Telstra Corp Ltd v AAP Telecommunications Pty Ltd

[1999] FCA 1112

FEDERAL COURT OF AUSTRALIA

Telstra Corp Ltd v AAP Telecommunications Pty Ltd [1999] FCA 1112

TELSTRA CORPORATION LIMITED v AAP TELECOMMUNICATIONS PTY LIMITED

NG 484 OF 1997
NG 449 OF 1997
NG 1124 OF 1997

THE HON JUSTICE MARCUS EINFELD AO

SYDNEY
12 AUGUST 1999

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 484 OF 1997 NG 449 OF 1997 NG 1125 OF 1997

BETWEEN:	TELSTRA CORPORATION LIMITED Applicant
AND:	AAP TELECOMMUNICATIONS PTY LIMITED Respondent

JUDGE:	THE HON JUSTICE MARCUS EINFELD AO
DATE:	12 AUGUST 1999
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. As is not uncommon when cases involving well known parties appear in the court lists, there are inquiries by media representatives to the Judge's chambers as to what the matter is intended to cover and presumably whether it might be of some interest to the public.  In this particular case, the media was informed that there was nothing of general interest in this morning’s proceedings.  It is just as well that they accepted the advice because they might have been shocked to learn how some lawyers behave in litigation, especially for parties that seem to have endless sums of money to debate arid issues with each other and then with the Court.  I cannot advise such parties how they should spend their money but I can restrict the wasting of time on frolics being extended to the Court.  The Court is entitled to expect the legal profession to present its litigation in a sensible and orderly fashion and not to bring applications that can and ought to be resolved without using valuable Court time.  This is one such example.

2. On 23 July the respondent filed a motion for discovery seeking five items or sets of items.  It appears from discussion this morning that there is no dispute about four of them in that material is likely to be produced in one form or another as sought in subparagraphs (b) to (f) of paragraph 1 of the motion.  Hence, the matter before the Court today is the discoverability of the documents set out in an annexure to a letter from AAPT’s solicitors to Telstra’s solicitors on 3 June 1999.

3. From the evidence before the Court, it has become clear that this letter was energised by an article which appeared in The Bulletin magazine on 6 April 1999, headed "Telstra Exposed".  In this article, there is reference to the existence of a number of documents which are, or were, said to be in the possession of Telstra and which, if correctly quoted, appear to have been made available in one form or another to the journalist who wrote the article.  The article is critical of Telstra but I am not interested in the journalist's overtones, observations or conclusions.  The only relevance of the article is the identification, apparently by direct quotation, of a number of documents that I am informed have not previously been discovered.  As a consequence, the letter of 3 June with its attached schedule was produced. 

4. Subsequently, the parties exchanged some forensic polemics which resulted at the end of the day in what was in effect a request by Telstra's lawyers of 28 June for the reasons why these documents are discoverable in this litigation.  That request drew an extensive reply from AAPT’s lawyers on 5 July which effectively goes through all the documents requested in the schedule to the letter of 3 June explaining in what way they arise from the pleadings and otherwise, and how the Court's rules and practice notes relevant to discovery make it necessary for the documents to be discovered. 

5. The complexity and extent of this exchange has, however, has not stopped counsel in this case from just talking from the bar table in flourishes and as if the Court is somehow on top of every specific individual minute issue in every pleading that has been filed and in the documents in question.  There are, for example, in the request for the documents a large number of technical terms which require explanation and some understanding in order to ascertain whether they are documents that prima facie arise from the pleadings.  In the presentation of the motion, the Court was not given the benefit of any assistance in that understanding except by general comment from the bar table, which is hardly an appropriate way of doing it when the matters concerned are so vigorously contested. 

6. Likewise can be categorised Telstra’s answers to the motion.  The argument was firstly presented as if the particularising letter of 5 July 1999 had never been written at all in that no reference was made to it when the motion was being argued.  Without the explanations in that letter, many of these documents would, on the description in the request, be doubtfully relevant or necessary in a discovery sense.   Yet that letter clearly answers the criticisms made of the desire for discovery of many of them.

7. Telstra secondly sought to answer the motion by oral assertions by counsel that the production of all or some of these documents would be highly oppressive to Telstra because they involve such a large number of documents.  Telstra is not an ordinary organisation and certainly not an individual.  It is the largest or one of the largest corporations in the country.  It has an enormous staff.  The material to which the request for discovery is directed has previously been identified in The Bulletin article and in other documents relating to this case, including the pleadings and correspondence between the parties.  It is not at all unlikely that at least many if not the majority of these documents have already been found, identified and put somewhere.   There is absolutely no evidence that production would be oppressive to Telstra or even that there are a large number of documents involved.  Without evidence that could be cross-examined on, it is simply unacceptable to respond to requests of this kind by saying that their production would be oppressive.

8. Telstra argued quite simplistically that because the National Access Agreement was entered into between these parties in June 1995 and that some references in The Bulletin article are to events, policies and documents in 1993 and the first half of 1994, there can be no potential relevance between the two.  Obviously if Telstra set up a policy in relation to some of the matters alleged here in the years prior to entering the agreement and that policy was still in operation at the time of the agreement, documents relating to the initiation of the policy or its expansion or promotion, albeit of earlier vintage, would clearly be discoverable.  As is well understood by every experienced lawyer, dates do not of themselves determine the discoverability of the material sought. 

9. By the same token, the fact that a particular subject is mentioned in some remote way in the cross-claim or elsewhere does not necessarily mean that all documents relevant to that subject become discoverable.  It depends in each case upon the context.  Furthermore, AAPT contended that an earlier order for discovery has in some way been breached by the failure to produce the further material now sought.  If so, it is not appropriate to deal with this submission in a motion for fresh discovery supported by a fresh affidavit.  Rather, proceedings should have been taken for the failure to comply with the earlier discovery order. 

10. The point I am making is that the arguments on this motion were just jumbled up in some confused global polemic way such as not to enable the Court to know what was ordered before, what has been pleaded, what has not been discovered and what should now be discovered in the light of additional material.  In the resolution of what is an important piece of litigation, the Court is simply not assisted at all by bundling everything together in a large bag, throwing it into the middle of the court room and hoping that the court will work out what is what from sweeping it up.  That is just simply not an acceptable strategy in this litigation in this Court at this time, if it ever is.  All I can say about it is that if this attitude is persisted in, the hearing date fixed for 6 December will be at risk and its continuation in 2000 will be even further delayed.  The parties have indicated to the Court that this litigation may take up to 6 months.  The capacity of the Court to deliver and administer justice in relation to all the other litigants is severely impeded by the prospect of such an extensive piece of litigation.  It is simply not justified that other litigants be penalised to satisfy the egos, forensic interests or tactical policies or strategies of parties that are of significant size.  They do and should know better. 

11. Coming to the schedule to the letter of 3 June, which effectively is the matter for determination on this motion, in principle the documents sought in paragraph 1 are manifestly discoverable.  AAPT is a reseller.  It is claiming that Telstra has breached an agreement with it in a number of respects, including that it would use its best endeavours to ensure that certain facilities were investigated, devised and trialled, and then made available to AAPT.  AAPT claims that Telstra did not comply with that agreement or at least delayed in doing so.  The documents to which paragraph 1 is directed are designed to address or are related to the addressing of those issues.

12. On the other hand, I have used the words ‘in principle’ because the paragraph is drafted in an extraordinarily broad and generic way.  In fact if you break it all down, it is not even grammatically sensible.  As that objection has not been taken, Telstra presumably knows what is being referred to, but when the request talks about electronic mail messages, just to choose one piece of it, recording, relating to or concerning Telstra's policies, strategies and procedures in respect of various matters, it includes exchanges between people about the most minor matters that could not conceivably have any serious relevance to the litigation.  Whenever a party seeks to discover material in such a generic and enormously extensive form, it runs the risk that it will actually not get anything like it is seeking because it could not be bothered drawing a distinction between the matters that are clearly producible and those that are not.

13. What AAPT is, in my view rightly, seeking is material which establishes whether Telstra had a policy or a strategy of making it difficult, to use a fairly pedestrian term, for resellers to compete with Telstra in the supply of telecommunication services to the public at large, and if so what it was.  This issue is not only of importance to the litigants, it is important to the public.  It is true that the documents sought here could in theory be a gigantic number of documents, but I suspect that they are more limited than would appear from the request.  “Board minutes” are unlikely to deal with this issue.  It is even difficult to imagine that Telstra had a “business plan” of obstructing or delaying access to services at a technical level.  Someone may have had a plan to do so but it is unlikely to have been a “business plan”.  What needs to be done, as I said at the outset of this motion, is for the parties to sit down sensibly, find out what material is available and organise between themselves for the supply of the manifestly discoverable documents in this connection.

14. The same thing may apply in paragraph 2 which deals with the so-called BCS tariffs.  The introductory part is the same as in paragraph 1 although the period is extended back by one year.  Although it is not immediately clear to me why that is the case, I do not think that the matter raises such an issue of principle as to require any delay on that ground, as the documents sought are explained and limited in the letter of 5 July, in particular in this case, I think, in paragraph 6 on page 2 of the letter.  As so re-phrased and re-cast, in relation to both paragraphs 1 and 2, it seems to me that it is clear what the respondent is seeking and it is also clear that the documents are discoverable. 

15. With regard to paragraph 3, again I have some difficulty understanding just precisely where this subject fits into the claim.  On the one hand, the request talks about the making available of technical services, designs and advances and then suddenly it goes into marketing plans.  These matters appear to be separate.  If so, they should be separated.  I do understand that pricing is an important part of the case made by AAPT and it does seem to me on the face of it that these documents, or some of them, are already embraced in some of the material that was previously ordered to be discovered.  Clearly the parties can be well aware of what issues are raised in relation to marketing and all documents that bear on that subject are plainly discoverable.  The same can be said of technical designs and the like.

16. Paragraph 4 is very similar to paragraph 3, except that it has the generic and well-recognised introductory lines of 1 and 2.  With the qualifying comments I made before in relation to the extensive language employed, those documents ought also to be discovered. 

17. Paragraph 5 is described in the letter of 5 July as only going to an aspect of Telstra's misuse of market power.  It is not there argued that paragraph 5, or for that matter 2 to 6 altogether, have anything to do with the national access agreement as AAPT has sought to argue today.  Telstra has sought to strike out the Part IV claim on which I have reserved judgment.  For the present, it is and should be treated as still part of the case.  On the other hand, it is difficult for me to understand how surveys by a polling organisation concerning the marketing or impact on consumers of Telstra's sale products and pricing mechanisms can have a great deal to do with the case.  No separate argument was directed towards this request, there is no particular reference to it that I have been able to ascertain in the letter of 5 July, and at the moment I cannot see what it has to do with the case.  If some argument is sought to be raised about it, it should be put in writing.  Discoverable documents going to the Part IV claim should be discovered while that claim is still part of the proceedings.

18. With regard to paragraph 6, with its similar generic introduction, there seems to be a request for documents showing views expressed by Telstra executives of the impact of Telstra's pricing activities on what is described here as “cost comparisons” for a potentially relevant period.  The relevance of the views of Telstra executives on what might be the impact of their pricing activities is a mystery to me, especially as the only explanation given for it in the letter of 5 July, again in this general way, is that they go to the Part IV claim.  It is said in that letter that these materials or these pricing plans were:

    …part of a strategy by Telstra to ensure that customers could not properly compare Telstra's pricing with that of AAPT and other resellers, and that there could be no effective price competition between AAPT and Telstra.

19. There is reference in the cross-claim to some such issue but I must confess that the idea that there should be discovered every e-mail of every Telstra executive giving his or her view of the impact of Telstra's pricing plans in relation to the competition with AAPT seems extreme.  It may be that there ought to be produced the views of the Telstra executives who are going to give evidence, and there may be aspects of the views of other Telstra executives on certain specific matters that are discoverable, but the wide sweep of paragraph 6 has not been explained in the letter of 5 July or from the bar table today.  It should be reframed in more specific terms and then negotiated with Telstra’s lawyers.

20. Paragraph 7 relates to a document identified in the Bulletin article.  In my opinion it is discoverable.  Paragraph 8, again with the wide sweep of introductory words familiar from other paragraphs, seems to be a request for information about Telstra's strategies for resale services.  This seems to be a request for exactly the same material as would presumably flow from paragraph 7.  At the moment I think the decision on paragraph 8 should be delayed until there has been discovered the document referred to in paragraph 7 which may summarise all of Telstra's views.  Otherwise there would be produced every draft of every view of every executive who has anything to do with resale services, and it is difficult to see how anything could flow from that, especially things like notes, records of meetings, memoranda and e-mail messages.  I can understand how documents which actually turn out to be policies of Telstra as an organisation could be discoverable but the periodic views of employees of Telstra which would be embraced by paragraph 8 strike me as being far beyond what should ordinarily be discovered.

21. Paragraph 9 is explained in paragraph 8 of the letter of 5 July, but in a remarkably cryptic way.  It was said there that Telstra's conduct in relation to the CustomNet Horizon (CNH) product is relevant to, amongst other things, "The barriers to entry in the markets pleaded by AAPT caused by Telstra's unilateral power in setting access conditions to resellers such as AAPT for services."  First of all, this shows that it goes to the Part IV claim and not to the national access agreement as AAPT alleged today.  Secondly, the use of words like, "amongst other things," indicates that there are some other things though what they are how the documents sought will be related to them is not explained.  Thirdly, it is very difficult to understand how, without further explanation, the CNH product is relevant to the barriers to entry which AAPT has pleaded.  There is certainly reference in the cross-claim to CNH, but it appears to be something quite specific and in a different context to what is sought in paragraph 9.  It has not been explained to me how the withdrawal of the CNH product and the design of some replacement product can have any relevance to the case at all.  It has not even been explained what the CNH product is, so I cannot conceivably imagine how its withdrawal is alleged to or could have affected AAPT.  At the moment I cannot see any relevance of the material sought in paragraph 9 at all, but I will give AAPT another opportunity to present it in writing if it cannot be resolved between the parties.

22. So far as concerns paragraph 10, counsel for Telstra took a rather broad forensic swipe at this request by saying that it required the production or discovery of private personal messages to girlfriends and other associates of the two gentlemen mentioned, despite the fact that in the letter of 5 July there is a specific restriction of the material sought to matters which were clearly relevant.  It is just not permissible to engage a Court in such play acting.  Clearly private messages by these two men would have no discoverability at all.  Mind you, the request itself should not have been in the terms used in paragraph 10 because on the face of it, it includes every e-mail message that these people sent or received.  Having regard to some of the material that comes through e-mails these days, including jokes and coloured pictures of people in various states of dress and undress, clearly the clause should have originally have been restricted to the matters set out in the letter of 5 July. 

23. This is another one of those examples where indulgent phraseology has resulted in an attempt to try and grab everything in sight.  Apart from anything else, much of it strikes me as being quite ungrammatical.  Further, as presumably it is intended to include things actually supplied by these people, not just sent to them, the use of the word "for" is unnecessarily restrictive.  In terms of paragraph 9 of the letter of 5 July, it seems to me that the revised form of paragraph 10 is discoverable, that is, the documents of or to Burdon and Yelland which relate to the strategies and conduct so far as concerned resellers for the period in question. 

1. Paragraph 11 has also not been properly explained.  In the letter of 5 July, it is said that the purpose of the FLEXCABS concept was to ensure that Telstra would maintain its monopoly position. It is not immediately clear how that assertion fits into the cross-claim.  I am not saying it does not, but at present I cannot see how the documents sought would advance, or would even be pertinent to, the claims made in the cross claim per se.  It is also oddly expressed – "High level or summary documents” relating to these things is a very vague concept indeed.  Perhaps Telstra's staff who look after documents might know what it means but I do not.  More importantly perhaps, it is not at all clear how the documents referred to will show that FLEXCABS was going to bear down on AAPT as such.

2. Telstra was entitled to maintain whatever monopoly positions the relevant legislation permitted.  If Parliament denied Telstra a monopoly position, then it would be in breach of the law to try to maintain it.  This relates not merely to AAPT, it relates to the public at large.  If Telstra is permitted to maintain its monopoly position by some legislative enactment, then so far as its policy was putting that monopoly position into effect, there is no role any policy could play, as far as I can see, in assisting AAPT in this litigation.  If the documents in paragraph 10 can be shown to have any relevance to the proceedings or to the cross claim, I will permit AAPT to argue the matter further in writing if it cannot otherwise be resolved.

3. I have made these summary observations to illustrate the way in which, in my view, the parties should approach the issue of discovery as it presently exists.  I cannot and will not make the order set out in paragraph 1(a) of the motion, but I am prepared to consider making an order which reflects the views that I have just expressed.  The parties can either agree on a resolution of the motion between themselves, in which case there is no need for me to make an order at all, or they can bring in short minutes of appropriate orders, which if agreed I will make in Chambers.  If there remain disputes about the orders, the matter can be listed and I will rule on them as necessary.

4. However, to avoid further argument, it would be preferable for the parties to deal with the matter themselves if only to assist themselves and the Court to put this litigation on as sensible a basis as possible.  I do not of course require any party to act in prejudice of its overall position, but the parties, the lawyers in particular, are well aware of the rules relating to discovery.  They are well aware of all the documentation that exists including the inter-partes correspondence.  They know perfectly well what is being sought and what is truly relevant, necessary and discoverable, even better than the Court.  There is nothing technical or new about the observations that I have just been making, I am not making new law at all, because as everybody knows, it is all embraced within rules that have long since been established both by authority and practice.  The parties know these rules well and should apply them.

I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marcus Einfeld AO.

Associate:

Dated:       12 August 1999  12 August 1

Counsel for the Applicant:	Mr A. W. Street SC
Solicitor for the Applicant:	Mallesons Stephen Jaques
Counsel for the Respondent:	Mr I. M. Jackman & Mr R. A. Dick
Solicitor for the Respondent:	Clayton Utz
Date of Hearing:	12 August 1999
Date of Judgment:	12 August 1999