BT (Australasia) Pty Ltd v State of New South Wales (No 11)
[1998] FCA 510
•15 MAY, 1998
FEDERAL COURT OF AUSTRALIA
DISCOVERY - whether discovery of certain documents is appropriate - whether applicants have established a need for the documents in order to prepare for trial.
Telecommunications Act 1991 (Cth), ss 183, 184, 185, 186, 190.
Bickel v John Fairfax & Sons Ltd [1981] 2 NSWLR 474 (S Ct NSW/Hunt J), cited.
BT AUSTRALASIA PTY LTD V STATE OF NEW SOUTH WALES & TELSTRA
NG 572 OF 1995
JUDGMENT NO 11
JUDGE: SACKVILLE J
PLACE: SYDNEY
DATE: 15 MAY 1998
IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 572 OF 1995
BETWEEN: BT AUSTRALASIA PTY LTD
APPLICANTAND STATE OF NEW SOUTH WALES
FIRST RESPONDENTTELSTRA CORPORATION LIMITED
SECOND RESPONDENTBETWEEN:
AND:
BETWEEN:
STATE OF NEW SOUTH WALES
CROSS CLAIMANT TO FIRST CROSS CLAIMBT AUSTRALASIA PTY LIMITED
FIRST CROSS RESPONDENT TO FIRST CROSS CLAIMBRITISH TELECOMMUNICATIONS PLC
SECOND CROSS RESPONDENT TO FIRST CROSS CLAIMBT AUSTRALASIA PTY LIMITED
CROSS CLAIMANT TO SECOND CROSS CLAIMAND:
TELSTRA CORPORATION LIMITED
CROSS RESPONDENT TO SECOND CROSS CLAIMBETWEEN: BRITISH TELECOMMUNICATIONS PLC
CROSS CLAIMANT TO THIRD CROSS CLAIMAND: TELSTRA CORPORATION LIMITED
CROSS RESPONDENT TO THIRD CROSS CLAIMBETWEEN: BRITISH TELECOMMUNICATIONS PLC
CROSS CLAIMANT TO FOURTH CROSS CLAIMAND: STATE OF NEW SOUTH WALES
CROSS RESPONDENT TO FOURTH CROSS CLAIMBETWEEN: STATE OF NEW SOUTH WALES
CROSS CLAIMANT TO FIFTH CROSS CLAIMAND: TELSTRA CORPORATION LIMITED
CROSS RESPONDENT TO FIFTH CROSS CLAIMBETWEEN: TELSTRA CORPORATION LIMITED
CROSS CLAIMANT TO SIXTH CROSS CLAIMAND: BT AUSTRALASIA PTY LIMITED
CROSS RESPONDENT TO SIXTH CROSS CLAIMBETWEEN: TELSTRA CORPORATION LIMITED
CROSS CLAIMANT TO SEVENTH CROSS CLAIMAND: BRITISH TELECOMMUNICATIONS PLC
CROSS RESPONDENT TO SEVENTH CROSS CLAIMBETWEEN: TELSTRA CORPORATION LIMITED
CROSS CLAIMANT TO EIGHTH CROSS CLAIMAND: STATE OF NEW SOUTH WALES
CROSS RESPONDENT TO EIGHTH CROSS CLAIMJUDGE: SACKVILLE J PLACE: SYDNEY DATE: 15 MAY, 1998
JUDGMENT - NO. 11
THE COURT ORDERS THAT:
The Applicants’ application for discovery of the documents specified in par 8.1 of its proposed ‘Short Minutes of Order’ dated 27 March 1998 be dismissed.
Note:Settlement and entry of orders is dealt with in order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 572 OF 1995
BETWEEN: BT AUSTRALASIA PTY LTD
APPLICANTAND STATE OF NEW SOUTH WALES
FIRST RESPONDENTTELSTRA CORPORATION LIMITED
SECOND RESPONDENTBETWEEN:
AND:
BETWEEN:
STATE OF NEW SOUTH WALES
CROSS CLAIMANT TO FIRST CROSS CLAIMBT AUSTRALASIA PTY LIMITED
FIRST CROSS RESPONDENT TO FIRST CROSS CLAIMBRITISH TELECOMMUNICATIONS PLC
SECOND CROSS RESPONDENT TO FIRST CROSS CLAIMBT AUSTRALASIA PTY LIMITED
CROSS CLAIMANT TO SECOND CROSS CLAIMAND:
TELSTRA CORPORATION LIMITED
CROSS RESPONDENT TO SECOND CROSS CLAIMBETWEEN: BRITISH TELECOMMUNICATIONS PLC
CROSS CLAIMANT TO THIRD CROSS CLAIMAND: TELSTRA CORPORATION LIMITED
CROSS RESPONDENT TO THIRD CROSS CLAIMBETWEEN: BRITISH TELECOMMUNICATIONS PLC
CROSS CLAIMANT TO FOURTH CROSS CLAIMAND: STATE OF NEW SOUTH WALES
CROSS RESPONDENT TO FOURTH CROSS CLAIMBETWEEN: STATE OF NEW SOUTH WALES
CROSS CLAIMANT TO FIFTH CROSS CLAIMAND: TELSTRA CORPORATION LIMITED
CROSS RESPONDENT TO FIFTH CROSS CLAIMBETWEEN: TELSTRA CORPORATION LIMITED
CROSS CLAIMANT TO SIXTH CROSS CLAIMAND: BT AUSTRALASIA PTY LIMITED
CROSS RESPONDENT TO SIXTH CROSS CLAIMBETWEEN: TELSTRA CORPORATION LIMITED
CROSS CLAIMANT TO SEVENTH CROSS CLAIMAND: BRITISH TELECOMMUNICATIONS PLC
CROSS RESPONDENT TO SEVENTH CROSS CLAIMBETWEEN: TELSTRA CORPORATION LIMITED
CROSS CLAIMANT TO EIGHTH CROSS CLAIMAND: STATE OF NEW SOUTH WALES
CROSS RESPONDENT TO EIGHTH CROSS CLAIMJUDGE: SACKVILLE J PLACE: SYDNEY DATE: 15 MAY, 1998
REASONS FOR JUDGMENT - NO. 11
The Orders Sought
This is a further dispute concerning discovery. BTA and BT plc (to which I refer collectively as “BT”) seek orders against Telstra. The form of the orders sought by BT was modified in the course of the hearing by Mr Margo, who appeared with Mr Bartos for BT. As modified, the orders sought by BT are as follows:
“8.ORDER that Telstra shall include in its discovery any reports, correspondence or other documents, including electronic documents:
8.1discovered by Telstra in the SPA proceedings (as defined in the affidavit of R J Todd sworn 27 June 1997 and as referred to in the Judgment of Sackville J dated 29 August 1997 at page 21.4 - 21.7) which:
(a)are high level documents relevant to the issues whether or not the generic terms of the filed tariffs for Flexi-Plans and/or SPAs were discriminatory within the meaning of s 183 of the Telecommunications Act 1991 (“the 1991 Act”) and/or contravened s 184(3) of the 1991 Act, provided that Telstra shall not be obliged by this order to discover multiple documents referring to the same aspects of the same generic terms;
(b)are high level documents (as defined in the current orders for discovery by Telstra) evidencing the number of SPAs in existence during the whole or part of the period from 20 November 1992 to 1 July 1994, whether customers party to such SPAs were also party to Flexi-Plans, and the quantum of expenditure by customers on telecommunication services covered by such SPAs, including, if available, the STD portions of such expenditure.”
Background Information
Between November 1992 and June 1994, Telstra offered to supply and supplied to persons in Australia telecommunications services under agreements in accordance with its Strategic Partnerships Tariff Type 1.01 or 1.02 (“SPT”) (that is, Strategic Partnership Agreements or “SPAs”). The evidence adduced on this application suggests that by October 1993, Telstra had executed 42 SPAs with customers. The SPAs were entered into with some of Australia’s largest companies and had a contractual value of some $3.5 billion.
The SPT required that, for the supply of telecommunications services under the SPT, a customer had to execute an SPA with Telstra for a period of from three to five years. On execution of the SPA, Telstra was obliged to allow to the person purchasing the services a discount in relation to the supply of each service supplied under the SPT. Under each SPA the customer was obliged to purchase from Telstra in each particular year of the agreement a nominated minimum quantity of telecommunications services.
In about December 1991, Telstra filed with the Australian Telecommunications Authority (“AUSTEL”), as is contemplated by s 190 of the Telecommunications Act 1991 (Cth) (the “TC Act”), the Telstra Tariff. (Section 190(1) provides that a telecommunications carrier may give to AUSTEL a written tariff of the carrier’s charges for “basic carrier services” that complies with the section.) The Telstra Tariff has included at all material times Flexi-Plans. Flexi-Plans are intended to enable customers to select price options in line with individual preferences. The features of the Flexi-Plans marketed by Telstra included discounts from the standard charges payable for certain services.
The SPA proceedings, referred to in the orders sought by BT, were proceedings commenced in this Court in 1994 by Optus Communications Pty Ltd and associated companies against Telstra. I was told by Mr Margo that the SPA proceedings involved allegations that Telstra’s SPAs and Flexi-Plans constituted discriminatory pricing in contravention of the TC Act. Telstra discovered approximately 40,000 documents in the SPA proceedings, while Optus discovered apparently 45,000 documents. The SPA proceedings were referred to briefly in Judgment No 4 in the present proceedings, delivered by me on 29 August 1997.
The Telecommunications Act
The TC Act includes (or included at the relevant times) the following provisions:
“183(1) A carrier that is in a position to dominate a market for a particular kind of telecommunications service must not discriminate, between persons who acquire in that market telecommunications services of that kind, in relation to:
(a) the charges for the services; or
(b) the terms and conditions on which the services are supplied.”...
184(1) A carrier must not, in relation to the supply of basic carriage services, discriminate against a person for the reason, or for reasons including the reason, that the person:
(a)supplies, or proposes to supply, eligible services under a class licence; or
(b)uses, or wishes to use, eligible services supplied under a class licence.
...
(3) A carrier must not vary a charge for a basic carriage service that the carrier supplies, or proposes to supply, to a person if the reason, or one of the reasons, for the variation is that the carrier also supplies, or does not also supply, other telecommunications services to the person.
...
185(1) Neither of sections 183 and 184 apply if, at the time of the discrimination, there is in force a decision by AUSTEL under section 185A that the discrimination, or discrimination of that kind, should be permitted.
...
186(1) Where a carrier contravenes, or proposes to contravene, section 183 or 184:
(a) any person who is, or would be, subjected to discrimination; or
(b) any other aggrieved person;
may apply to the Federal Court for relief.
(2) The relief that may be granted includes an injunction and damages.”
The First Amended Statement of Claim
BTA’s case is currently pleaded in the second amended statement of claim filed on 2 May 1997 (the “second statement of claim”). Detailed orders were made in relation to Telstra’s discovery on 20 May 1996 (as amended on 29 May 1996). At that time, BTA’s case was pleaded in the first amended statement of claim (the “first statement of claim”).
The first statement of claim pleaded that Telstra had contravened the TC Act. BTA pleaded (par 26) that Telstra was a dominant carrier, within the meaning of ss 183 and 184 of the TC Act, in each of a number of markets, including the market for the supply and acquisition of telecommunications services in Australia. It was alleged (par 27) that BTA and Telstra at all material times had been in competition in each of those markets. Paragraph 35A pleaded as follows:
“35A(a) Between November 1992 and March 1993, Telstra sold about 600 Flexi-plans to Agencies either alone or in combination with SPAs and/or LTAs.
(b)Flexi-plans and CNH tariffs were so formulated that CNH did not qualify for any Flexi-plan discount and CNH did not provide any discount on local calls using a CNH line, as a result of which an Agency with a Flexi plan would lose a Flexi-plan advantage if it connected to CNH.
(c)Prior to the amendments to the Telecommunications Act effected by the Telecommunications Amendment Act 1994, [that is, the repeal of s 184(3)], the offering of discounts by Telstra by way of Flexi plans, either alone or in combination with SPAs and/or LTAs, constituted discrimination by Telstra between persons who acquired telecommunications services in the markets referred to in paragraphs 26(1), (ii), (v), (vi), (ix), (x) and (xix) - (xxii) above in relation to the charges for those services and the terms and conditions upon which those services were supplied in contravention of sections 183 and 184(3) of the Telecommunications Act.
(d)BTA was and is an aggrieved person in respect of Telstra’s said contravention of sections 183 and 184 of the Telecommunications Act.”
BTA claimed, inter alia, damages and injunctions pursuant to s 186 of the TC Act.
The May 1996 Discovery Order
The May 1996 discovery order against Telstra contained the following provisions relevant to the current dispute
“That in the following orders and schedules:
‘market and competition issues’ means the issues raised by paragraphs 26(b) and 27 of the Amended Statement of Claim...;
‘high level documents’ means reports, analyses, surveys, plans, business plans, studies, feasibility studies, strategy or policy documents, manuals, forecasts, assessments, registers, submissions, schedules or similar documents, including documents in electronic format, which aggregate or summarise information or data;
...
Discovery by Telstra in relation to the market and competition issues
2.That, subject and without prejudice to [BT’s] right to request or apply for further discovery by [Telstra] in any area, [Telstra] shall give discovery by verified list in relation to the market and competition issues as follows:
(a)High level documents which are or were during the period in the possession of custody of any of the initial personnel and which are within one or more of the following categories in Schedule One:
...2.14;
...6.1.
...
Discovery by Telstra in relation to issues other than the market and competition issues
3. That, subject and without prejudice to [BT’s] right to request or apply for further discovery by [Telstra] in any area, [Telstra] shall give discovery by verified list in relation to the issues other than the market and competition issues as set out in Schedule Two provided that nothing in this order is intended to or shall impose upon [Telstra] an obligation to give discovery that is any more extensive than would be required by an order for general discovery and this order is further subject to any written agreement between the parties limiting discovery.”
Schedule One to the order included the following paragraphs:
“2.14 High level documents evidencing or referring to:
(a) the reasons why Telstra developed or should develop;
(b) the form in which Telstra has developed or should develop;
(c) the impact on competition and Telstra’s market share of;
(d) the commercial justification for;(e)whether there was any cost justification for the discounts offered or to be offered by; and/or
(f)the operation or success or otherwise of,
any customer selectable charging options (such as Strategic Partnership Agreements and Flexi-plans).
...
6REGULATORY AUTHORITIES
6.1Correspondence between, notes of meetings with and high level documents submitted to or received from Austel, the Commonwealth Government, the Commonwealth Minister with responsibility for telecommunications or the Trade Practices Commission in relation to:
(a)pricing strategies;
(b)competitive activities;
(c)price and competition regulation;
(d)market definition, market power and market dominance; and
(e)breaches or alleged breaches of the Telecommunications Act;
(f)customer selectable pricing plans; or
(g)proposed or requested amendments to the regulatory arrangements for telecommunications.”
Schedule Two to the order included the following paragraphs:
“19.Documents, recording, referring to or evidencing (but, except in the case of high level documents specifically referred to in this paragraph 19, excluding at this stage documents relating solely to customers of Telstra located outside the State of New South Wales or relating solely to the Commonwealth Government or its instrumentalities):
...
19.4the sale or attempted sale or renewal of any Flexi-plan or other discount plan to or with the Government or any NSWG Agency on or after 20 November 1992 and up to 1 August 1995, including any information provided to the Government or any NSWG Agency about the alleged benefits of any Flexi-plan, SPA or LTA but limited at this stage to correspondence, Telstra memoranda, file notes, meeting notes, telephone notes and marketing material sent by Telstra to any NSWG Entity or NSWG Agency;
19.5the sale or proposed sale of Flexi-plans in combination or association with SPAs or LTAs, any complaint or query by or to AUSTEL about that and any submission or proposed submission to AUSTEL about that.”
The Second Amended Statement of Claim
BTA’s pleaded case in relation to the cause of action under the TC Act was substantially amended and expanded in the second statement of claim. After pleading the relevant provisions of the TC Act (pars 35A, 35B), the second statement of claim pleads that Telstra was a “carrier” within the meaning of the TC Act (par 35C) and was at all times in a position to dominate the relevant markets for telecommunications services (par 35D).
BTA pleads its case in relation to Flexi-plans as follows:
“35E At all material times each of CNH and CVPN was:
(a)a ‘telecommunications service’ within the meaning of section 5 of the Telecommunications Act; and
(b)a ‘basic carriage service’ within the meanings of sections 5 and 174 of the Act
which was, was to be, or had been supplied by Telstra.
35FBetween November 1992 and July 1994 or thereabouts, and at such other times as may be material, Telstra marketed ‘Flexi-plans’ to Agencies either alone or in combination with ‘Strategic Partnership Agreements’ and ‘Long Term Agreements’.
35GThe offering of discounts by Telstra by way of Flexi-plans, either alone or in combination with Strategic Partnership Agreements and Long Term Agreements or either of them, constituted discrimination, in contravention of section 183(1) of the Telecommunications Act, between persons who acquired telecommunications in one or other of [the pleaded markets] in relation to each of: (A) the charges for telecommunications services; and (B) the terms and conditions upon which those services were supplied.
35HThe following factors were at all material times indicative of the discriminatory features and operation of Flexi-plans for the purpose of section 183(1) of the Telecommunications Act:
(a)Flexi-plans discriminated between those persons who paid Telstra a monthly fee to join the Flexi-plan and those who did not;
(b)Flexi-plans discriminated between persons who selected Flexi-plans according to whether or not those persons had calling line identification facilities;
(c)Flexi-plans discriminated between high-usage customers and low-usage customers;
(d)Flexi-plans discriminated between customers in that they provided a discount on one service for the reason that the customer’s expenditure on another service or other services was at or about a certain level.
35IThe offering of discounts by Telstra by way of Flexi-plans, either alone or in combination with Strategic Partnership Agreements and Long Term Agreements or either of them, constituted a contravention of section 184(3) of the Telecommunications Act in that Flexi-plans provided a discount on one service for the reason that the customer’s expenditure on other services was at or about a certain level.
In relation to Strategic Partnership Tariffs, the case is pleaded as follows:
35JBetween November 1992 and June 1994 or thereabouts Telstra offered to supply and did supply to persons in Australia telecommunications services in accordance with its Strategic Partnerships Tariff Types 1.01 and/or 1.02 (“SPT”).
35KTelstra’s offers to supply and supply of telecommunications services in accordance with the SPT, as alleged in paragraph 35J above, were on the express basis that persons using those services (“customers”) execute a Strategic Partnership Agreement with Telstra on terms which include the following:
(a)the Strategic Partnership Agreement was to have a duration of 3, 4 or 5 years;
(b)Telstra would allow to the customer a discount in relation to the supply of each service supplied under the SPT;
(c)a customer was required to purchase from Telstra in each year of the operation of the Agreement a nominated minimum amount of telecommunications services.
35LAt all material times the SPT provided for Telstra to supply telecommunications services to the public:
(a)at prices which were less than Telstra’s standard prices; and
(b)on terms and conditions which were different from Telstra’s standard terms and conditions;
in circumstances in which the customer acquiring those services had (amongst other things):
(c)purchased telecommunication services from Telstra valued at not less than $1 million per annum; and
(d)entered into a Strategic Partnership Agreement with Telstra pursuant to the SPT.
35MTelstra’s offers to supply and supply of telecommunications services under each Strategic Partnership Agreement pursuant to the SPT, as alleged in paragraphs 35J to 35L (inclusive) above, constituted discrimination, in contravention of section 183(1) of the Telecommunications Act between those persons who acquired telecommunications services in one or other of [the pleaded markets] in relation to each of: (A) the charges for telecommunications services; and (B) the terms and conditions upon which those services were supplied.
35NThe following factors were at all material times indicative of the discriminatory features and operation of Strategic Partnership Agreements entered into pursuant to the SPT for the purpose of section 183(1) of the Telecommunications Act:
(a)Strategic Partnership Agreements discriminated between those persons who executed a Strategic Partnership Agreement with Telstra and those who did not;
(b)Strategic Partnership Agreements discriminated between persons who executed Strategic Partnership Agreements according to whether or not those persons had calling line identification facilities;
(c)Strategic Partnership Agreements discriminated between persons who were high usage customers and those who were low usage customers;
(d)Strategic Partnership Agreements discriminated between customers in that they provided a discount on one service for the reason that the customer’s expenditure on another service or other services was at or about a certain level.
35OTelstra’s provision of discounts by way of Strategic Partnership Agreements pursuant to the SPT as alleged above at all material times constituted a contravention of section 184(3) of the Telecommunications Act in that Strategic Partnership Agreements pursuant to the SPT provided a discount on one service for the reason that the customer’s expenditure on other services was at or about a certain level.”
BTA is said to be an aggrieved person in the manner alleged in pars 35P and 35Q:
“35PBTA suffered loss and damage by reason of Telstra’s contraventions of sections 183(1) and 184(3) of the Telecommunications Act, as alleged above, in that the illegal marketing and sale of telecommunications services by Telstra:
(a)obstructed and hindered BTA in its endeavours to ensure that the Government and Agencies of the Government obtained Required Services under the TDN Agreement and (in the case of Agencies) entered into Agency Service Agreements with BTA for, inter alia, connection to VPN (including CNH) pursuant to the TDN Agreement, and generally operated as a disincentive for the Government and Agencies to transact business with BTA;
(b)obstructed and hindered BTA’s opportunities for marketing and selling VPN services, long distance services and local call services utilising the TDN to customers generally (including customers other than the Government and Agencies).
364QHaving suffered loss and damage by reason of Telstra’s contraventions of sections 183(1) and 184(3) of the Telecommunications Act, BTA is and was at all material times an ‘aggrieved person’ within the meaning of section 186 of the Telecommunications Act 1991.”
Particulars of Damages
On 11 July 1997, Telstra’s solicitors requested BT to provide further and better particulars of the second statement of claim. The letter included a request, in relation to par 35P of the second statement of claim, that BT provide full particulars of the loss or damage suffered by BTA as a result of Telstra’s alleged contravention of the TC Act. This elicited the following response from BT’s solicitors:
“BTA expects to provide particulars as part of witness statements in the course of preparation. In any event, it reserves a right to review the question of particulars following completion of discovery by Telstra and NSWG.”
On 24 March 1998, BT forwarded to Telstra’s solicitors what were described as “Particulars of BTA’s Expectation Damages - Loss of Business Opportunities”. This description rather suggests that the particulars relate to damages for breach of contract or, perhaps, for inducing breach of contract. However, Mr Margo assured me that they were intended to provide particulars of BTA’s claim for damages against Telstra for its contravention of the TC Act.
The particulars are as follows:
“Particulars of BTA’s Expectation Damages - Loss Business Opportunities
1.BTA claims damages for loss of business opportunities and the profits which would have accrued therefrom.
2.It was the intention of BTA and was in the contemplation of the parties at the time of BTA’s entry into the TDN Agreement and/or subsequently that at some time or times during the term of the TDN Agreement BTA would have business opportunities arising out of the construction, operation and growth of the TDN.
3.As a result of the construction, operation and growth of the TDN, BTA would have established strong connection with the Government and the Agencies and would have been in a position to take advantage of opportunities for the provision of telecommunications services in Australia to customers generally arising from technological developments and advances, progressive deregulation of the Australian telecommunications industry, development or expansion of existing areas of opportunity and the creation or exploitation of new opportunities for the supply of telecommunications services.
4.For instance, BTA could have adopted the strategy of entering the segment servicing large customers with telecommunications services in Australia, building that segment to include customers and suppliers of those customers, breaking out into the local market generally, and broadening the services offered to customers.
5.The opportunities included at least:
(a)The opportunity to enter and provide services in the market or markets or segments of markets for the following services:
Local Calls
International Voice calls
Domestic long distance voice calls
Data & Applications
Mobile
Outsourcing/facilities management
Video
Equipment Supply
(b)The opportunity of incorporating State Owned Infrastructure into the TDN after deregulation of telecommunications in 1997.
(c)The opportunity of acquiring an interest in AAPT.
6.The contemplation of the parties and the intention of BTA appears in or is to be inferred from the following:
(a)The terms of the TDN Agreement;
(b)The extent and nature of the TDN to be established under the TDN Agreement;
(c)The extent of BTA’s obligations under the TDN Agreement;
(d)The statements in the documents specified in Part D and Confidential Schedules 14, 15 and 16 of Mr Vella’s Second Report on Damages.
7.Because the TDN Agreement was repudiated by the Government in breach of contract induced by Telstra, BTA lost the opportunities referred to in 3, 4 and 5 above. BTA will contend that it would probably have exploited the opportunities had the TDN Agreement remained on foot and the TDN had been fully established and functioned under it, in the light of the facts and matters particularised in 6 above and the evidence adduced at trial.
8.In relation to lost business opportunities, BTA claims damages. Examples of assessment and valuation of the specific opportunities identified in 5 above and the method of principles of assessment and valuation are set out in Part D and confidential Schedule 16 of Mr Vella’s Second Report on Damages.”
Further Background
I must confess to having experienced considerable difficulty in understanding BT’s position, not merely in relation to discovery but, more fundamentally, in relation to the case it intends to plead. The difficulty has arisen, in part, because BT’s position seems to have changed in the course of the litigation and, indeed, in the course of argument on the present application. Some further background is helpful in understanding the issues.
First, BTA’s claims in relation to the TC Act, as pleaded in the first statement of claim, was a limited one. The pleaded claim was that Telstra had sold Flexi-plans to “Agencies” either alone or in combination with SPAs. In fact, as Mr Margo informed me, none of the Agencies had executed an SPA; only the State did so. In any event, BTA pleaded that, because of the way Telstra had formulated the Flexi-plans and the CNH tariff, an Agency with a Flexi-plan would be discouraged from acquiring or maintaining services provided by BTA.
In addition to pleading a limited case, the first statement of claim used the concept of “Agencies” ambiguously. It is not clear whether that expression was intended to be confined to the 158 Agencies listed in the Schedule to the first statement of claim, or whether it encompassed all Agencies. Mr Margo suggested that the latter was intended, because par 4(a) of the first statement of claim defined the expression broadly. However, it is far from clear that par 4(a) was intended to apply to par 35A, which pleaded the case that Telstra had contravened the TC Act. Be that as it may, the first statement of claim appears only to have sought damages (relevantly) for BTA’s loss of business by reason of unlawful price discrimination by Telstra in the form of the Flexi-plans and the CNH tariff. The first statement of claim did not particularise the losses said to have been sustained by BTA by reason of Telstra’s alleged contravention of the TC Act.
Secondly, the May 1996 discovery order appears to have required Telstra to discover classes of documents considerably wider than the pleadings, in their then form, justified. In particular, it is difficult to understand why Telstra should have agreed to discover “high level documents” evidencing the matters referred to in par 2.14 of Schedule One to the order. The paragraph included, for example, any high level documents evidencing or referring to the commercial justification for or whether there was any cost justification for the discounts offered by any SPAs or Flexi-plans. Similarly, it is difficult to follow why correspondence within all the categories specified in par 6.1 of Schedule One was relevant to the issues pleaded. These seem to me further examples of what I have previously described as the discovery tail wagging the pleading dog. One might have thought that the proper scope of discovery would be defined by the issues identified in the pleadings, not by what happens to have been inserted by agreement into an order for discovery, regardless of the form of the pleadings.
Thirdly, as Mr Margo ultimately conceded in argument, the second statement of claim greatly expands the scope of BTA’s pleaded case. The revised pleading, as has been seen, addresses separately Telstra’s use of Flexi-plans and its use of SPAs.
Although the pleading in the second statement of claim relating to Flexi-plans is not notable for its clarity, it does not appear to increase materially the issues raised by par 35A of the first statement of claim. The central allegation on this aspect of the case is that Telstra marketed Flexi-plans to “Agencies”, either alone or in combination with SPAs (par 35F). The ambiguity relating to “Agencies” appeared to remain unresolved. The second statement of claim then alleges that the offering of discounts by Telstra by way of Flexi-plans, either alone or in combination with SPAs, constituted price discrimination in contravention of the TC Act (pars 35G to 35I).
While the precise scope of these allegations is not entirely clear, Mr Margo said he thought that par 35F “had the effect of confining the Flexi-plans section” of the pleading. As I understood him, par 35E to 35I are intended to plead that Telstra engaged in unlawful price discrimination through its use of Flexi-plans in relation to Agencies. Because of this discrimination it is said (as I follow the pleading) that BTA was disadvantaged in its attempts to sell telecommunications services to the Agencies. BTA (so it claims) was thus deprived not only of the Agencies’ business, but of a springboard for using the TDN to supply telecommunications services to the wider telecommunications market.
Whatever the position concerning pars 35E to 35I, BTA’s pleaded case in relation to SPAs, in my opinion, clearly expands the scope of BTA’s claim. Paragraphs 35J to 35O of the second statement of claim plead that Telstra’s supply of telecommunications services under each of the SPAs entered into by it constituted price discrimination by it in one or more of a number of markets, in contravention of s 183(1) of the TC Act. I was informed from the bar table that there may ultimately have been some seventy SPAs entered into between Telstra and its large customers. Whether or not this estimate is accurate, the inclusion of pars 35J to 35O greatly increased the range of issues in dispute between the parties and, thus, the volume of documents potentially discoverable in the proceedings by Telstra. That this is so seems to me to be reinforced by the terms of par 35P of the second statement of claim . Paragraph 35P asserts, inter alia, that BTA suffered loss and damage by reason of Telstra’s contravention of s 183(1) of the TC Act. That loss and damage is said to have flowed from the obstruction to BTA’s opportunities for marketing and selling VPN services and other services utilising the TDN “to customers generally (including customers other than the Government and Agencies)”.
Fourthly, prior to filing the second statement of claim BTA asserted in a letter from its solicitors of 14 January 1997, directed to Telstra’s solicitors, that
“[t]he proposed amendments should not expand the scope of your and our clients’ discovery and inspection, being matters which are within the factual ambit of the existing issues in the proceedings”. (Emphasis added.)
Mr Margo, as I understood him, ultimately conceded that this statement was not accurate, but asserted that Telstra had always understood the correct position (whatever that may have been).
When pressed on this matter, Mr Margo said in argument that there was no need separately to consider the discriminatory nature of all seventy or so SPAs, because their discriminatory character could be established by reference to “the published tariff version of them” (Ts 77). He then said this (Ts 78):
“We will preserve however the claim relating to other SPAs just for the purpose of giving us an area of damages if and when we get through the gate of the TDN and the opportunity that the market has shrunk or condensed..., but it would not add significantly to the burden of discovery in my submission because although we plead widely, we are not seeking wide discovery. All we are seeking in that connection is this 8.1(b) and we are happy to take it in the form of admissions, schedule or whatever and if it is not sufficient that is our problem. We do not want or seek of our case to be flooded with the 45,000 documents from Melbourne and that is at one level the issue between Telstra and BTA on this application.”
Like a good deal in this case, I am left in some doubt as to what Mr Margo intended to convey in this passage. As I follow him, however, BTA has pleaded a cause of action in broad terms in pars 35J to 35O, in part at least, so that it can rely on the illegality of the SPAs as an element in making out its claim for damages against Telstra arising from other alleged contraventions of the TC Act.
Fifthly, BT relies on a variety of documents as providing particulars of its claim for damages under the TC Act. Mr Margo says that the claim is particularised in the letter of 24 March 1998, despite the heading to that letter which, as I have already noted, refers to “Expectation Damages”. For myself, I find it rather difficult to relate what is put in that letter to the pleaded causes of action arising under the TC Act, as distinct from other pleaded causes of action, notably those in contract or in tort (for inducing breach of contract). Nonetheless, as I have noted, Mr Margo says that the document was intended to particularise the claim under the TC Act.
Mr Margo relies also on correspondence in which BT describes its claims as one for
“loss of custom (as distinct from loss of particular customers) as a result of the discriminatory SPA tariff” (see letter of 27 April 1998).
Mr Margo suggests that this assertion both narrows and elucidates BT’s claim for damages. On the contrary, I think it makes BT’s case more difficult to follow. The authorities dealing with defamation claims in which damages for loss of custom are sought suggest that such a claim should be particularised: Bickel v John Fairfax & Sons Ltd [1981] 2 NSWLR 474 (S Ct NSW/Hunt J), at 484. I think that there is considerable force in Mr Street’s submission that the absence of particulars of loss of custom is a significant defect in the presentation of BT’s case.
Mr Margo then says that, in any event, further details of BT’s damages claim are provided in the expert reports already filed. But these are lengthy documents that appear to address issues travelling well beyond the case as presently pleaded. Nor do they attempt to make out a “loss of custom” claim of the kind foreshadowed by BT’s correspondence. In any event, they are no substitute for proper pleadings and particulars, especially in a case of this magnitude and complexity.
Sixthly, in the course of argument Mr Margo accepted that the experts’ report already filed on behalf of BT records admissions made in documents already discovered by Telstra that SPAs were discriminatory and not cost justified. Mr Margo also said that BT is confident that the material already put on by the experts established a case of price discrimination by Telstra in relation to the State and its Agencies. Although he sought to withdraw this comment later, I see no reason not to take it at face value. Moreover, the experts’ report filed on behalf of BTA asserts that Telstra bears the onus of proving that discounts given under the SPAs were cost justified, where discrimination under ss 183 and 184 of the TC Act is alleged. The report also asserts that breaches of s 184(3) of the TC Act are apparent from the terms of the Telstra Tariff itself.
Reasoning
This account demonstrates, in my view, that BT’s claim for damages by reason of Telstra’s alleged breach of the TC Act has not been and is not now clearly pleaded or particularised. As a consequence, there remain considerable ambiguities and uncertainties in BT’s pleaded case. This makes it more difficult than it should be to assess whether BT has a genuine need for any particular class of documents in order to make out its claim.
Having regard to the deficiencies I have identified, responsibility for which must be laid at BT’s door, I do not think that BT has established that it needs either category of documents it seeks in order to prepare its case for trial. The observations made by Mr Margo in the course of argument and the approach taken by the experts in their report tend to support the contrary view. So, too, does BT’s statement in correspondence, pre-dating the filing of the second statement of claim, that the proposed amendments to the pleadings would not substantially expand the scope of discovery.
Furthermore, it is necessary to take into account the stage these proceedings have reached and the burden that would be imposed by the orders sought by BT. If Telstra were required to discover the documents sought by BT, especially those specified in par 8.1(a), the probabilities are that it would be required to undertake further extensive and time-consuming searches. As I have repeatedly observed, discovery in this case has assumed mammoth proportions, at vast expense to the parties and at a very considerable cost to the Court in terms of hearing time and the burden of preparing judgments. (By way of illustration the parties have required twelve full hearing days since 1 December 1997, together with numerous extended directions hearings. This is the eleventh reserved interlocutory judgment in these proceedings.) I have little doubt that much of this expense and effort has been unnecessary, in the sense that it has not been required for the fair and orderly preparation of the proceedings for trial. It must also be borne in mind that the trial has been set down for February 1999, a date that all parties say they are anxious to retain.
In my view, BT should not receive the benefit of further orders for discovery in the absence of establishing a genuine need, in the interests of fairness, to inspect the classes of documents that have been identified. Unlike some other discovery disputes in these proceedings, this is not an instance of Telstra having defaulted in performing its clear obligations under earlier orders of the Court. It follows from what I have said that BT has not established that it needs the documents in order to prepare for the hearing of this case.
I have not overlooked the fact that the class of documents identified in par 8.1(b) is narrower than that in par 8.1(a). It is fair to say that the burden of complying with par 8.1(b) is not as great as that which would be imposed on Telstra by par 8.1(a). But I am not satisfied that BT requires discovery of these documents in order to have fair opportunity to prepare for trial. Indeed, given that Mr Margo acknowledged that BT intends to make out its case of illegal price discrimination by reference to the terms of the State’s SPA, it is difficult to see why BT requires access to the documents specified in par 8.1(b). It may be that, if BT’s case had been fully and clearly pleaded and particularised, the answer would have been more apparent. On the basis of the material before me, however, I do not think an order in terms of par 8.1(b) should be made.
BT’s claim should be dismissed.
I certify that this and the preceding eighteen (18) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville.
Associate:
Dated: 15 May, 1998
Counsel for the Applicant: Mr R Margo and Mr J Bartos Solicitor for the Applicant: Middletons Moore & Bevins. Counsel for the First Respondent Mr J M Stowe QC and Mr D R Stack Solicitor for the First Respondent Crown Solicitors Office Counsel for the Second Respondent:
Mr A W Street SC and Mr J R J Lockhart
Solicitor for the Second Respondent: Blake Dawson Waldron. Date of Hearing:
30 April 1998
Date of Judgment: 15 May, 1998
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