Rehn v Australian Football League

REHN v AUSTRALIAN FOOTBALL LEAGUE & ORS
[2003] SASC 159
Civil
Doyle CJ

A defendant in an action in this court has appealed against a Master’s Order that the defendant discover and produce for inspection certain documents in the defendant’s possession.
Two main issues arise on the appeal. Are the documents “directly relevant to any issue arising on the pleadings”, and so documents which the defendant should have discovered, without the necessity for an Order, by virtue of r58A.03? Alternatively, is the Order supportable under r58A.04(1) on the basis that the documents are “indirectly relevant to any issue arising on the pleadings” and that it is “in the interests of justice” that the documents be discovered and produced?
There is a subsidiary issue of whether one of the plaintiff’s solicitors should be permitted to inspect the documents.
Facts
The following facts are drawn from the pleadings. As yet there has not been a trial.
Mr Rehn was employed as a football player for the Adelaide Football Club (“AFC”). He was employed to play in the national competition conducted by the Australian Football League (“AFL”). Both AFC and AFL are parties to his contract of employment.
Mr Rehn claims that in 1999 he was “the premier ruckman” playing for AFC and one of the best ruckmen in the AFL competition.
In February 1999 he injured his knee during the course of a game when he slipped on the plate on which the ball was bounced at centre bounces. He suffered a serious knee injury.
Mr Rehn claims that AFC and AFL and the South Australian National Football League Inc. are liable to pay damages to him for the injury that he sustained.
Mr Rehn claims that he has suffered and will suffer a loss of earning capacity as a result of his injury. The particulars of loss in the Statement of Claim refer to loss of income earned under his contract as a player: Statement of Claim, para 22.2.13. The particulars of loss provided under r46.15 refer to loss of income from endorsements.
It is clear enough that Mr Rehn claims damages for impairment of his capacity to earn income as a player and for loss of opportunities to use his standing as a player to gain income from endorsing products and like activities.
The Master’s order
Mr Rehn sought discovery and production by AFL of contracts held by AFL. He sought discovery of player contracts (contracts between AFL clubs and players) and marketing contracts (apparently contracts between players and persons willing to pay players for the right to exploit commercially the player’s reputation). AFL opposed the application.
The Master ordered discovery and production of the following documents:
“1.1 The playing contracts of every player in the AFL competition who earned the sum of $245,000.00 and above per football season for the 2000, 2001 and 2002 football seasons, limited to the income of each player, the tenure and name of each player
1.2 The marketing contracts of every player in the AFL competition who earned the sum of $245,000.00 and above per football season for the 2000, 2001 and 2002 football seasons, with information pertaining to the identity of third parties to be masked”
The Master authorised nominated persons to inspect and to copy the contracts, subject to them signing an undertaking relating to disclosure of the contents of the contracts and to the use of the contents of the contracts. There are some problems with the form of the undertaking, but nothing turns on that.
No information was put before the Master or before me that identifies the number of contracts that must be produced. However, AFL exhibited to an affidavit before the Master copies of some of the documents discovered by it, relating to payments to players, presumably under player contracts. One of these documents is a schedule of player payments in which those payments are shown by reference to bands or levels of dollar amounts and the number of players in each band or level.
From that schedule I can tell that 168 players received $200,000 or more under their player contracts in 2002; that 147 players received $200,000 or more under their player contracts in 2001 and that 112 players received $200,000 or more under their player contracts in 2000. The number of contracts to be produced will be less than the numbers just stated. AFL need not produce the contracts for players who earned between $200,000 and $249,000. Some player contracts operate for more than one year. I have no means of being any more precise than that as to the number of contracts to be produced. By reference to the number of players appearing in the bands or levels below $200,000 I estimate that for the years 2000 and 2001 the AFL will have to produce the contracts for something less than one quarter of all players, and for the year 2002 something less than one third of all players.
The parties informed me that the amount of $245,000 appearing in the Order is the amount earned by Mr Rehn in his last year as a player. The Order therefore requires AFL to discover and to produce the contracts of players who, in the years specified, earned as much as or more than Mr Rehn earned in his last year as a player.
An affidavit filed to support the application to the Master states that Mr Rehn’s solicitors propose to give copies of the contracts to a firm of chartered accountants to enable them to produce “a forensic accounting report”. No further detail is given.
The pleadings and issues arising on the pleadings
The pleadings in the action are governed by r46A. Accordingly, Mr Rehn was permitted to plead only “the general effect” of his injuries on his capacity to work: r46A.04. The Defence puts in issue the claim of loss of earning capacity. The affidavit of loss, filed pursuant to r46A.11 refers rather generally to loss attributable to losing “the benefit of endorsements”.
An issue arising on the pleadings is whether Mr Rehn has suffered a loss of earning capacity and, if he has, the nature and extent of such loss.
Mr Walsh QC, counsel for Mr Rehn before me, said that Mr Rehn’s case at trial will be that the player contracts to be produced will indicate a range of payments to players, and that the case will be that his payments would have fallen somewhere within that range. It will be a matter for judgment at trial where Mr Rehn puts himself within that range. It is likely that at trial his counsel will select certain players as being, for various reasons, closely comparable in terms of earning capacity, and that they will be a particular focus of his case. The player contracts will also be used to prepare a chart showing the rate of change of player payments over the years. Not much was said about the marketing contracts. I assume that the marketing contracts will be used in a similar fashion, but whether they will provide useful information is less clear, bearing in mind that they might well provide for payments by reference to products sold, or by reference to promotional appearances. An inspection of the contracts might not give any real indication of the amount earned by the player under the contract.
I mention here that in a case like this the plaintiff should, in my opinion, identify clearly the intended use of the documents to be produced. The proposed use is important in deciding if the documents have to be produced, or should be produced. It is not enough to say that they will be used to produce an expert report. In the present case I can leave it at that, because the proposed use identified by Mr Walsh is an obvious one.
Are the contracts directly relevant to an issue arising on the pleadings?
In Quenchy Crusta Sales Pty Ltd v Logi-Tech Pty Ltd (2002) 223 LSJS 266, [2002] SASC 374 I referred briefly to the reason for the changed approach to discovery reflected by the terms of r58A.03, which provides:
“The parties must discover in their list of documents, but discover only, the documents which are or have been in their possession, custody or power which are directly relevant to any issue arising on the pleadings.”
The purpose is, clearly enough, to limit the scope of discovery so that unnecessary discovery will not be made. It was widely accepted that the cost of the discovery process, because of the breadth of the former obligation to make discovery, was disproportionate to the contribution the discovery process made to the just and efficient disposition of civil litigation.
The obligation to make discovery is now limited to documents directly relevant to an issue arising on the pleadings. The meaning to be given to r58A.03 is to be found to some extent in the contrast with the former obligation to discover documents relating to any matter in question in an action, an obligation which had been interpreted broadly: see Mulley v Manifold (1959) 103 CLR 341 at 345 Menzies J, and Quenchy Crusta at [8]-[13]. Thus the meaning of r58A.03 emerges, in part, from an understanding of the change that it was intended to effect.
However, as I commented in Quenchy Crusta, it is not possible to state precisely the effect of the adverb “directly” in r58A.03. Indirect relevance to an issue is not enough for the purposes of r58A.03, but distinguishing between direct and indirect relevance is not easy.
It is consistent with the intent of r58A.03 to apply the requirement of direct relevance firmly, and to give it a relatively narrow meaning. To hold that a document is not directly relevant to an issue arising on the pleadings is not to deprive a party of access to the document. The effect of such a holding is merely that the requirement to discover the document is not imposed by r58A.03, and that the court will decide, on application to it, whether the document must be discovered. In other words, r58A.03 draws the line between an obligation to make discovery as a matter of course, and an obligation to make discovery upon application to the court and after the court has considered whether the interests of justice requires that discovery should be made.
Another point relevant to the meaning of r58A.03 is that the rule assumes that a party is able to decide, from the pleadings, what documents must be discovered. This also suggests a narrow meaning for “directly relevant”. It would be counter-productive if a party was expected to discover documents because they might be relevant, depending on how the other party’s case was put at trial. r58A.03 assumes that a party can determine that party’s obligation to make discovery by reference to the pleadings.
I consider that a document that demonstrates Mr Rehn’s earning capacity at the time of his injury, and a document that demonstrates what his earning capacity would have been at trial but for his injury, would be directly relevant to an issue arising on the pleadings. That, perhaps, is self-evident. The problem is, how to distinguish between such a document and one that is relevant to the issue, but not directly relevant.
In the case of an injured worker claiming damages from the worker’s employer, the employer’s records of payments to the worker who replaced the injured worker, or the record of payments to a worker doing the same work, would in my opinion be directly relevant to the issue of the injured worker’s earning capacity but for the injury. On the other hand, the employer’s record of payments to workers doing merely similar work, or records of payments to workers doing different work, but work which the plaintiff might have done apart from the injury, I would regard as indirectly relevant to the issue of the worker’s loss of earning capacity. The latter category of documents would arguably provide relevant material in valuing the lost earning capacity, and might help to provide upper and lower limits to the value of that capacity. But, it seems to me, such material can fairly be regarded as indirectly relevant rather than as directly relevant.
The line that I draw does not reflect what might be called a logical distinction. In the end, all of the material referred to can be used to prove the value of the lost earning capacity. The line reflects an attempt to give content to the emphasis apparently intended by the requirement of direct relevance.
The distinction that I draw also reflects my assessment of what a defendant employer might be expected to be able to assess on the basis of the pleadings in such a case, without knowing how the injured worker would put the worker’s case at trial.
Applying that approach to the present case, my view is that the documents that the AFL must produce are not directly relevant to the issue of loss of earning capacity. The AFL is required to produce the contracts of a fairly large group of players, a good number of whose earnings might do no more than set a floor or ceiling as it were to the claim. I acknowledge that within the group of players there will be players who could be regarded as having an earning capacity closely comparable to that of Mr Rehn. However, that does not make the class of documents to be produced directly relevant. It merely means that within the class are some documents that might be or will be directly relevant to an issue on the pleadings. The same comment applies with somewhat greater force to the marketing contracts, because of the doubt about the value of the information to be found in them.
I acknowledge the point made by Mr Walsh, that the class of documents can be described as embracing the contracts of players who in the relevant years earned an amount equal to or greater than that earned by Mr Rehn in his last year as a player. However, describing the class in that manner does not to me make the class directly relevant.
I should add, because of a point made in argument, that in my view an order requiring AFL to discover and to produce the contracts of players whose earnings are comparable to what Mr Rehn would have earned but for his injury, would not be an appropriate order. Such an order would require the AFL to form views about the claim by Mr Rehn that AFL cannot be required to form.
For those reasons, I consider that the order of the Master is not supportable as an order made to enforce the obligation imposed by r58A.03.
Is it in the interest of justice to order production?
There can be no doubt that the contracts are indirectly relevant to the issue of loss of earning capacity. Accordingly, the issue under r58A.04 is whether it is in the interests of justice that production be ordered.
Matters relevant to the interests of justice will vary from case to case. Often a proper consideration of those matters will require proof by the relevant party, by affidavit, of facts relevant to the particular matter. In the present case the material is very sparse.
I accept that access to the contracts is likely to be of considerable assistance to Mr Rehn’s advisers. It is an efficient way of collecting relevant information. The information in the contracts will be relevant to proof of the value of his lost earning capacity, and it is likely that among the contracts will be the contracts of players who will be found to be comparable in terms of earning capacity to Mr Rehn.
On the other hand, there is no material before me to suggest that some or much of this information could not be obtained by a direct approach to players, or to leading players. I recognise that this would be less convenient from the point of view of Mr Rehn’s advisers, but that is only one factor. I am prepared to assume that direct approaches would be rejected in some cases, but I am not prepared to assume that all or most players would refuse to assist Mr Rehn in this way. That is a factor that weighs against the making of the order.
Reports published by AFL, some at least of which were before the Master, provide some of the information sought. As I have already indicated, they disclose player payments by reference to bands or levels of payment, and the number of players in each band or level. They do not provide names, or the actual amount paid in each case. This information would enable general trends in payments to be tracked. It also provides some indication of the amount likely to be paid to a player. For example, if Mr Rehn claims that his earning capacity was equal to that of the best 10% of players, the published information enables one to estimate the earnings of the best 10% of players. On the other hand, it is not clear whether the AFL or AFC would accept this material as proof of these matters. One would hope that they would, but no formal admission has been made to that effect. These matters also tell slightly against the making of the Order.
On the other hand, and this is a matter of some significance, AFL has not attempted to establish that the production of the contracts is an onerous task or will involve significant expense. It is not attempted to suggest that the inspection of the marketing contracts will not provide any useful information.
Nor has AFL provided to the court any information about the basis on which it holds the copy contracts, or about any obligation of confidentiality imposed on it by the player or club parties, by the AFL rules or by the contract itself.
I am prepared to assume that a number of players and clubs might object to the disclosure of the contracts. I am prepared to assume that they would object even allowing for the undertakings required by the Master, that are intended to protect confidentiality, and even allowing for the fact that the court will, at trial, take steps to preserve confidentiality. However, absent any evidence about this, I am not prepared to assume that all or most of the players and clubs affected will object, or that production of the contract involves a departure from a legal obligation otherwise binding on AFL. Nor am I prepared to assume that the intrusion on confidentiality, if there is one, is of a grave nature. For all I know it may be that much of this information is already known or partly known, and it may well be that players and clubs have no objection to provision of the information to Mr Rehn in connection with his claim, provided that appropriate undertakings are obtained.
Summarising things, the Order requires AFL to produce a substantial number of contracts, but there is no claim that the task imposed on it is an onerous one. The information obtained is likely to enable Mr Rehn’s solicitors in an efficient manner to provide the court with information helpful to his claim, and information that will assist the court in assessing his claim. The information will be more accurate and informative than a report based only on reports published by AFL. Some players and clubs may object to the disclosure, but there is no basis for me to conclude that this is a major factor.
Weighing matters up, I consider that it was open to the Master to make the Order. As it happens, the Master gave no reasons for the Order. Accordingly, it is appropriate for me to consider the matter afresh. On that basis I would have made the Order myself, mainly because of the potential utility of the information and because of the absence of any material to support a strong objection in the interests of justice to the making of the Order.
The Plaintiff’s solicitor
One of the persons permitted to inspect the documents is Mr Griffin, one of two solicitors from the firm acting for Mr Rehn.
An affidavit filed before the Master by the solicitor for AFC states that Mr Griffin acts as an agent for a number of players and adds:
“… I believe that it will not be possible for the plaintiff’s solicitor to ignore his knowledge from those document in that dual role.”
That is all that is said. This affidavit was used as a basis for a submission that in representing other players in their dealings with clubs, and I assume this would involve negotiating player payments, Mr Griffin will be unable to put out of his mind knowledge he has acquired of payments made to players under contracts produced in this action. The argument is that he will not be able to comply with his express undertaking, and with the implied obligation, not to use the information except for the purposes of this action.

I find it difficult to understand how, in negotiating with a club on behalf of another player, Mr Griffin could, from a practical point of view, put aside knowledge that he has acquired about payments made to players by the relevant club and other clubs under contracts produced by AFL. I can understand that such knowledge could be useful, although I have no means of assessing how useful it would be. I recognise that there are difficulties of proof on a matter like this, but I am left to speculate.
There is no indication that any club objects to this situation. Even AFC, which is a party to the action, has not clearly stated that it objects to Mr Griffin having access, although the fact that its solicitor filed the affidavit referred to suggests that it would. There is simply no information about the attitude of other clubs or any other person who might be affected in this way.
As I have mentioned, there is no evidence about the potential value of this information to Mr Griffin. For all I know an experienced agent might not find this information particularly useful. I simply do not know.
In the circumstances, unassisted by anything other than general knowledge, I consider that this matter does not require me to uphold the appeal, or to vary the Order to exclude Mr Griffin from the persons who may inspect the contracts.
It will be for Mr Griffin to decide whether to inspect the contracts. If he does, the issue of whether that compromises his ability to represent a player in later negotiations with an AFL club will have to be determined when the issue arises. Presumably the issue will arise if the Club takes objection to him acting. As I have said, I consider that it will be difficult to observe the undertaking. However, as between the parties before me, I consider that this is not a reason to set aside or to vary the order made.
Conclusion
For those reasons I would dismiss the appeal.

[2003] SASC 159

30 May 2003