Lawyers for Ben Roberts-Smith and Seven Network have accused Nine of “injustice” in a heated battle over the costs for the soldier’s failed multimillion-dollar lawsuit.
In July, Federal Court Justice Anthony Besanko ruled that some of the imputations against Mr Roberts-Smith put forward across six articles in The Sydney Morning Herald, The Age and The Canberra Times were substantially true.
He dismissed Mr Robert-Smith’s lawsuit after finding the newspapers had proven on the balance of probabilities the Victoria Cross recipient had been complicit in war crimes while serving in Afghanistan.
Mr Roberts-Smith has launched an appeal against the judgment, which will be heard in February next year.
It has been estimated the legal bills for the marathon defamation case exceeded $25m.
In the meantime, his legal representatives and the lawyers for his former employer and financier Seven Network are fighting to resist an order they pay the costs.
Mr Roberts-Smith previously agreed to pay the costs of the failed lawsuit on an indemnity basis from March 17, 2020.
However, Nine also sought a third-party order asking for costs from his financial backers, Seven Network, its owner billionaire media mogul Kerry Stokes and his private company Australian Capital Equity.
Mr Stokes and Seven initially funded the lawsuit before a loan agreement was reached with ACE, who would be paid 15 per cent interest if Mr Roberts-Smith was successful.
On Wednesday, the Federal Court heard Nine had issued subpoenas requesting all communications between Seven and Mr Roberts-Smith or his lawyers about the litigation and the loans.
Lawyers for Seven and Mr Roberts-Smith appealed to the Federal Court to block the requests, which they criticised as an “enormously wide dragnet” that would capture irrelevant documents.
Seven’s barrister Neil Young SC told the court Justice Besanko “gave no consideration” to whether the large number of requested documents would “materially assist” the proceedings.
“(If successful) they would get to see everything about the relationship and they would get to make up their minds about what parts of it they wanted to rely on in their case,” he said.
“That’s contrary to the functioning of a subpoena.”
He noted the subpoenas related to communications between numerous employees of the same company over a five-year period, and would likely encompass confidential topics.
Mr Robert-Smith’s lawyer Catherine Gleeson SC agreed there was an “aspect of injustice” in requiring a response to such broad subpoenas, which would require reviewing documents that could be subject to legal privilege.
She said it would be a “much more expansive undertaking than it would be if the subpoena was more targeted”.
Ms Gleeson argued Nine was trying to mount a circumstantial case on evidence that would not stand up on its own, while refusing multiple entreaties to narrow the subpoena terms.
“It is unnecessary and disproportionate to go fishing around for something else that might augment what is an inferential picture,” she said.
“Many of those documents would be of such wholly peripheral relevance that it would not matter if there were a thousand of them.
“The subpoena goes too far in picking up the documents it picks up.”
However, Nine’s lawyer Nicholas Owen SC said the claim that a large number of irrelevant documents surrendered “sits very uncomfortably” with the “equally forceful submission” about legal privilege.
He argued there had already been “a large amount” of legal privilege claims made, which signified that the requested communications were relevant and “substantive”.
“Given the close involvement and observation of all of the subpoena recipients, there is no real substance to any suggestion that there would be any difficulty in understanding what documents were and weren’t caught by the subpoenas,” he said.
The court heard the crux of the issue in the battle over costs was whether Seven, Mr Stokes, and ACE could be considered third parties to the proceedings.
When accepting Mr Roberts-Smith’s loan, ACE said it regarded Seven’s continued oversight of his proceedings as “important for a successful outcome”.
Mr Owens said Seven had engaged its own team of lawyers to provide daily updates on the trial, which revealed the “very intertwined and close involvement” of the company and ACE.
Nine contends the document demonstrates the entities were involved in the management and oversight of the lawsuit, and are therefore liable to pay costs as a third party.
Mr Owens said the importance of all communications between Seven executives and Mr Stokes with Mr Roberts-Smith was “obvious” in that context.
“What that tells you is that not only has something been going on but they want it to continue and they regard it as capable of affecting the outcome of the case,” he said.
Yet Seven’s legal team argued that observation and interest in a legal case should not be considered a basis for liability.
“There is nothing in any of the authorities to support the suggestion that mere oversight is in itself sufficient to justify a third party costs order,” Justin Williams SC told the court.
Mr Owens accused Seven and the highly decorated SAS soldier of trying to “confine the case we wish to run” and maintained Nine’s continued refusal was “not bloody-mindedness”.
“(The subpoenas) don’t go beyond what will be relevant to establishing oversight and management in the way we rely on it,” he said.
“What we say is that on no view is our case fishing.”
The court heard “many many millions of dollars” were in issue in terms of the costs for the 110-day defamation trial.
Ms Gleeson noted Mr Roberts-Smith will not be participating in the costs dispute, and the court heard no one involved in the defamation case will be called to give evidence on the matter.
The court will hand down its decision about the subpoenas at a later date.