Telstra Corp Ltd v Billbusters Pty Ltd

[1998] FCA 752

FEDERAL COURT OF AUSTRALIA

PRACTICE AND PROCEDURE - “pre‑trial” discovery - respondents made public statements in the media alleging the applicant had overcharged customers for telephone accounts - applicant trying to determine whether or not to bring court action against the respondents - application for discovery pursuant to O 15A r6 of the Federal Court Rules - whether applicant has, after making all reasonable inquiries, not sufficient information to enable a decision to be made whether to commence a proceeding in the Court to obtain relief - whether there is reasonable cause to believe that the respondents are likely to have or have possession of documents to enable identification of alleged errors or overcharging in accounts.

Federal Court Rules:  O 15A r6

TELSTRA CORPORATION LIMITED v BILLBUSTERS PTY LTD & ANOR
VG 236 of 1998

GOLDBERG J
MELBOURNE
19 JUNE 1998

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 236 of 1998

BETWEEN:

TELSTRA CORPORATION LIMITED
(ACN 051 775 556)
Applicant

AND:

BILLBUSTERS PTY LTD
(ACN 081 250 099)
First Respondent

MILE KENDRICK-SMITH
Second Respondent

JUDGE:

GOLDBERG J

DATE OF ORDER:

19 JUNE 1998

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1. Within 60 days of the date of this order the respondents make, file and serve a list which enumerates and describes documents which are or have been in their possession, custody or power and which comprise or are within the following categories:

(a)all accounts, correspondence reviewed or assessed by the respondents, or either of them, for the purpose of identifying alleged errors or overcharging by Telstra and addressed to or received by:

(i)the charity referred to by Mr Smith during the course of an interview broadcast on Radio 2UE at about 9.30am on 10 May 1998;

(ii)one of the largest retailers in Australia, as referred to, in substance, by Mr Smith;

(A)during an interview broadcast on Radio 2UE at about 9.30am on 10 May 1998;

(B)during an interview broadcast on Radio 2UE at about 7.20am on 22 May 1998;

(b)all accounts, correspondence which relate in any way to:

(i)the alleged sum of $167,000 overcharged by Telstra in bills to a charity, as referred to in an interview broadcast on Radio 2UE at about 9.30am on 10 May 1998;

(ii)the alleged errors found in 20% of the bills of one of the largest retailers in Australia comprising:

(A)67% of the bill value in Victoria; and/or

(B)103% of the bill value in New South Wales, as referred to by Mr Smith in,

(C)an interview broadcast on Radio 2UE at about 9.30am on 10 May 1998; and/or

(D)an interview broadcast on Radio 2UE at about 7.20am on 22 May 1998;

(iii)the sum of $600,000 allegedly overcharged by Telstra in its accounts to the New South Wales division of one of Australia’s largest retailers, as referred to by Mr Smith in an interview broadcast by Radio 2UE at 7.20am on 22 May 1998;

(iv)the alleged estimate of $800 million overcharged by Telstra in bills to its customers, as referred to by Mr Smith in:

(A)a quotation published in an article in “The Australian Financial Review” newspaper on 20 May 1998; and/or

(B)an interview broadcast on the “Today Show” on Channel 9 at about 7.15am on 21 May 1998;

(v)the estimate of $1.2 billion allegedly overcharged by Telstra in bills to its domestic clients, as referred to by Mr Smith in an interview broadcast on Radio 2UE at about 7.20am on 22 May 1998;

(vi)the estimate of $1.1 billion allegedly overcharged by Telstra in bills to its domestic clients, as referred to by Mr Smith in an interview broadcast on “A Current Affair” on Channel 9 at about 6.30pm on 25 May 1998;

(vii)the 33,000 domestic accounts referred to by Mr Smith in:

(A)a quotation published in an article in “The Australian Financial Review” newspaper on 20 May 1998;

(B)an interview broadcast on Radio 2UE on or about 7.20am on 22 May 1998;

(C)an interview broadcast on the “Today Show” broadcast on Channel 9 at or about 7.15am on 21 May 1998;

(viii)the alleged average overcharging error rate of $178 in the calculation of each Telstra account referred to in substance by Mr Smith in:

(A)a quotation published in an article in “The Australian Financial Review” newspaper on 20 May 1998;

(B)an interview broadcast on Radio 2UE on or about 7.20am on 22 May 1998;

(C)an interview broadcast on the “Today Show” broadcast on Channel 9 at or about 7.15am on 21 May 1998;

(D)an interview broadcast on “A Current Affair” broadcast on Channel 9 on or about 6.30pm on 25 May 1998;

(ix)the bills alleged by Mr Smith in an interview broadcast on the “Today Show” on Channel 9 at bout 7.15am on 21 May 1998 to have been doctored, changed or tampered with by Telstra before provision to the Australian Consumers’ Association;

(x)the information alleged by Mr Smith in an interview broadcast on the “Today Show” on Channel 9 at about 7.15am on 21 May 1998 to have been tampered with by Telstra before provision to a Senate Committee or Senate Committees;

(xi)the proposed audit and/or project by the Australian Consumers’ Association referred to in the exhibit “PMF‑6” to the affidavit of Peter Michael Foster sworn 5 June 1998.

1. The respondents pay the applicant’s costs of the application.

1. The respondents’ costs of complying with this order be paid by the applicant to the respondents on a solicitor and client basis.

1. Liberty be reserved to all parties to apply for such further or other orders and directions as they may be advised.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 236 of 1998

BETWEEN:

TELSTRA CORPORATION LIMITED
(ACN 051 775 556)
Applicant

AND:

BILLBUSTERS PTY LTD
(ACN 081 250 099)
First Respondent

MILES KENDRICK-SMITH
Second Respondent

JUDGE:	GOLDBERG J
DATE:	19 JUNE 1998
PLACE:	MELBOURNE

EXTEMPORE REASONS FOR JUDGMENT

Telstra Corporation Limited (“Telstra”) applies by way of motion for an order for what I will call loosely “preliminary discovery” pursuant to O 15A r6 of the Federal Court Rules, which I set out in these reasons, which provides:

“Where:

(a)there is reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court from a person whose description has been ascertained;

(b)after making all reasonable inquiries, the applicant has not sufficient information to enable a decision to be made whether to commence a proceeding in the Court to obtain that relief; and

(c)there is reasonable cause to believe that that person has or is likely to have or has had or is likely to have had possession of any document relating to the question whether the applicant has the right to obtain the relief and that inspection of the document by the applicant would assist in making the decision -

the Court may order that that person shall make discovery to the applicant of any document of the kind described in paragraph (c).”

There rule requires that the applicant has reasonable cause to believe that it has or may have the right to obtain relief in the Court.  Telstra says that after making all reasonable inquiries it has not sufficient information to enable a decision to be made whether to commence a proceeding in the Court and that there is reasonable cause to believe that the respondents are likely to have or have in their possession what I will call loosely “relevant documents”. 

The motion arises as a result of a number of public statements recorded and reported in the media by the second respondent, Mr Kendrick‑Smith, for and on behalf of the first respondent, in a series of interviews and articles successively found on Radio 2UE on 10 May 1998, a quotation in an article in the “Australian Financial Review” on 20 May 1998, Radio 2UE interview on 22 May 1998, interview on the “Today Show” Channel 9 on 21 May 1998 and an interview on “A Current Affair”, Channel 9 on 25 May 1998. 

In general terms, statements were made that Telstra had overcharged various persons.  There is a reference to overcharging a charity $167,000 or thereabouts and to the fact that 20% of the bills of a large national retailer were checked and disclosed a 67% error rate in Victoria and a 103% error rate in New South Wales.  It is also suggested in these reports that of the order of $800 million has been overcharged, that 33,000 domestic accounts were assessed with an average error rate of $178 and that Telstra tampered with information in relation to an inquiry made by the Australian Consumers’ Association. 

I have not identified all the matters dealt with in the interviews and reports but the substantive matters enable me to form a conclusion on the application.  Evidence has been given on behalf of Telstra, substantially by Mr Foster, the National General Manager, Process, Planning and Metrics.  In short compass he says as a result of his inquiries he cannot identify the relevant charity referred to or the retailer and the inquiries that he has made from relevant responsible officers of Telstra disclose that they have no knowledge of the claims set out in his affidavit.

Telstra then say that it has made reasonable inquiries to assist it to make a decision whether to commence a proceeding but it is unable to do so until it can identify the parties referred to and obtain access to the documents which are sought by way of preliminary discovery. 

The respondents for whom Mr Harvey appears, submit that, on the face of the evidence put before the Court by Telstra it has sufficient information to determine whether it has a cause of action.  Indeed he submits that Telstra has in the material put before the Court which it has sent to the respondents that it has a cause of action.  In the alternative, he says that it has not made reasonable inquiries and by way of example says that Telstra has not asked the respondents to identify the charity or the retailer.  He also submits that Telstra know about the 33,000 consumers in respect of which there was an average error rate of $178 because letters have been sent to Telstra.  He submits that the evidence discloses that Telstra has not spoken to the Seventh Day Adventist Church or to particular retailers identified that may be the relevant retailer referred to in the material.

Mr Harvey also submits that the evidence does not disclose that Telstra has been through its correspondence files.  The Courts have taken an “expansive view” of the scope of this rule.  In Paxus Services Ltd v People Bank Pty Ltd (1990) 99 ALR 728, Burchett J considered the approach to be taken and in a passage which has been cited and approved in subsequent cases said at 733:

“It is no answer to the applicant’s application under r 6 to say that the proceeding is in the nature of a fishing expedition ... Rule 6 is designed to enable an applicant, in a situation where his proof can rise no higher than the level the rule describes, to ascertain whether he has a case against the prospective respondent - that is, to ‘fish’ in the old sense. ...
           It would be unfortunate if a rule designed to amplify the court's power to penetrate obscurities and uncertainties in the interests of justice were to be weakened by restrictive and unnecessary glosses.  I think the rule is of a beneficial kind within the meaning of the well-known principle of interpretation, and should be given the fullest scope its language will reasonably allow.  The proper brake on any excesses in its use is the discretion of the court which is required to be exercised in the particular circumstances of each case.  One guide for that discretion is provided by the reference in rule 6(b) to ‘all reasonable inquiries’...”

In relation to the first submission which is made on behalf of the respondents, it is said that Telstra has sufficient information.  On one view it might be said that Telstra has sufficient information in that it can say that it knows of no person, company, charity or retailer that it has overcharged.  To that extent it is sufficient information only up to a particular point.  It is also put, in the alternative, that Telstra has not made reasonable inquiries but that is a matter of degree. 

The relevant factor to be considered is whether the applicant does not have sufficient information to enable a decision to be made whether to commence a proceeding.  Gobbo J, (as he then was) in Gibson v Australia and New Zealand Banking Group Ltd, (unreported, 30 August 1991, Supreme Court of Victoria) said:

“In my view, the gist of the rule is directed to knowing not whether the case is a strong one or a weak one, not whether it is incidentally supported or what the full range of other material is, but whether the applicant has sufficient information to enable that applicant to decide whether to commence a proceeding.”

It seems to me that in many cases what his Honour says can be applied quite simply.  But I would venture to suggest in a case such as the one before me there is a difficulty for an applicant where it is said that a particular person has been the subject of overcharging, and the identity of that person is not known to the prospective applicant in the proceeding. 

Notwithstanding what Gobbo J said in Gibson v Australia and New Zealand Banking Group Ltd (supra), it seems to me that it might be said that whether or not an applicant has sufficient information to enable a decision to be made whether to commence a proceeding does have an element in it of a value judgment.  When I refer to a value judgment in the particular case before me, that would involve knowing who or what is the subject of the overcharging and who or what is the subject of the accounts in respect of which it is said there is an average error rate of $178.

In this particular case it is not so much a matter of knowing whether the case is a strong one or a weak one but what is the nature of the case.  There have been decisions where applications under this rule have been refused, such as Prosnow International Pty Ltd v Polar Technologies Pty Ltd (1998) 39 IPR 328 at 369. That was a case where O’Loughlin J was not satisfied that the relevant uncertainty existed.

Each case of course must be considered on its facts.  It seems to me in the circumstances of this case that it is relevant for the applicant to know who are supposed to be the subject or alleged to be the subject of the overchargings in order to have sufficient information to enable a decision to be made whether to commence the proceeding.

So far as the reasonable inquiries are concerned I am satisfied, having regard to the nature of Telstra’s organisation is and the persons to whom questions were directed, that reasonable inquiries have to be made.  It is of course true that further inquiries can be made.  Inquiries could be made at a number of levels within the Telstra organisation.  Inquiries could be made of particular organisations who are clients or customers of Telstra.  But I have to be satisfied that reasonable inquiries have been made, and that is a matter of degree. 

I am satisfied on the facts before me that reasonable inquiries have been made.  In all the circumstances, having regard to the principles to which I have referred, I consider that the application ought to be granted.

The form of discovery to be ordered ought not to be in the nature of general discovery albeit in relation to what at the moment appear to be the particular issues identified.  As I noted in argument with Counsel, I do not think it appropriate for there to be discovery of everything that relates to what in effect would be the defence, whatever it might be, of the respondents.  Telstra ought to have access to the source material available to the respondents.  It is then a matter for Telstra to form its own judgment on the material provided.

In those circumstances, I am disposed to make an order under O 15A r6 in relation to paragraph 1(a) of the motion, in relation to all accounts and correspondence reviewed or assessed.  I would not make an order in relation to any other documents of any description reviewed.  Similarly with paragraph 1(b) of the motion, I would make the order for discovery of all accounts and correspondence which relate in any way to the matters referred to but not for discovery of “any other documents”. 

Mr Harvey submits that each party should bear their own costs of and incidental to the application.  Mr Bongiorno submits in substance that he has succeeded on the merits.  I think this was a contested application which was contested on issues which arise out of, and in relation to O 15A.  It is a separate and discrete application and the issues will not arise further.  In all those circumstances the respondents should pay the applicant’s costs of the application.

I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg

Associate:

Dated:             30 June 1998

Counsel for the Applicant:	Mr B Bongiorno QC and Mr M Dreyfus
Solicitor for the Applicant:	Mallesons Stephen Jaques
Counsel for the Respondent:	Mr M Harvey
Solicitor for the Respondent:	Norton Smith & Co
Date of Hearing:	19 June 1998
Date of Judgment:	19 June 1998