than the Seven Network as per our agreement. BELAFONTE: Oh, okay, I get it now, can you put that in writing? LYONS: Yes, I will send you an email straight away. 67Stephen Belafonte denies that this conversation took place. I am satisfied that it did. Clearly there was a discussion because, thereafter, on 26 February 2013 Brad Lyons emailed Stephen Belafonte as follows: Dear Stephen, Good to chat. As discussed can you give me a rough schedule for Mel as we want her to feature in some way in the Australian X Factor, at the very least "home" visits. To formalise the release, we agree: 1. that Mel will not provide her services to any opposing network (Nine,Ten, Foxtel or any of its channels, etc.) during the period covered by the option 2. do promos for x factor (assuming we can come to an agreement which we will negotiate in good faith with you) 3. don't do Australia-targeted promos for the US show given it is to be shown in Australia , or for any other Australian television network or channel (free or pay) during the continuance of our original agreement and option Would you be good enough to email back to confirm and let me have the schedule Thanks again for your understanding, 68Stephen Belafonte did not respond. 69By 3 March 2013 (unbeknown to Seven) Stephen Belafonte was in negotiations with Nine for Mel to do Australia's Got Talent. On 3 March 2013 Mr Michael Healy, Brad Lyons' counterpart at Nine, sent Stephen Belafonte a schedule and an email which said "[g]reat if we can pull this off". 70Michael Healy suggested that Stephen Belafonte retain, and put him in touch with, a lawyer at Baker & McKenzie in connection with the possible impediment to signing a contract with Nine because of the prior relationship with Seven. According to Stephen Belafonte, the lawyer wanted to take a look at all the correspondence and emails. 71This led to Stephen Belafonte sending the following email to Brad Lyons, drafted by the lawyers, but on which Stephen Belafonte said he "weighed-in": Dear Brad I just wanted to close the loop after our last discussion. As I made clear, we haven't agreed to any release. When we spoke in early February we all agreed to go our separate ways and not to continue with the agreement. As you were aware, the whole arrangement was always contingent on Mel's ability to get appropriate visas for the whole family. (please see section 14 in the 7 agreement) That wasn't possible for this year. We each agreed not to proceed and there is no current agreement. Also, we certainly haven't agreed to ongoing restrictions on Mel's ability to do work. For example, she can't and won't agree to limitations on what she does in the US and abroad. As I have said, we did not agree to terms of any release and there was no discussion of the financial basis of any new relationship If you want to discuss a new arrangement, we can consider it although we need to do so quickly. Any proposal would have to include an appropriate fee and there are some personal issues which need to be dealt with. 72On 6 March 2013 Brad Lyons responded as follows: Dear Stephen, Thanks for this. I think there has been some big misunderstanding here. We have never said we would restrict Mel working in the US and the UK. We actually can't do it nor would we want to. All we wanted from you guys is a guarantee that should Mel be available to work in television back in Australia we would have exclusive rights during the original period we had negotiated. I think that's fair enough. We are feverishly looking at how to work Mel into our next XF somehow and I understand the urgency but the schedule is moving around a lot at the moment because we have not locked in the fourth judge. I will come back to you asap. 73On 10 March 2013 Stephen Belafonte emailed Brad Lyons as follows: Dear Brad I understand that you want a guarantee but that needs to be part of a new agreement. As we all agreed in early February to walk away, there is no guarantee at the moment and no arrangement. You seem to be suggested that Mel should give you a guarantee of exclusivity when we haven't talked about the financial side or what her role would be. At this stage you don't appear to have a clear idea of what her role might be either. In those circumstances I don't think it is fair to ask for a guarantee and it can't be imposed on Mel. Any exclusivity could of course be part of a new deal but it would also have to include a fee. If Seven wants to put something to us by close of business [tomorrow] your time, we will consider it. If not, we will move on. 74On 12 March 2013 Brad Lyons replied as follows: Dear Stephen, Something has gone seriously wrong here. Of course we agreed that we couldn't and wouldn't stop Mel working overseas but you and I both agreed that if she was available to work in Australia then it would be with Seven. And the only reason I am trying to put something in writing to you is because you asked for it. Anyway I don't want to argue or have a debate. I just ask for a bit of time to come up with a plan to include Mel in the XF which of course would incorporate payment. The reason I can't be rock solid on the schedule right at the moment is that it is moving as we try to lock in a fourth judge. I can at least say we'd love Mel to be involved in the home visits which will take place in June in Los Angeles. 75On 11 March 2013 Michael Healy had provided Stephen Belafonte with headline dates for production and Nine provided him with a deal memo in respect of Mel's role as a judge for Australia's Got Talent. Nine had requested that the discussions and deal memo be kept confidential. 76It is clear that whilst Stephen Belafonte kept his dealings with Nine from Seven, he did not keep his dealings with Seven from Nine. To the contrary, he agreed to keep Nine "in the loop" about the communications he was having with Brad Lyons. More than that, he sought an indemnity from Nine in respect of any costs, including legal expenses, arising out of a claim by Seven in respect of Osiris and Mel providing Mel's services to Nine. 77On 14 March 2013 Osiris and Mel signed a written agreement with Nine under which Osiris agreed to furnish the services of Mel, which obligation Mel agreed to guarantee, to appear on Australia's Got Talent during 2013. Mel must be in Australia for both audition episodes and live episodes over a period of 91 days. Under the agreement Nine has given an indemnity to Osiris and Mel against costs including, but not limited to, legal expenses, damages and the amount of any settlement arising out of a claim by Seven in respect of Osiris providing her services to Nine.

THE PARTIES' POSITIONS 78Seven contends that on or about 19 December 2012 it, Osiris and Mel agreed to vary the option such that Seven would pay the increased guaranteed fee but Mel would not be required to provide her services for Dancing with the Stars in 2013. It contends that by the option exercise letter it exercised the option as varied. 79Mel, Osiris and Nine dispute that Seven validly exercised any option or that there was any agreement extending the Agreement. They submit that Seven made an offer to extend the Agreement on varied terms, to which offer Mel and Osiris did not respond and therefore did not accept. They rely on the facts that in her 20 December 2012 email, Therese Hegarty asked Stephen Belafonte to let her know if there were any issues or problems, to which he in terms did not respond, and that he did not provide an invoice as invited. 80Mel, Osiris and Nine say that if the Agreement was extended, the parties to it agreed during the course of their dealings between 8 and 21 February 2013 that it was terminated or discharged, with no party thereafter having any rights or duties against or to the others. 81Osiris and Mel, but not Nine, also put that the parties treated the contract as at an end, even if there was no contract to discharge it. 82As a fallback position, Seven says that if the parties made any subsequent agreement (which it denies), it extended no further than to Seven releasing Osiris and Mel from the obligation that Mel travel to Australia to provide her services as a judge/mentor, and did not involve releasing her from the obligation not to work on television or engage in other commercial activity in Australia prior to 31 January 2014, except for Seven or with its written agreement. 83Osiris, Mel and Nine respond that if, under a varied agreement, Seven was not obliged to employ Mel on Dancing with the Stars in Australia and, at the same time, she cannot work for any other television station during 2013, the arrangement amounts to a restraint of trade which is unenforceable as being against public policy. 84Osiris, Mel and Nine accept that if Seven succeeds in its primary contention that the Agreement was extended and there has been no variation, Seven is entitled to final injunctive relief. In this regard they correctly abandoned a contention that injunctive relief should be withheld in any event on discretionary grounds. They suggested, however, that if Seven's fallback position was upheld, relief should only be granted on conditions (apparently in relation to payment) upon which they would wish to be heard. As I understood it, this was on the footing that such relief would inhibit Mel from working in Australia but would not oblige Seven to pay her. 85Osiris and Mel abandoned a number of other manifestly unsustainable propositions. One of these was that Seven was estopped from denying that the Agreement had been discharged because they had acted, in contracting with Nine, to their detriment on a common assumption with Seven that the Agreement had been discharged. One insuperable hurdle to this contention was that Stephen Belafonte proceeded to contract with Nine in the full knowledge that Seven was asserting a contract. He went so far as to seek and obtain an indemnity from Nine to protect the position if Seven brought this very claim and succeeded. Another unsustainable contention was that it was an express or implied term of the Agreement that performance by Mel was conditional upon visas being obtained for her children. For one, such a condition is inconsistent with cl 14 of the Agreement. Yet another unsustainable contention was that if the extended Agreement was found to be on foot, there were discretionary reasons for refusing Seven relief.

WAS THE AGREEMENT EXTENDED? 86Whether the dealings of Seven, Osiris and Mel up to and including the option exercise letter brought into existence a binding agreement depends on them having had an intention to create binding relations. Intention in this context means that which would be objectively conveyed by what is said or done in the circumstances in which the statements and actions happened. In ascertaining the intention of the parties, whether from a series of communications or from a single document, regard can be had to the commercial circumstances in which the parties exchanged their communications or arrived at the document and to the subject-matter of the arrangement. The objective intention of the parties is fact-based, found in all the circumstances. Regard can also be had to the conduct of the parties after the occasion of the arrangement, to cast light on the meaning of the communications in question and otherwise on whether they intended immediately to be contractually bound: Sagacious Procurement Pty Ltd v Symbion Health Ltd [2008] NSWCA 149 at 69 per Giles JA; Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 at 105-106; Australian Broadcasting Corporation v XIVth Commonwealth Games Limited (1988) 18 NSWLR 540 at 548-549; see generally Michael Furmston and G J Tolhurst Contract Formation: Law and Practice (2010) Oxford University Press, Ch 10. 87The existence of a contract is a consequence which the law imposes upon, or sees as a result of, what the parties have said and done. Actual subjective intention to contract is a factor which the law takes into account in determining whether a contract exists but it is not, or not always, the determining factor: Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 at 330 per Mahoney JA, 337 per McHugh JA. 88On any objective view of what Seven, Osiris and Mel did, orally and in writing, the parties had an intention to contract on the terms described in the option exercise letter. Copious factors support this conclusion. 89An initial observation is that the Agreement provides no mandatory method for the exercise of the option, nor does it contain any provision inhibiting oral variation. 90First, the terms of the variation alleged by Seven are precise and are recorded in the option exercise letter. 91Secondly, in their conversation on 17 December 2012, Stephen Belafonte enquired as to what was happening with the deal and Brad Lyons informed him that Seven was keen to exercise the option. Stephen Belafonte raised the difficulty Mel had had with Daniel MacPherson and this was resolved by clear consensus that she would not go back on Dancing with the Stars but would still be paid the increased fee as if the option had been exercised without variation. 92Thirdly, in her 19 December 2012 email, Therese Hegarty confirmed the fee and Stephen Belafonte thanked her. The form and terms of the option exercise letter are formal and clearly convey an intention that the option is being exercised. It also confirms the earlier oral arrangement, an assertion to which Stephen Belafonte did not demur. In her 20 December 2012 email, Therese Hegarty invited Stephen Belafonte to let her know if there were any issues or problems with the fee. He did not take up this invitation. This is indicative of acceptance rather than non-acceptance. Although no invoice was sent at that time, events were overtaken by the emergence of the children's visa issue. In any event, the first instalment was not payable until 1 February 2013. 93Fourthly, that day Stephen Belafonte asked Seven to sponsor their nanny. 94Fifthly, both Brad Lyons and Stephen Belafonte subjectively intended there to be a binding agreement. With respect to Brad Lyons, this is clear from his assertion on 17 January 2013 that there was an agreement. In his email to Bruce McWilliam he asserted that the option had been exercised. Stephen Belafonte gave evidence to the following effect: Q: As at 17 January 2013 you believed there was a contract in place between Seven on the one hand and your wife and Osiris on the other, didn't you? A: Yes Q: And in the course of the conversation that took place in January 2013 Mr Lyons reminded you that Seven also believed there was a contract in place, didn't he? A: Yes 95I find that, with effect from 20 December 2012, there was a binding agreement between Seven, Osiris and Mel on the terms disclosed in the option exercise letter.

WAS THE AGREEMENT TERMINATED? 96A contract terminating an earlier contract is like any other contract and its formation, construction and termination are governed by the general law of contract formation: see N C Seddon, R A Bigwood, M P Ellinghaus Cheshire and Fifoot Law of Contract, 10th Aust ed (2012) LexisNexis Butterworths at [22.8]. 97Where a party establishes the existence of a contract, there is a presumption of continuance. Such a presumption is ordinarily relied on in proceedings to enforce the contract. The plaintiff has the burden of proving the making of the contract and the defendant has the burden of proving any matters alleged to have resulted in the termination of the contract, subject to its formation: Massoud v NRMA Insurance Ltd (1995) 8 ANZ Insurance Cases ¶61-257 (75,873). 98A contract may, in addition, be discharged by abandonment. This occurs if both parties treat their contract as at end even if no contract to discharge it can be spelt out: see DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423; N C Seddon, R A Bigwood, M P Ellinghaus Cheshire and Fifoot Law of Contract, 10th Aust ed (2012) LexisNexis Butterworths at [22.9]. 99Objectively viewed, do the dealings between Brad Lyons and Stephen Belafonte from 8 February 2013 onwards disclose an intention to enter into a binding contract terminating the Agreement? 100It was put on behalf of Nine that objective indications of an intention to bring the Agreement to an end include that: no mention of exclusivity was made in the conversation on 8 February 2013; the parties contemplated a replacement judge being found for Mel; if the parties contemplated other than a complete mutual release, this would have been said; there was no suggestion that after 8 February 2013 Seven regarded itself as liable for the full contract fee or that Osiris considered itself entitled to the fee; and that Seven twice requested an invoice and none was provided. 101I consider that the protagonists' dealings, objectively assessed, disclose no such intention. In my view, they disclose an intention that the Agreement remain on foot. 102The services of Mel were self-evidently valuable to Seven and Nine. The Agreement was self-evidently valuable to Mel. Exclusivity of Mel's services in Australia was both a contractual and commercial given. 103By 3 February 2013 Brad Lyons had asserted the existence of the contract to Stephen Belafonte and the exercise of the option to Bruce McWilliam in the context of a suspicion that she had been offered a job in the UK. 104An obvious potential consequence of termination without more would have been that Mel could have worked in Australia for a Seven competitor, when she had worked on Seven's shows for two years and it was contemplated that Seven would have her exclusive services for another year. I consider that it is not likely to be inferred that either party would have intended this. 105Stephen Belafonte made it clear that Mel would not come to Australia for an extended period without the children. This meant that she would not be able to perform the role of judge in the manner originally contemplated. Perhaps with a dose of compassion, but nevertheless reluctantly, Brad Lyons resigned himself to the reality of this. But his conduct is inimical to the suggestion that he intended the Agreement to be at an end. 106On 17 January 2013 he said exactly the opposite. 107On 8 February 2013 it had become apparent that the children's visa problem had become insuperable. 108Brad Lyons conveyed his resignation as to the reality, but what he said and did would not have conveyed to any reasonable person in the position of Stephen Belafonte that the Agreement was at an end, even less so that Mel was now free to come to Australia (albeit for a shorter period or periods, with or without her children) and not work for Seven but for its competitor on a show like Australia's Got Talent. Seven's search for a replacement judge was a pragmatic response but Seven still wished to have Mel, if it could. No language of release, let alone complete mutual release, was used by Brad Lyons or by Stephen Belafonte. More than once, Stephen Belafonte was asked for an invoice but this pertained to Mel playing the role which was originally contemplated and was overtaken by events. It could have hardly been suggested by Mel that the full fee was payable in the events that had occurred. But Seven remained liable to pay it if she performed as originally contemplated. 109Brad Lyons' expressed desire to create a role for Mel on X Factor, if one could be devised, notwithstanding her unwillingness to come to Australia, is inimical to the suggestion of an intention to bring the Agreement to an end, as is Stephen Belafonte's avowed willingness on Mel's behalf to consider such a role. What she could do was still under consideration. On 21 February 2013 Brad Lyons told Stephen Belafonte that they were still trying to work out what they could do and were looking at a fifth judge scenario, but it was difficult until they knew what Mel's schedule was. 110At the outset, Stephen Belafonte had asked for something in writing. This was, I find, a request for confirmation as to what Mel could do, notwithstanding her contractual obligations to Seven. Brad Lyons had not given anything in writing. Clearly he became concerned when he heard Mel was going to do America's Got Talent, given the connection with that show and the Australian equivalent. This gave matters something of a different complexion and understandably, in the light of his resignation that Mel would not come to Australia for Seven in the role originally contemplated, it was necessary for there to be precision about any release. Hence his email on 24 February 2013. 111In his conversation with Stephen Belafonte after this email, Brad Lyons reiterated that Mel could not work for any other network in Australia as per their agreement, with which Stephen Belafonte agreed. 112Stephen Belafonte gave evidence that he regards a deal as having to be signed and in writing to be binding. In this respect I accept his evidence. It is consistent with him having asked for something in writing at the outset. However, it sits uneasily with his present position that a binding deal bringing the Agreement to an end was done orally. 113Seven's outward (and if it be relevant, inward) behaviour is consistent only with it maintaining the position that it was entitled to Mel's exclusive services in Australia, and inconsistent with the notion that the Agreement had been discharged, as now suggested by Osiris, Mel and Nine. 114Cases involving abandonment usually include some lengthy period of inactivity or other conduct on the part of both parties inconsistent with an intention that the agreement is still on foot. That is not this case. 115Seven was keen, and I accept remains keen and willing, to employ Mel in the manner originally contemplated. The problem is with Mel. 116Because I have found that there was no binding agreement of any nature to discharge or vary the Agreement as extended by the option exercise letter, it is not necessary to deal with Seven's fallback position and Osiris, Mel and Nine's responses to it. 117I do, however, observe that even Brad Lyons' resignation did not extend to allowing Mel to work in Australia for a competitor. If, contrary to my finding, there was an agreement, it went no further than to release her from coming to Australia to perform the role originally contemplated, and did not extend to permitting her to engage in television activity in this country other than working for Seven. 118The proposition that such a limited agreement would entail a restraint of trade which is void as against public policy is untenable. It is based on the assumption that Mel would be inhibited from working in Australia and Seven would not be obliged to pay her the amounts contracted for. The assumption is a false one. 119Under the Agreement, Mel has an obligation to provide her exclusive services to Seven and Seven is entitled to her performance of this obligation. Seven seeks no more than her compliance with a negative promise not to provide services to its competitor, which promise is part of a fair and freely negotiated bargain made recently. 120Were she to perform under the Agreement, Seven would be obliged, and has expressed a willingness, to pay her in accordance with the contract, notwithstanding recent events. However, while she remains unready and unwilling to perform, she is not entitled to any remuneration under the contract: see Curro v Beyond Productions Pty Ltd (1993) 30 NSWLR 337 at 349. It is all in her own hands. 121As was the case in Curro v Beyond Productions at 348, I see no reason why she should not be ordered to keep her word that she would not work for anyone but Seven in Australia in 2013.

CONCLUSION 122Seven is entitled to injunctive relief. 123The parties are to bring in Short Minutes of Order and I will hear them on costs. 124The Exhibits are to be returned.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 April 2013

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