Seven Salvages Some Cost In C7

Sydney Morning Herald

Thursday September 27, 2007

Elisabeth Sexton

THE Seven Network has slightly reduced the legal bills it must pay for its comprehensive loss in the $200 million C7 trade practices case, by persuading the Federal Court that its suit had "some prospects of success" shortly before the main hearings began in September 2005.

Earlier this month three of the successful defendants - Publishing & Broadcasting Ltd, Telstra and Optus - asked Justice Ronald Sackville to order Seven to pay their costs in full from August 2005, when Seven rejected an offer to settle the case for $10 million.

Yesterday Justice Sackville, who in July dismissed the case and criticised Seven for pursuing it in great complexity, ruled Seven was not "imprudent or unreasonable" when it rejected the offer.

"While there were aspects of Seven's case that were untenable ... in my view the core of Seven's case based on alleged contraventions of sections 45(2) and 46 of the Trade Practices Act could reasonably have been seen at the time as having some prospects of success," the judge said. "Although I think it very likely that the maximum award of damages that Seven could have realistically hoped to achieve would be measured in the tens of millions of dollars, as at August 2005 an award of damages substantially greater than $10 million was not a fanciful prospect."

The ruling means Seven will have to pay only the "party/party" costs of PBL, Telstra and Optus incurred before and after August 2005. Assessing costs on a party/party basis uses a scale of "necessary" expenditure set by the court and commonly results in a winning party being reimbursed about 60 per cent of actual costs.

Yesterday's decision reduced PBL's claim from $18 million to $16.4 million, Telstra's from $17.2 million to $15.9 million and Optus's from $7.3 million to $6.9 million. The combined effect is a $3.3 million reduction.

Justice Sackville said he hoped the three companies could now reach agreement with Seven on how much Seven should pay.

Seven's total costs since launching the suit in November 2002 are estimated at $100 million. It recently agreed to pay the largest defendant, News Ltd, $23.5 million of the $40.4 million it spent.

Seven has until October 22 to appeal the dismissal of its case.