C7 Sport - The C7 Litigation - The Costs Hearing

The Costs Hearing

During the trial decision, Justice Sackville commented on the hefty financial cost of the case, remarking that "in my view, the expenditure of $200 million and counting on a single piece of litigation is not only extraordinarily wasteful, but borders on the scandalous". The case has continually been labelled by both the legal and media sectors as one of the most extreme examples of "mega-litigation".

In costs documents lodged on 2007-08-27 the NRL, one of the defendants in the case, argued for an indemnity costs order, the actual costs incurred by the parties, be awarded against Seven, with the figure estimated at approximately $200 million. It is claimed that the primary reason for this is that Seven refused a formal settlement offer only weeks before the judgment was handed down.

On 2007-09-14 Seven agreed to a costs settlement with News Limited, the Australian Football League, the National Rugby League, Channel Ten and pay-TV group Austar. The costs payments will also be proportionately settled with parties in the case owned in part by News - its 25 per cent owned pay-TV company Foxtel and 50 per cent owned pay-TV sports channel Fox Sports. Seven will pay News Limited the sum of $23.5 million in the settlement, approximately 50% of the costs incurred by News. Seven failed to reach any such agreement with Foxtel and Fox Sports co-owner Publishing & Broadcasting Ltd, Optus and Telstra.

During the formal costs hearing on 2007-09-17, the Federal Court heard argument from PBL, Telstra and Optus that they should receive indemnity costs backdated from August 2005, due to Seven's rejection of a formal settlement offer comprising a $10 million payment and the entire amount of Seven's costs, which at that point were approximately $40 million. In costs documents lodged with the court, it was revealed that PBL had spent $21.5 million but is seeking between $17.7 and $18 million; Telstra spent $20.7 million and is seeking $17 million; while Optus spent $9.2 million and is seeking $7.1-7.3 million.

Justice Sackville noted that he was in "quite a difficult position" in determining any costs order, as it was difficult to assess whether Seven acted unreasonably in not accepting the effectively $50 million offer. Adding to the difficulty, but not entirely binding, was Justice Sackville's comment that the Court was considering - but did not yet have in place - a rule where a losing party should have to pay indemnity costs if it could be shown that it had rejected an earlier offer of settlement. PBL's lead counsel, Tony Meagher SC, claimed in the hearing that Seven should have realised the "enormous problems" in its case as at August 2005. Justice Sackville reserved his decision.