The Movie Network Channels Pty Ltd v Optus Vision Pty Ltd

Supreme Court of NSW|2009-03-17|Before: Einstein J, Cole J, Young J, Toohey J

CITATION : The Movie Network Channels Pty Ltd v Optus Vision Pty Ltd [2009] NSWSC 132

HEARING DATE(S) : 16/02/09, 18/02/09 - 20/02/09, 23/02/09 - 25/02/09, 5/03/09, 12/03/09

JURISDICTION : Equity Division Commercial List

CATCHWORDS : Application by plaintiff for leave to reopen - Principles - Defendant had made forensic decision now not able to be undone

ASIC v Rich (2006) 235 ALR 587 Australasian Meat Industry Employees' Union (WA Branch); ex parte Ferguson (1986) 67 ALR 491 Autodesk Inc v Dyason (No. 2) (1993) 176 CLR 300 Barker v Furlong [1891] 2 Ch 172 Betts v Whittingslowe (No 1) [1944] SASR 163; Hughes v Hill [1937] SASR 285 Granitgard Pty Ltd v Termicide Pest Control Pty Ltd (No 3) [2009] FCA 82 Hawthorn Glen Pty Ltd v Aconex Pty Limited (No 1) [2007] FCA 2010 CASES CITED : Inspector-General in Bankruptcy v Bradshaw [2006] FCA 22 Jesseron Holdings Pty Ltd v Middle East Trading Consultants Pty Ltd (No 2) (1994) 122 ALR 717 Multicon Engineering Pty Ltd v Federal Airports Corporation, Supreme Court of New South Wales, Cole J, 10 December 1993, unreported Smith v NSW Bar Association (1992) 176 CLR 256 Telecom Vanuatu Ltd v Optus Networks Pty Ltd (No 2) [2009] NSWSC 33 Urban Transport Authority of NSW v Nweiser (1992) 28 NSWLR 471 Watson v Metropolitan (Perth) Passenger Transport Trust [1965] WAR 88 Woolworth Ltd v Olson [2004] NSWSC 871

PARTIES : The Movie Network Channels Pty Ltd (Plaintiff) Optus Vision Pty Ltd (Defendant)

COUNSEL : Mr RJ Weber SC, Mr KL Andronos (Plaintiff) Mr NC Hutley SC, Mr PJ Brereton (Defendant)

SOLICITORS : TressCox Lawyers (Plaintiff) Baker & McKenzie (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

50054/06 The Movie Network Channels Pty Limited v Optus Vision Pty Limited JUDGMENT The application to reopen 1 TMNC seeks leave to re-open its case by way of motion filed 6 March 2009, so that it may read certain paragraphs of affidavits which were not read during the course of the hearing and so that it may tender some additional documents. 2 The affidavit material relates to 3 witnesses, Messrs Dudley-Smith, Miele and Basser. TMNC served affidavits sworn by each of these witnesses in advance of the hearing. However, at the hearing TMNC elected to read only a limited number of paragraphs of the affidavits of Mr Dudley-Smith and Mr Miele. TMNC did not read or seek to rely on any part of the affidavit of Mr Basser. 3 The documents sought to be tendered by TMNC are:

i. a fax from Herbert Greer & Rundle to Clayton Utz and others dated 19 August 1999 enclosing a draft of the proposed channel supply agreement;

ii. Mr Dudley-Smith's handwritten notes of a meeting dated 22 August 1999;

iii. The handwritten notes of a representative of Optus Vision at a meeting dated 22 August 1999. The principles which informed the exercise of the discretion 4 In every case the overriding principle to be applied is whether the interests of justice are better served by allowing or rejecting the application to re-open [Inspector-General in Bankruptcy v Bradshaw [2006] FCA 22 at [24]; Urban Transport Authority of NSW v Nweiser (1992) 28 NSWLR 471 at 478]. An application to re-open is subject to various degrees of scrutiny depending on the stage of the proceedings when the application is made. The test of what is 'just' at this stage of the proceedings is akin to the considerations applicable where leave to rely on fresh evidence is sought on appeal. That is, the evidence must be credible, highly probative and not previously obtainable by reasonable diligence [Jesseron Holdings Pty Ltd v Middle East Trading Consultants Pty Ltd (No 2) (1994) 122 ALR 717 at 719 per Young J; Ritchies at [51.51.50]; Australasian Meat Industry Employees' Union (WA Branch); ex parte Ferguson (1986) 67 ALR 491 at 493 - 494 per Toohey J; Murray v Figge (1974) 4 ALR 612; Betts v Whittingslowe (No 1) [1944] SASR 163; Hughes v Hill [1937] SASR 285; Watson v Metropolitan (Perth) Passenger Transport Trust [1965] WAR 88]. 5 Naturally the principles which inform the exercise of the discretion to re-open are to be read against the general background of the obvious public interest in the finality of litigation: cf Autodesk Inc v Dyason (No. 2) (1993) 176 CLR 300 per Mason CJ at 302-303. 6 In Inspector-General in Bankruptcy v Bradshaw [2006] FCA 22 Kenny J identified at [24] certain recognised classes of cases in which a court may grant leave to re-open as including where:

(a) Fresh evidence becomes available [ Granitgard Pty Ltd v Termicide Pest Control Pty Ltd (No 3) [2009] FCA 82 (evidence from a 'whistle blower' became available after the conclusion of the hearing)];

(b) There is inadvertent error; [ Telecom Vanuatu Ltd v Optus Networks Pty Ltd (No 2) [2009] NSWSC 33];

(c) There is a mistaken apprehension of the facts [ Urban Transport Authority of NSW v Nweiser (1992) 28 NSWLR 471; Autodesk Inc ]; or

(d) There is a mistaken apprehension of the law [ Urban Transport Authority of NSW v Nweiser (1992) 28 NSWLR 471]. 7 In Smith v NSW Bar Association (1992) 176 CLR 256 at 266 a majority of the High Court found that:

"If an application is made to re-open on the basis that new or additional evidence is available, it will be relevant, at that stage, to inquire why the evidence was not called at the hearing. If there was a deliberate decision not to call it, ordinarily that will tell decisively against the application." [See also: Barker v Furlong [1891] 2 Ch 172 at 184; Hughes v Hill [1937] SASR 285 at 287; Multicon Engineering Pty Ltd v Federal Airports Corporation (NSWSC, Cole J, 10 December 1993, unreported)]. 8 In ASIC v Rich (2006) 235 ALR 587 at [18] per Austin J listed the factors that he agreed were relevant to the exercise of the discretion as follows:

i. The nature of the proceeding [See also Woolworth Ltd v Olson [2004] NSWSC 871];

ii. Whether the occasion for calling the further evidence ought reasonably to have been foreseen;

iii. The consideration of fairness that the defendant is entitled to know all of the evidence he has to meet in taking forensic decisions as to cross-examination and the nature and extent of the evidence he will himself adduce on the matters in question;

iv. The extent to which the plaintiff has embarked upon calling evidence on the issue in question in its case in chief;

v. The importance of the issue on which the further evidence is sought to be adduced to the pleaded issues in the case;

vi. The degree of relevance and the probative value of the further evidence sought to be adduced and its potential to involve an undue waste of time;

vii. The prejudice to the defendant in terms of delay in the completion of the proceeding and the consequential costs;

viii. The public interest in the conclusion of litigation [See also Hawthorn Glen Pty Ltd v Aconex Pty Limited (No 1) [2007] FCA 2010 at [48]]; and

ix. What explanation is offered by the plaintiff for not having called the evidence in chief. The circumstances 9 The hearing of the matter occurred over 7 sitting days beginning on 16 February 2009 and concluding on 25 February 2009. 10 On 17 February 2009 the plaintiff advised the Court and the defendant that it did not intend to read any affidavit material prepared by Mr Basser. The plaintiff also confirmed which parts of the affidavits of Mr Miele and Mr Dudley-Smith (which had already been provided to the court) it intended to read. 11 The first called of the plaintiff's witnesses was Mr Dudley-Smith. Specific objection was made to certain paragraphs of Mr Dudley-Smith's evidence. In particular, objection was made to the paragraphs concerning a meeting that took place in March 1999. 12 The defendant also objected to the whole of Mr Dudley-Smith's evidence as "entirely irrelevant. He was not, at the relevant time, the mind of the company". The Court noted the point before allowing the evidence. A voir dire then took place in relation to Mr Dudley-Smith's evidence. This process included the cross examination of Mr Dudley-Smith on the issue of who was present at the meeting in March 1999 and who the relevant officers of TMNC were at the time the contract was signed. Following the voir dire, submissions were put by both parties as to whether this part of Mr Dudley-Smith's evidence ought be admitted. Submissions related to the knowledge of the plaintiff were made by the defendant at T105/6-16. 13 Following the voir dire Mr Dudley-Smith was cross-examined in the ordinary course during which he agreed that he attended the negotiations to "negotiate on behalf of your client, your employer" and to "advance their interests" and that he agreed to the execution of the CSA "on behalf of Warner Bros". Mr Dudley-Smith's affidavit evidence [See paragraphs [1] - [15] of the affidavit of Mr Dudley-Smith sworn 4 April 2007. A copy is at Tab 2 of AJC-4], was that his employer at all relevant times prior to the execution of the CSA was Warner Bros International Television Distribution Inc.. There was no re-examination of Mr Dudley-Smith by TMNC. 14 As the defendant contended in its submissions on the application to reopen:

We refer to what we said at the conclusion of the plaintiff's lay evidence, which was referred to at transcript 169 lines 3 to 4. Your Honour will see that after that evidence of Mr Dudley-Smith, we elected to call no evidence. That was in the context where we had been told that Mr Basser was not to be called, and so all that took place from our perspective was a documentary tender.

So, in other words, what has happened is my learned friend has tendered select paragraphs of an affidavit, which we have objected to on the basis that Mr Dudley-Smith is not the relevant mind. We have made clear the position that the person who we say is the relevant mind is Mr Basser. We have then elected to call no evidence. 15 Hence at the conclusion of the plaintiff's lay evidence, the defendant participated in the documentary tender process but elected not to read any of the nine affidavits prepared by it and served in advance of the hearing (T169/3-4). 16 The defendant addressed the issue of Mr Dudley-Smith's lack of capacity and the absence of Mr Basser from the meeting in March 1999 in its outline of closing submissions and in its closing oral submissions (T303/26-304/24). 17 The first occasion on which the plaintiff attempted to deal with the issues presented by the lack of evidence upon which it could base its submissions on TMNC's knowledge was in its closing submissions in reply where reference was made to authorities for two differing sources of attribution of corporate knowledge. (T338/30 - T340/13). The defendant, not having been given notice of these authorities, was invited to provide written submissions to the Court addressing the point (T349/16 - 38). 18 The parties subsequently provided the Court with the following documents:

i. defendant's further response to plaintiff's oral submissions in reply (26 February 2009);

ii. plaintiff's reply to defendant's response of 26 February 2009 (27 February 2009); and

iii. defendant's response to plaintiff's submissions dated 27 February 2009 (5 March 2009). 19 In addition to the formal submissions outlined above, various e-mails were provided to the Court indicating the plaintiff's intention to seek leave to re-open its case. Ultimately the parties were called before the Court on 5 March 2009 at which time the plaintiff sought and was granted leave to file in Court a notice of motion and affidavit in support seeking to re-open its case. The plaintiffs reason for seeking to lead the additional evidence 20 In an affidavit filed by the plaintiff in support of the re-opening application, Mr Bamford who is a partner of Mr Little [the solicitor on the record for the plaintiff] deposed as follows:

On the final day of the hearing, his Honour permitted the defendant to provide movie network and the court with some short additional written submissions in relation to the agency theory of attribution by 12 o'clock on Thursday 26th February 2009.

Prior to receipt of the defendant's written submissions in reply, and, in particular, prior to reading paragraphs 2 (d) of that document, the plaintiff had not understood from the defendant's oral submissions and address that it sought to rely on the allegation that none of Messrs Dudley-Smith, Miele or Sutton had had any connection with the plaintiff or with the negotiation of the CSA in the period from its incorporation on 90 in August 1999 until the execution of the CSA on 25 August 1999. Until then I had understood that the defendant's argument was confined to the absence of Greg Basser or alternatively the absence of Roadshow as a joint venture from the meeting of March 1999 21 The plaintiff's application fully to reopen its case is made for the purposes of demonstrating the continued involvement of Messrs Dudley-Smith and Miele in the negotiations with Mr Basser and the plaintiff in the relevant seven-day period. The defendant's submissions 22 The defendant has put forward as its primary position, the proposition that the evidence sought to be adduced by the plaintiff is irrelevant to the issues in dispute in the proceedings so that permitting the plaintiff to lead that evidence would be an undue waste of the parties and the court to time. The proposition is that the mere presence of an individual at a meeting [or his undefined "involvement" with the plaintiff] does not prove the capacity in which that person was acting in terms of his dealings with the defendant. 23 The defendant however further contends as follows:

Alternatively, if, by "involvement", the plaintiff intends to suggest these individuals were somehow involved in the management of the plaintiff during this time then it is an issue that was squarely before the Court during the hearing, including during the cross examination of Mr Dudley-Smith . There can be no proper claim of surprise and there is no other explanation offered as to why the plaintiff failed to lead this evidence prior to final oral submissions. If, contrary to the defendant's primary contention that the evidence is irrelevant, the evidence is received by the Court in support of the proposition that Dudley-Smith was the agent, officer or employee of the plaintiff then the defendant would suffer irredeemable prejudice. The suggested irredeemable prejudice 24 The suggested prejudice contended for by the defendant is said to include the following:

i. The defendant losing forever the forensic advantage of considering whether and how it should cross examine Mr Dudley-Smith on this point prior to the import of that cross examination being laid bare by the parties' submissions;

ii. The defendant losing forever the forensic advantage of considering whether it required Messrs Miele and Basser to be available for cross examination on this point (and therefore generally) prior to the import of that cross examination being laid bare by the parties' submissions; and

iii. The defendant losing forever the forensic advantage of considering whether it should read any of its affidavits prior to making its closing submissions addressing the inadequacies in the plaintiff's case. 25 The defendant's proposition is that none of this prejudice which would be suffered by the defendant can be cured by permitting the defendant to reply, further cross examine the plaintiff's witnesses or decide now to read some or all of its affidavits. This is said to be because the defendant's witnesses would be cross-examined by the plaintiff's counsel after having the benefit of reading, hearing and considering the defendant's closing submissions. The plaintiff would then have an opportunity to seek to remedy the suggested inadequacies of its case in chief (contended for in the defendant's closing submissions) through cross-examination of the defendant's witnesses. 26 The defendant contends that it is apparent that TMNC, by its counsel, made a deliberate tactical decision not to read Mr Basser's affidavit and not to rely on the paragraphs in Messrs Dudley-Smith and Miele's affidavits that are now sought to be read. Decision 27 As I see it the present situation may appropriately be categorised as one where events have occurred which would render it unjust to allow the party seeking the indulgence to call further evidence. In particular the plaintiff here seeks an indulgence from the court to lead further evidence after the defendant has: i. made forensic decisions as to: (a) whether and how it should cross-examine the plaintiff's witnesses;

iv. made its closing submissions, both oral and in writing. 28 I accept as pervasive the defendant's contention that the forensic decisions and submissions which have been made by the defendant are not able to be undone. Nor can the prejudice be cured by permitting the defendant to cross-examine the plaintiff's witnesses anew or to read its affidavits. Further it does seem that the instant application is also striking in that virtually every single one of the factors listed by Austin J n ASIC v Rich tend against the granting of leave. 29 For those reasons the application is dismissed. ******

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Cases Cited (12)