AG Australia Holdings Limited v Burton & Anor

Supreme Court of NSW|2002-03-07|Before: Campbell J

Reported Decision : (2004) 58 IPR 268 58 NSWLR 464

CITATION : AG Australia Holdings Limited v Burton & Anor [2002] NSWSC 170 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC 1640/02 HEARING DATE(S) : 7 March 2002 JUDGMENT DATE : 3 May 2002

AG Australia Holdings Limited (Plaintiff) PARTIES : Nigel Victor Burton (1st Defendant) John Roderick Edward Price & Ors t/as Maurice Blackburn Cashman (2nd Defendant) JUDGMENT OF : Campbell J

70 MBC have provided examples of three confidentiality regimes which GIO has agreed to in connection with the representative proceedings. These are proffered as examples of how a confidentiality undertaking can be used to protect confidential information when it is used in litigation. They have the extra persuasive power of being regimes that GIO itself has agreed to, or put forward.

71 I have earlier mentioned that ASIC has on foot proceedings against three officers of GIO. In preparing to bring those proceedings, ASIC held examinations of numerous senior officers of GIO and GIO Re. MBC subpoenaed those transcripts in the Federal Court representative proceedings. On 8 November 2001 Justice Moore made an order, with the consent of all parties in the representative proceedings, including GIO, and of those examinees who were legally represented, which permitted access to the transcripts to counsel, solicitors, expert witnesses, lay witnesses, and officers of the insurers or reinsurers of the respondents with responsibility in relation to indemnification of any respondent and solicitors retained by any such officers, on the basis that each person to whom access was granted, signed a confidentiality undertaking, the form of which was set out in the court order, and each person to whom the transcript was shown destroyed all copies of the transcript or parts thereof, and any notes they might have made or received in relation to the transcript or any part, upon conclusion of the proceedings.

72 The second example of a confidentiality regime related to confidential documents, which had been produced by Mr King, including his tax return. The third example was of two rival confidentiality regimes which were proposed by the solicitors for GIO, and by MBC, in relation to the Burton documents which Justice Moore had just ordered be discovered.

73 The law recognises three different ways in which an obligation of confidentiality might arise. The first is by express provision in a contract. The second is by an implied term in a contract. The third is as an obligation recognised in the exclusive jurisdiction of equity.

74 In any litigation which seeks to enforce an obligation of confidentiality, it is important to recognise which of these three types of obligation is alleged. The considerations which enter into the validity, and means of enforcement, of an obligation of confidentiality can differ, between these three types.

75 In the present case, the obligation which is sought to be enforced is, primarily, an express contractual obligation, namely that arising under the confidentiality undertaking which Mr Burton executed on 31 May 1999 (see paragraph 18 above). It would only be to the extent that this express confidentiality agreement could not be enforced that GIO would need to fall back on an implied term in Mr Burton's contract of employment, or an equitable obligation of confidence.

How the Defendants Say There is no Breach of Confidentiality Obligations

76 There was no argument put (nor could any argument have been put) that Mr Burton, by his communications with MBC, was not in breach of the literal words of that confidentiality undertaking. Rather Mr Burton and MBC put two related arguments. The first was that the confidentiality undertaken should not be read in accordance with its literal words, but rather should be "read down" so as to not prohibit the communication by Mr Burton, of the information which he communicated to MBC. If that argument fails, then MBC and Mr Burton submit that the confidentiality agreement is, in part, void, to the extent that it prohibits Mr Burton engaging in such communications.

77 The same consideration underlies both these arguments, namely, a matter of public policy, concerning the due administration of justice. They submit that the confidentiality agreement,

"… can sensibly be read so as not to prevent disclosure properly required for the due administration of justice. Plainly, it cannot operate to prevent the witness from giving evidence. By the same reasoning, it should not prevent disclosure for the purpose of preparing a witness statement. The alternative is to permit the evidence to be obtained, but to require it to be called "blind". That achieves nothing by way of protecting confidentiality, and would substantially hinder the efficient conduct of the trial of the Federal Court proceedings."

78 Any attempt to construe is an attempt to expound the meaning of the words which the parties to that contract used, employing such extrinsic aids to construction as might be legitimate (Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, at 348-352). Looking at the language of the confidentiality agreement which Mr Burton has signed, I see nothing in the words which suggests that they should be given the limited meaning for which MBC and Mr Burton contend. There is nothing in the situation that the contracting parties were in, at the time the document was entered, as known one to the other - namely, that there were respectively an insurance company conducting a substantial business, and a senior executive of that company who had had, and continued to have, access to commercially sensitive information - which would lead to treating the parties as having intended anything other than the literal meaning of the words they used. There is no suggestion that at that time there was any litigation against GIO, or that GIO would not continue a reinsurance business. I reject the suggestion that the wording of the confidentiality undertaking should be read down, as a matter of construction.

79 MBC and Mr Burton submit that in the present case, the Federal Court litigation makes serious civil claims, on behalf of thousands of former shareholders of what was then a listed public company of misleading and deceptive conduct (which is alleged to be a breach of various norms of conduct established by statute), and of negligence. They submit that there is a very high public interest in the administration of justice, namely, the fair, efficient and just resolution of (in this instance) civil claims. They say that there would be a grave injustice if these former GIO shareholders were to be denied the ability to obtain factual information from a principal witness capable of establishing the allegations made against GIO and others in the Federal Court proceedings. They say that, as a matter of public policy, GIO should not be able to elevate its interest in the preservation of its private and confidential information above the public interest in the due administration of justice.

80 MBC and Mr Burton rely on A v Hayden (1984) 156 CLR 532. That case concerned an application for an injunction by members of the Australian Secret Intelligence Service to prevent the Commonwealth from disclosing their identities to the Victorian State Commissioner of Police. The Victorian Police were investigating criminal conduct alleged to have been engaged in by ASIS members. The Victorian State Government, at the request of the Victorian Police, had asked the Commonwealth Government to disclose the identity of those ASIS agents. The ASIS agents had an express term in their contract of employment which bound the Commonwealth not to disclose their identity. The court held that that provision in their contracts of employment was contrary to public policy (Gibbs CJ dissenting on this issue - at 543-544). The basis on which Mason J found the term void was (at 553),

"… because the promise seeks to impose an obligation which is at variance with a fundamental head of public policy - the public interest in the enforcement of the criminal law and in the administration of justice."

81 His Honour's discussion of the case law, and subsequent application of it, at 553-561, retains a continuing flavour of focusing on contracts which interfere with the due administration of the criminal law. Thus, his Honour said:

"… that there is a powerful public interest in the enforcement of the criminal law is an important element in the administration of justice does not admit of debate. Indeed, its importance has been such that the common law has regarded as illegal "any contract or engagement having a tendency, however slight, to affect the administration of justice" to use the words of Lord Lyndhurst in Egerton v Brownlow (Earl) (1853) 4 HLC 1 at 163 [10 ER 359 at 424]."

"…the underlying thrust of the common law principle was directed as much against the detriment which would be caused to the administration of justice if agreements of the kind in question were to be enforced as against the evil of making knowledge of the commission of the crime a source of profit to the individual." (at 554-555)

"… the effective enforcement of the criminal law and the administration of justice, which are central elements in a well ordered democratic society, depend for their efficacy on the unrestricted freedom of each and every citizen to assist and co-operate with the authorities in the investigation and prosecution of criminal offences. There is therefore a powerful public interest in promoting and preserving the citizen's freedom to assist and co-operate with the authorities in the investigation and prosecution of crime." (at 555)

"… the public interest in the enforcement of the criminal law is not diminished because it now depends, not on any duty or obligation on the part of the citizen to give information concerning the commission of an offence, but on his freedom to decide what action he will take." (555-556)

"At first glance it might be thought that the making of a contract not to disclose information which may prove to be relevant to the investigation of a crime is no more than an exercise of the citizen's freedom of action to which I have referred, but this is to ignore the element of public policy." (556)

"It is obvious that the public interest in the enforcement of the criminal law as an element in the administration of justice would be seriously impaired if the citizen were at liberty to assume in return for a benefit an obligation not to disclose information concerning the commission of a criminal offence. The enforcement of the criminal law cannot be allowed to hinge on the willingness of the citizen to make a profit out of his silence, whether the contract be made before or after the commission of the offence." (556)

82 It was on the basis of this discussion of principle, and in the context of a factual situation where the particular inference with the administration of justice which was at issue was the administration of criminal justice, that Mason J came to his conclusion, at 556-557.

"The foregoing discussion indicates that, subject to minor qualification only, Lord Lyndhurst was correct in Egerton v Brownlow (1853) 4 HLC at 163 (10 ER at 424) when he said that any contract having a tendency, however slight, to affect the administration of justice is illegal. He was of course speaking of a contract or engagement which has a tendency to affect the administration of justice adversely. …

Sometimes it is said that a contract to which the principle applies is void; at other times it is said that the contract is unenforceable or, … that the court will not lend its aid to the enforcement of the contract. The true position, as I see it, is that some contracts are void whereas others are valid, though the court will decline to enforce the particular provision in a valid contract in particular circumstances when enforcement of that provision would have an adverse effect on the administration of justice. Thus, a simple agreement not to disclose the existence of a serious criminal offence, which has been, or is about to be, committed in consideration of the payment of a sum of money may well be void because it is illegal. However, it will be otherwise with a contract which is in all respects lawful but nevertheless contains a provision which, if enforced according to its terms, will result in an interference with the administration of justice. Take a contract which contains a minor or subsidiary provision which, though not directed to non-disclosure of criminal offences, imposes an obligation of confidentiality in sweeping terms. If those terms are not susceptible of being read down, the court will refuse to lend its aid to the enforcement of the provision if enforcement would result in the non-disclosure of a criminal offence adversely affecting the administration of justice."

"… if the court was to grant the plaintiffs the permanent injunctions which they seek it would be elevating their private right to confidentiality above the interest of the community in the efficient investigation of alleged breaches of the law. The Commonwealth seeks to advance that interest, yet the injunctions would prevent it from doing so. The administration of justice, and in particular the enforcement of the criminal law, must always rank highly in any assessment of the public interest."

84 Brennan J held that the term in the contract was void because the Crown could not bind itself, by contract, to give up a discretion of this type (at 586). It was in that context that his Honour said:

"The variety of circumstances comprehended by the promise and the unqualified obligation not to disclose in any circumstances (except for the purposes of ASIS) would preclude the executive government from furnishing information that might otherwise be available to assist the police to enforce the law. Such a promise has a tendency adversely to affect the administration of justice and is void: (Egerton v Brownlow (Earl) (1853) 4 HLC 1 at 163 [10 ER 359, at 424]; Horne v Barber (1920) 27 CLR 494, at 499-500.)

"… the ability of any citizen to assist in the detection and suppression of crime cannot be bargained away except where the crime is not a matter of public concern: cf Kerridge v Simmonds (1906) 4 CLR 253. That is not to say that obligations of confidence cannot be accepted by contract or imposed by law but such obligations cannot enjoin silence where disclosure is reasonably required by the police (or other law enforcement agency) to assist in the investigation of crimes reasonably suspected to have been committed and such disclosure is justified in the public interest: cf Initial Services Ltd v Putterill [1968] 1 QB 396, at 405. A term of a contract not to disclose confidential information though disclosure is reasonably so required to be made and though disclosure is in the public interest is void."

"… the courts of this country will not lend their aid to enforce a promise not to disclose information where the circumstances are such that the enforcement or insistence upon observance of the promise would obstruct the due administration of the criminal law of Australia, whether Commonwealth or State. The rationale of that proposition is that, apart from the exceptional case (such as that of a professional legal adviser) where the overall administration of the law itself requires that confidentiality be maintained, it would be contrary to public policy for the courts to enforce a right on the part of one person to insist that another fail or refuse to disclose relevant information to assist those entrusted with the ordinary administration of the criminal law in the proper investigation and prosecution of criminal activity: the enforcement by the courts of such a private right to insist that another fail or refuse to disclose relevant information would involve the courts in the obstruction of the due administration of the criminal law which is a mainstay both of the rule of law which they exist to serve and of the very existence of effective private rights. For the purposes of that proposition, the investigation of actual or reasonably apprehended criminal activity by a regular law enforcement agency of the Commonwealth or of a State is part of the administration of the criminal law." (595)

86 It can be seen from this analysis of the decision in A v Hayden that the ground of the decision, that the term of contract there in question was void, was that it interfered with the administration of the criminal law.

87 Thus, if the confidentiality promise in the present case is to be struck down, or not enforced, on the grounds of public policy, some source other than the ratio decidendi of A v Hayden must be found for that statement of public policy.

88 In Egerton v Brownlow (1853) 4 HLC 1; 10 ER 359 the House of Lords was considering a settlement of property which settled land on Lord Alford for life, with successive interest to various of his descendents, but with a proviso that, "if Lord Alford shall die without having acquired the title of Duke or Marquis of Bridgewater to him and the heirs male of his body, then" certain of the gifts to his successors would not occur. The House of Lords held that the proviso was a condition subsequent, that it was void as being contrary to public policy, and hence did not take effect. Lord Lyndhurst, at 160 (423 of ER) said:

"It is a well established rule of law that a condition against the public good, or public policy, as it is usually called, is illegal and void. Sheppard's Touchstone and Lord Coke are direct authorities on this point. In more modern times we find Lord Hardwicke, in a case already cited by the Lord Chief Baron, stating that, "political arguments in the fullest sense of the word, as they concern the government of a nation, must be, and always have been, of great weight in the consideration of the Court; and though there may be no dolus malus in contracts as to other persons, yet if the rest of mankind are concerned as well as the parties, it may properly be said that it regards the public utility."

"These reasons of public benefit and utility weigh greatly with me, and are a principal ingredient in my present opinion." …

The inquiry must, in each instance, where no former precedent has occurred, have been into the tendency of the act to interfere with the general interest. The rule, then, is clear. Whether the particular case comes within the rule, it is the province of the court in each instance, acting with due caution, to determine."

89 His Lordship then went on to consider how, if a substantial gift of property was made dependent on attaining a peerage, and given that peerages were usually conferred on the advice of the ministry then in power, the person who so stood to gain might be swayed from the impartial performance of his duty as both legislator and judge. It was in that context that his Lordship made his oft quoted remark:

"It is admitted, that any contract or engagement having a tendency, however slight, to affect the administration of justice, is illegal and void."

90 These days, the courts are more constrained than in Lord Lyndhurst's day in deciding what counts as public policy. Courts do not now entertain or decide "political arguments in the fullest sense of the word, as they concern the government of the nation" when deciding whether a contract contravenes public policy. In Re Morris (deceased) (1943) 43 SR (NSW) 352, at 355-356 Jordan CJ said:

"… the phrase 'public policy' appears to mean the ideas which for the time being prevail in a community as to the conditions necessary to ensure its welfare; so that anything is treated as against public policy if it is generally regarded as injurious to the public interest. 'The "public policy" which a court is entitled to apply as a test of validity to a contract is in relation to some definite and governing principle which the community as a whole has already adopted either formally by law or tacitly by its general course of corporate life, and which the courts of the country can therefore recognise and enforce. The court is not a legislator: it cannot initiate the principle; it can only state or formulate it if it already exists': Wilkinson v Osborne (1915) 21 CLR 89 at 97. It is well settled that a contract is not enforceable if its enforcement would be opposed by public policy: Mogul Steamship Co v McGregor, Gow & Co [1892] AC 25 at 39, 51. Public policy is not, however, fixed and stable. From generation to generation ideas change as to what is necessary or injurious, so that 'public policy is a variable thing. It must fluctuate with the circumstances of the time': Naylor, Benzon & Co v Krainische Industie Gesellschaft [1918] 1 KB 331, at 342. New heads of public policy come into being, and old heads undergo modification."

91 This passage has been quoted with approval by Mason J in A v Hayden (1984) 156 CLR 532 at 558, and by Spigelman CJ in R v Young (1999) 46 NSWLR 681 at 700. The quotation from Wilkinson v Osborne (1915) 21 CLR 89 contained in it, was cited by Wilson and Dawson JJ in A v Hayden at 571.

92 While the courts have no choice but to make findings about what public policy requires, and to revisit those findings from generation to generation, it is a task which is performed using the approach laid down in Wilkinson v Osborne and in Re Morris (deceased). Further it is a task which must be approached with extreme caution. As Mason J said in A v Hayden, at 559:

"The problem is one of formulating with any degree of precision the criteria or the circumstances which will justify a court in refusing to enforce a contract on the ground that there is a countervailing public interest amounting to public policy. The difficulties in ascertaining the existence and strength of an identifiable public interest to which the courts should give effect by refusing to enforce a contract are so formidable as to require that they "should use extreme reserve in holding such a contract to be void as against public policy, and only do so when the contract is incontestably and on any view inimical to the public interest", to use the words of Asquith LJ in Monkland v Jack Barclay Ltd [1951] 2 KB 252, at 265."

93 To find out whether public policy does not permit the entering, or enforcement, of the contractual arrangement on which GIO sues, it is necessary to look to various areas where the law has already expressed choices which might bear upon that question.

94 Attempting to pervert the course of justice (sometimes also referred to as attempting to defeat or obstruct the course of justice) was an indictable common law misdemeanour. In Victoria (where the distinction between felonies and misdemeanours has been abolished by the Crimes (Classification of Offences) Act 1981 (Vic)) it is an indictable common law offence. (I mention the Victorian position because Mr Murphy conducts his practice in Melbourne, and it may be - the evidence does not establish - that at least some of the disclosures occurred in Melbourne.)

95 The common law has been abolished in New South Wales in this respect, by amendments to the Crimes Act 1900 in 1990 which inserted a new section 341, which abolished the offence of perverting the course of justice, and the offence of attempting or conspiring to pervert the course of justice. Now, Part 7 of the Crimes Act 1900 deals with various offences connected with interfering with the administration of justice.

96 Part 7 of the Crimes Act 1900 is divided into Division 1 (definitions), Division 2 (interference with the administration of justice - section 314 to 319 inclusive), and Division 3 (interference with judicial officers, witnesses, jurors etc - section 320 to 326 inclusive), and Division 4 (perjury, false statements etc - sections 327 to 339 - inclusive), and Division 5 (miscellaneous).

97 The 1990 amendments inserted the following new provisions in the Crimes Act 1900:

"312 A reference in this Part to perverting the course of justice is a reference to obstructing, preventing, perverting or defeating the course of justice or the administration of the law.

319 A person who does any act, or makes any omission, intending in any way to pervert the course of justice, is liable to imprisonment for 14 years."

98 The Crimes Act 1900 contains, in section 314 and following, various prohibitions of conduct which are specific ways in which the administration of justice might be interfered with. Section 319 is a provision of much greater generality than those other sections. None of those other sections could possibly be infringed by enforcement, in the circumstances of the present case, of the confidentiality obligation.

99 The only other provisions of the Crimes Act 1900 which could even arguably bear on the present case are:

"322 A person who threatens to do or cause, or who does or causes, any injury or detriment to any person … intending to influence a person called or to be called as a witness in any judicial proceeding to give false evidence or withhold true evidence or to not attend as a witness or not produce anything in evidence pursuant to a summons or subpoena … is liable to imprisonment for 10 years.

323 A person who does any act … intending to procure, persuade, induce or otherwise cause any person called or to be called as a witness in any judicial proceeding to give false evidence or withhold true evidence or to not attend as a witness or not produce anything in evidence pursuant to a summons or subpoena … is liable to imprisonment for 7 years.

325 A person who without lawful excuse wilfully prevents, obstructs or dissuades a person called as a witness in any judicial proceeding from attending as a witness or from producing anything in evidence pursuant to a summons or subpoena is liable to imprisonment for 5 years

(1A) A person who without lawful excuse wilfully prevents, obstructs or dissuades another person who the person believes may be called as a witness in any judicial proceeding from attending the proceeding is liable to imprisonment for 5 years."

100 None of these provisions deal with the case of someone using a contractual provision to prevent a potential witness in litigation from disclosing confidential information, out of court, to a solicitor who seeks to use that confidential information in the preparation of pending litigation. Thus, only section 319 remains a candidate for possibly articulating the sort of public policy which MBC and Mr Burton invoke in the present case.

101 The Crimes Act 1914 (Cth) contains in Part III a set of offences relating to the administration of justice.

102 The only sections which could even arguably have any bearing on the present case are:

a person for or on account of his having appeared, or being about to appear, as a witness in a judicial proceeding shall be guilty of an indictable offence.

40 A person who intentionally prevents another person who has been summonsed to attend as a witness in a judicial proceeding from attending as a witness or from producing anything in evidence pursuant to the subpoena or summons shall be guilty of an offence.

43(1) Any person who attempts, in any way not specially defined in this Act to obstruct, prevent, pervert or defeat the cause of justice in relation to the judicial power of the Commonwealth, shall be guilty of an offence.

103 Sections 36A and 40 do not strike at the present situation, of GIO seeking to enforce a confidentiality obligation in relation to disclosures out of court of confidential information.

104 Section 319 of the Crimes Act 1900 (NSW), and section 43(1) of the Crimes Act 1914 (Cth) would be influenced, in their interpretation, by the previous common law on the subject. For help in construing those sections, and to ascertain the Victorian law concerning this topic, I now turn to consider the common law concerning perverting the course of justice.

105 The case law concerning the offence of perverting the course of justice is strongly weighted with cases concerning interference with the processes of the criminal law. They include a doctor giving a medical certificate which falsely states that an accused is unfit to stand his trial R v Edelsten (1990) 21 NSWLR 542; attempting to influence a judicial officer concerning the disposition of a case before him R v Murphy (1985) 4 NSWLR 42 (even if the case is a committal proceeding R v Murphy (1985) 158 CLR 596); an accused providing self bail R v Freeman (1985) 3 NSWLR 303 at 309; a solicitor representing a client in court when the client is charged under a name which the solicitor knows is not the client's real name Hatty v Pilkinton (1992) 35 FCR 433; pressuring an accused to plead guilty Meissner v R (1995) 184 CLR 132; and making an accusation of crime one knows is false to the police, and planting items one intends to be taken to be evidence of the truth of the accusation R v Rowell [1978] 1 WLR 132.

106 From the multitude of reported cases concerning this offence, Mason J, in A v Hayden chose to refer to those cases which bore a close analogy to the facts of the case then before the High Court. Thus, his Honour said, at 553-554:

"In Howard v Odhams Press Ltd [1938] 1 KB 1, at 29 Slesser LJ pointed out that the perversion of justice may take place in many ways. One example was concealment or procuring the concealment of a felony amounting to the offence of misprision. Another example is an agreement not to prosecute or to stifle a prosecution which at common law is void or unenforceable: Williams v Bayley (1866) LR 1 HL at 220 per Lord Westbury.

Yet another example is an agreement between a prosecutor and persons indicted that a witness should not give evidence at a trial for reward."

107 Similarly, Wilson and Dawson JJ at 571 referred to Collins v Blantern (1767) 2 Wils. KB 347 at 350; 95 ER 850 at 852, a case concerning a contract to stifle a prosecution for perjury. That it was these cases that were referred to by Mason J, and by Wilson and Dawson JJ, demonstrates how their Honours were carrying through the methodology for recognition of public policy laid down in Wilkinson v Osborne, searching for cases which had articulated, in another sphere of law, the public policy which was then to be applied to decide whether a contract is enforceable.

108 Notwithstanding the preponderance of cases concerning perverting the course of justice being ones which related to interfering with criminal proceedings, there are some cases concerning the offence of perverting the course of justice, which relate to interference with civil proceedings. R v Vreones [1891] 1 QB 360 held that the offence was established when the accused had tampered with samples of goods, the quality of which was disputed, with intent to deceive arbitrators. R v Kellett [1976] 1 QB 372 held that the offence was committed where a respondent to a divorce case threatened to sue a potential witness in that case for slander for a statement which that person had made to an enquiry agent, with the intent of causing that potential witness not to give evidence in the case. The ratio decidendi of that case was that:

"… a threat (or promise) made to a witness is, like an assault on a witness, an attempt to pervert the course of justice, if made with the intention of persuading him to alter or withhold his evidence, whether or not what he threatens (or promises) is a lawful act, such as the exercise of a legal right, and whether or not he has any other intention or intends to do the act if the evidence is not altered, or withheld." (at 393)

109 However, I had not been referred to any case, and my own researches have not revealed any case, which suggests that any offence connected with interfering with the course of justice is committed if an employer seeks to enforce a confidentiality clause in an agreement with his employee (or former employee), by preventing the employee from disclosing, to a solicitor, out of court, confidential information of the employer.

Interfering with the Course of Justice - Application in Civil Law

110 The notion of interfering with the administration of justice has been recognised, in connection with certain civil proceedings, outside the context of a criminal charge. I have already mentioned Egerton v Brownlow, where the concept was applied to strike down a condition subsequent in a settlement. When that was the context in which Lord Lyndhurst made the remark, "It is admitted, that any contract or engagement having a tendency, however slight, to affect the administration of justice, is illegal and void", some caution is called for in applying that remark to a widely different context.

111 In Lound v Grimwade (1888) 39 Ch D 605 Stirling J dealt with an action to set aside a bond under which the plaintiff promised to pay money. The action succeeded, because part of the consideration for giving the bond was a promise that no criminal proceedings would be begun against the plaintiff, and that certain other criminal proceedings would be conducted in such a way that the plaintiff's name would not be mentioned, or if it was mentioned the plaintiff would be exonerated from all blame in connection with the transactions there in question. This consideration was clearly one which would amount to the offence of interfering with the administration of justice. However, in coming to that conclusion Stirling J made some remarks which could potentially mislead. His Lordship quotes Lord Lyndhurst's famous sentence from Egerton v Earl Brownlow, and continues (at 612-3):

"Upon this principle it has been repeatedly held that agreements tending to affect the course of legal proceedings are illegal, even though those proceedings may not be strictly criminal in their nature. Thus an agreement to pay money in consideration of the withdrawal of opposition to the discharge of an insolvent has been held to be illegal: Hall v Dyson (17 QB 785); Hills v Mitson (8 Ex 751). In Elliott v Richardson (Law Rep 5 Cp 744) an agreement by a shareholder in a company which was being compulsorily wound up that he would endeavour to postpone the making of a call was held to be illegal on the ground that it amounted to an interference with public justice; see especially the judgment of Mr Justice Willes (Law Rep 5 CP 748) with which the other judges (Keating J and M Smith J) agreed. A fortiori, must an agreement which tends to interfere with the course of criminal proceedings be illegal."

112 It is the last sentence in this passage just quoted which is the ratio of the decision. The first sentence of the passage quoted is, in my view, too widely stated, and not borne out by the cases relied on.

113 Hall v Dyson (1852) 17 A & E 785 and Hills v Mitson (1853) 8 Ex 751 were each cases where an insolvent debtor had applied for his discharge from custody, the plaintiff had set about opposing that discharge, but dropped his opposition in return for money. The report of Hall v Dyson does not mention Egerton v Lord Brownlow. The reasoning of Lord Campbell CJ (at 791) was:

"In the present case, the creditor is, as it were, bought off; and he was under a moral obligation to continue his opposition, in as much as, by giving notice of it, he had led the other creditors to believe that he really intended to oppose. The consequence of his withdrawing is that justice is disappointed, because the adjudication is made without the proper investigation having taken place. It seems to me that the consideration for receiving the money, which is, to withdraw his opposition, and that after having given notice of it, is clearly immoral.

Patterson J held that the agreement sued on was illegal:

"… in as much as it is contrary to the policy of the Insolvent Debtors' Act, and amounts moreover to a fraud on the creditors. The duty of opposition on the part of the creditor may be a duty only of imperfect obligation: but, if he has the option of pursuing one course or the other, it is an immoral act, against the policy of the law, and a fraud upon the other creditors, to take money for exercising that option (at 792).

114 Thus, in Hall v Dyson it was the specific type of interference with the administration of justice which led to the conclusion that the agreement was contrary to public policy - that the opposing creditor had taken on a role in the litigation, that other creditors were likely to rely on his continuing to perform, so that the opposing creditor was not free to consult only his own private interests in deciding to withdraw his opposition. As well, for any creditor to receive a personal benefit in this way was contrary to the policy of the Insolvent Debtors Act, which required creditors to be treated equally.

115 Hills v Mitson did no more than apply Hall v Dyson (at 758). Elliott v Richardson (1870) LR 5 CP 744 concerned an agreement between A (a shareholder in a company in the course of winding up) and B (a shareholder in and creditor of that company) that A would seek to postpone the making of a call on shares in the company, and support the admission to proof of B's claimed debt, in return for which B would pay the calls due on A's shares. Willes J's preferred ground of decision was that the agreement was unenforceable because it amounted to maintenance. He went on to give a view on another point that had been raised, holding that the agreement amounted to an interference with the course of public justice. However, he then went on: "In order to explain my view on that point, we must look at the nature of the Winding-Up Acts", and gave a summary of the way those Acts had substituted a court-controlled process for the previous cumbersome procedures. He concluded, at 749:

"It seems to me that this an essential part of the intentions of the legislature, that the proceedings should be taken with reasonable speed; and that being so, any secret agreement by which persons who are given a locus standi, as representing their own interests, should, for money, undertake to delay proceedings to the prejudice of the other shareholders and creditors, is void, not only as being against public policy, but as being against the clear intention of the legislature under the Winding-Up Acts."

116 Both Keating J and Montague Smith J, gave separate judgments, based solely on the agreement being contrary to the policy of the Winding-Up Acts. Holding the agreement to be contrary to public policy because it was contrary to the policy of a specific statute is, with respect to Stirling J, a long way from holding that "agreements tending to affect the course of legal proceedings are illegal."

117 A moment's consideration will show that there are many agreements which "tend to affect the course of legal proceedings" in one sense of that expression, but which are not illegal.

· Legal practitioners are paid for their services, and sometimes have a provision in their retainers whereby, if funds are not provided in advance, they are entitled not to appear at litigation. That type of contract could have a significant effect on the course of legal proceedings, if it resulted in the lawyer ceasing to act close to the hearing date, yet it would not seriously be suggested that it was illegal or unenforceable as contrary to public policy.

· An agreement settling legal proceedings has a profound effect on the course of those legal proceedings, but is not contrary to public policy. Even a claim for private injury resulting from an act which amounts to an indictable offence can be compromised, provided that it is not a matter of public concern, Kerridge v Simmonds (1906) 4 CLR 253, at 258-260 per Griffiths CJ.

· Many agreements to fund the bringing of litigation are now regarded as not amounting to maintenance. In Kien Nam Quach v Huntof Pty Ltd [2000] NSWSC 932 Dunford J quoted, at [10] from Steyn LJ in Giles v Thompson [1993] 3 All ER 321 at 328, "Nevertheless the offences and torts of maintenance and champerty lingered on in atrophied form for more than a century after any public interest in maintaining them had disappeared". Dunford J continued, at [11] and [12]:

"Since then the offences and torts of maintenance and champerty have been abolished in England and in a number of the Australian states. In New South Wales, the relevant statute is the Maintenance and Champerty Abolition Act 1993 No. 88. However, s 6 provides that the Act does not affect any rule of law as to cases in which a contract is to be treated as contrary to public policy or as otherwise illegal whether the contract was made before or after the commencement of the Act.

In recent times the courts have taken a more liberal attitude to what constitutes an interest in the litigation or other motive recognised as justifying maintenance of litigation by a stranger to it: Stevens v Keogh (1946) 72 CLR 1, Trendtex Trading Corporation v Credit Suisse [1982] AC 679, Magic Menu Systems v AFA Facilitation Ltd (1997) 72 FCR 261 at 267, Roux v Australian Broadcasting Commission [1992] 2 VR 577 at 607, Martell v Consett Iron Co Limited supra, so that the provision of legal assistance by trade organisations, trade unions and employers or where the maintainer has a "genuine commercial interest" in the outcome of the litigation are no longer regarded as offending the rules against maintenance of other persons' litigation. It appears that there is a further exception in relation to bankruptcy and company administration cases, e.g. Re Tosich Constructions Pty Limited, Re William Felton Co Pty Ltd (1998) 28 ACSR 228 at 232."

See also NAB Ltd v Market Holdings Pty Ltd (in Liq) [2001] NSWSC 253; (2001) 37 ACSR 629 at [221]-[223] per Young CJ in Eq; Hogarth v Gye [2002] NSWSC 32 at [8] per Bryson J; Cadwallader v Bajco [2001] NSWSC 1193 at [151] per Austin J.

118 On the other hand, there are several indictors that it is in accord with public policy that a confidentiality agreement, like the one on which GIO sues in the present case, should be enforceable.

119 Section 183 of the Corporations Act 2001 (Cth) says;

(1) a person who obtains information because they are, or have been, a director or other officer or employee of a corporation must not improperly use the information to:

(a) gain an advantage for themselves or someone else; or (b) cause detriment to the corporation.

Note 1: This duty continues after the person stops being an officer or employee of the corporation.

Note 2: This subsection is a civil penalty provision (see section 1317E).

120 The definition of "officer", in section 9 of the Corporations Act 2001 (Cth), includes:

"… a person … who makes, or participates in making, decisions that effect the whole, or a substantial part, of the business of the corporation."

121 In Grove v Flavel (1986) 4 ACLC 654, at 659 Jacobs J (with whom Matheson and Olsson JJ agreed) noted the wide variety of roles in a company which fell within the definition of "officer", and said:

"It seems to me, therefore, that what is "improper" for the purposes of sec 124(2) cannot be determined by reference to some common uniform or inflexible standard which applies equally to every person who is an officer, but rather must be determined by reference to the particular duties and responsibilities of the particular officer whose conduct is impugned."

122 That observation would also apply to section 183 of the Corporations Act 2001 (Cth).

123 While section 183 is contravened only if the employee, etc improperly uses the information, concerning the predecessor of that section (section 232(5) of the Corporations Law) Young J said, in Rosetex Co Pty Ltd v Licata (1994) 12 AC LC 269, at 273:

"… "information" in s232(5) means the sort of information which equity would protect by injunction if a director used it in breach of his fiduciary duties. "Improper" use of that information is in much the same plight as a breach of fiduciary duty under the general law."

124 In R v Byrnes (1995) 183 CLR 501, at 514-515 Brennan, Dean, Toohey and Gaudron JJ said, concerning the proscription, in section 229(4) of the Companies (South Australia) Code, of an officer or employee making, "improper use of his position as such an officer or employee, to gain, directly or indirectly, and advantage for himself or for any other person or to cause detriment to the corporation":

"Impropriety does not depend on an alleged offender's consciousness of impropriety. Impropriety consists in a breach of the standards of conduct that would be expected of a person in the position of the alleged offender by reasonable persons with knowledge of the duties, powers and authorities of the position and the circumstances of the case. When impropriety is said to consist in an abuse of power, the state of mind of the alleged offender is important (Hindle v John Cotton Ltd (1919) 56 SLR 625 at 630-631): the alleged offender's knowledge or means of knowledge of the circumstances in which the power is exercised and his purpose or intention in exercising the power are important factors in determining the question whether the power has been abused. But impropriety is not restricted to abuse of power. It may consist in the doing of an act which the director or officer knows or ought to know that he has no authority to do."

125 That construction can, it seems to me, properly apply to section 183 Corporations Act 2001 (Cth).

126 The existence of section 183 suggests that the maintenance of confidences by a former corporate officer is something which public policy requires - at least in those circumstances where there is not a countervailing obligation.

127 But MBC and Mr Burton do not assert that there is any obligation on someone who is the repository of confidential information, which could possibly be of use in litigation, to assist a legal practitioner in the preparation of that litigation. In this respect there is a fundamental difference between the position Mr Burton has been in when he has been freely disclosing information in the privacy of MBC's offices, to the situation he would be in when he was answering questions, pursuant to a subpoena, in a courtroom.

128 What MBC and Mr Burton say is that public policy requires that, if a person who has such information wishes to assist a lawyer in preparation of litigation, public policy requires that he be free to do so, notwithstanding any contractual obligations he might have undertaken. It does not seem consistent with section 183 that a former corporate officer have that freedom, except perhaps if the nature of the information sought to be disclosed was such that the former employee was not acting "improperly" in disclosing it. I shall return to this topic later (see paragraph 210 below).

Confidentiality and the Availability of Evidence in Court Proceedings

129 There are well established limitations on obligations of confidentiality, being limitations which are established for the purpose of enabling the system of administration of justice to operate. Thus, at common law, a witness who is called to give evidence in court is not entitled, on the ground of owing an obligation of confidence alone, to decline to answer any relevant question which is permitted to be put (D v National Society for the Prevention to Children [1978] AC 171, at 218, 230, 237). If the confidential information also is the subject of a privilege recognised in the law of evidence which applies in the court before whom the person is called, it is that privilege, not the confidentiality, which provides a ground on which that person need not give the evidence.

130 However, the rules of court state the extent of the obligation in this respect. The rules of court standardly provide for the issue of subpoenas to give evidence and subpoenas for production. They standardly provide for the form of the subpoena which may be issued, though allowing for the court to authorise the subpoena to issue in some other form (eg Supreme Court Rules Part 37 Rule 2, Federal Court Rules Order 27 Rule 2). The obligation under the subpoena is, typically, an order that the recipient shall attend for the purpose of giving evidence before the court, at a nominated time and place and until the recipient is excused by the court from further attending. The rules of court which create this obligation to attend, say nothing about the recipient of a subpoena having any obligation to say a single word to the party who issues the subpoena, outside the context of answering questions in court.

131 While the administration of justice is a very important matter of social policy, it is not one which overrides all other matters of public importance. There are many constraints under which litigation operates, where, as a matter of public policy, information is not able to be used at all in litigation. In the Federal Court (which is probably the relevant court to consider for present purposes) the Evidence Act 1995(Cth) applies. It denies the court evidence when it is the subject of client legal privilege (section 117-126), religious confession privilege (section 127), self incrimination privilege (section 128), evidence relating to the reasoning process of a judicial officer (section 129), various public interest privileges (section 130), or evidence of settlement negotiations (section 131). As well, the court has a discretion to exclude evidence in the circumstances where section 135 applies, to limit the use of evidence under section 136, and to not receive evidence which was obtained improperly or in contravention of a law, or in consequence of an impropriety or contravention of a law under section 138. A subpoena to give evidence will usually not be enforced against an expert who has had no connection with the facts of the case (Application of Forsyth; Re Cordova v Philips Roxane Laboratories Inc [1984] 2 NSWLR 327). When there are these limitations on the court actually receiving evidence in litigation, it ought not come as a surprise if more extensive limitations can be imposed, consistently with public policy, on a lawyer's receipt of information and documents, in the privacy of his own office, for the purpose of eventually being used in litigation.

132 As well, when a case is in the course of preparation, limits are imposed on the ability of a litigant to compel the production of information which is relevant to the case. While there are procedures of discovery, and interrogatories, whereby a litigant can compulsorily obtain documents, and information, from an opposite party, those procedures are always subject to the control of the court. In the course of controlling those procedures, one of the factors which the court takes into account, is whether information is confidential. Confidentiality can be taken into account in deciding whether to order discovery at all, and if so to what extent, Science Research Council v Nassé [1980] AC 1028 at 1065-1066, 1071-1072, 1073, 1077, 1085, 1089-1090. Further, the court can, in appropriate cases such as when the opposite party is a trade rival, allow inspection of a discovered document which is confidential on the basis that it is disclosed only to counsel, solicitors and nominated experts, not to the client: Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34.

133 If documents are obtained from a third party on subpoena, and the third party objects to those documents being inspected, the court decides whether, when, and subject to what, if any, limitations, inspection can occur: National Employers' Mutual General Association Ltd v Waind and Hill [1978] 1 NSWLR 372.

134 If the court requires the disclosure of information, or documents, for the purpose of one piece of litigation, the court ensures that (unless leave of the court is obtained) the information, or document, is not used for any other piece of litigation - Harman v Secretary of State for the Home Department [1983] 1 AC 280 (document obtained on discovery) Ainsworth v Hanrahan (1991) 25 NSWLR 155 (answer to interrogatories); Central Queensland Cement Pty Ltd v Hardy [1989] 2 Qd R 509 (witness statement).

135 It is already established that there are circumstances where the law will prevent a repository of confidential information from making that information available to someone else, for the purpose of litigation. The obligation of confidentiality which is imposed on legal practitioners, is a familiar example of this restraint. In Rakusen v Ellis, Munday & Clarke [1912] 1 Ch 831, at 835 Cozens-Hardy MR said:

"A solicitor can be restrained as a matter of absolute obligation and as a general principle from disclosing any secrets which are confidentially reposed in him. In that respect it does not very much differ from the position of any confidential agent who is employed by a principal."

136 Concerning the responsibility of a solicitor entrusted with confidential information, who is called on to use that confidential information for another client, in another case, Cozens-Hardy said, at 835-6:

"… and if this had been a case of Mr Munday having obtained from the plaintiff, who said that he had been wrongfully dismissed, confidential information bearing upon the circumstances or the alleged justification of the wrongful dismissal, and if it had been a case of Mr Munday afterwards appearing in the action for the defendants, speaking for myself, I should have said that was a case in which he was putting himself in a position in which he could not as an honest man discharge his duty to the defendants without consciously or unconsciously availing himself of information which he had obtained while acting for Mr Rakusen. That would be a typical case in which a person ought not to be allowed to put himself in a position in which he could not clear his mind from the knowledge he had obtained. I cannot bring myself to doubt that any respectable solicitor would in those circumstances have said at once, "I am very sorry I cannot act for you because I am familiar with the circumstances alleged by the other side, which circumstances have been communicated to me confidentially"".

"In almost all business there must be persons in such a confidential relationship to the employers or to the people who are employed by them for purposes connected with the business, that the knowledge which they acquire is not knowledge at their own disposal but consists substantially of the secrets of the employer. Such employments come to an end sometimes at the choice of the master, sometimes at the choice of the servant, and thereupon difficulties necessarily arise, because the person who is no longer in employment still has in his breast secrets which are the property of his past employer. The view that the law takes of the rights of the parties in that position is too clear to be disputed. The employee is quite free to go into the service of people who may be rivals or the opponents of his former master. The law does not say that the possession of those secrets shall cripple his work, or sterilise it. He may go into employment quite inconsistent with the employment which he had in the past. All that the law says is: you shall not disclose or put at the service of your new employer the secrets that belong to your old employer."

"There is a general principle, applicable not to solicitors only, but to confidential agents of all kinds, that confidential information shall not be used against the principal from whom, or for whom, and in whose employment, it has been obtained. There is no general rule that a solicitor who has acted in a particular matter for one party shall not under any circumstances subsequently act in that matter for his opponent. Whether he will be restrained from so acting or not depends on the particular circumstances. Of course he will be restrained from communicating confidential information … "

139 No doubt there are many cases where it would be convenient for a plaintiff to prove its case by obtaining confidential information from a former solicitor of the defendant. Yet it is quite clear that a plaintiff cannot adopt this course, notwithstanding the practical difficulties which not proceeding this way might occasion to the plaintiff in running his litigation. It is also quite clear that if a plaintiff attempts to do so he will be restrained by injunction, and that any difficulties which the issuing of such an injunction might occasion to the plaintiff in running his litigation will provide no reason for refusing to grant the injunction. This outcome is not a consequence of particular responsibilities which are placed upon solicitors, but is the operation of the ordinary law concerning confidential information.

140 The availability of an injunction to restrain a solicitor from disclosing confidential information has not since been doubted. - D & J Constructions Pty Ltd v Head (1987) 9 NSWLR 118, Edmonds, "Trusting Lawyers with Confidences - Conflicting Realities (A Review of the Test and Principles Applying to Lawyers' Conflicts of Interests)" (1998) 16 ABR 222; In Re a Firm of Solicitors [1992] 1 QB 959. While Rakusen has been disapproved in some subsequent decisions (eg by the House of Lords in Prince Jefri Bolkiah v KPMG (1999) 2 WLR 215), it was on the grounds that it did not go far enough, in refusing an injunction in circumstances where it could not be demonstrated that acting for a later client would result in an abuse of confidential information. In Bolkiah v KPMG, at 225, Lord Millett (with whom all other of their Lordships hearing that case agreed) said, at 225:

"Whether founded on contract or equity, the duty to preserve confidentiality is unqualified. It is a duty to keep the information confidential, not merely to take all reasonable steps to do so. Moreover, it is not merely a duty not to communicate the information to a third party. It is a duty not to misuse it, that is to say, without the consent of the former client to make any use of it or to cause any use to be made of it by others otherwise than for his benefit. The former client cannot be protected completely from accidental or inadvertent disclosure. But he is entitled to prevent his former solicitor from exposing him to any avoidable risk; and this includes the increased risk of the use of information to his prejudice arising from the acceptance of instructions to act for another client with an adverse interest in a matter to which the information is or may be relevant."

(See also Wan v McDonald (1992) 33 FCR 491 at 512, Carindale Country Club Estate v Astill (1993) 42 FCR 307, Malleson Stephen Jaques v KPMG Peat Marwick (1990) 4 WAR 357 at 362-3.)

141 The question of whether an injunction is available to prevent confidential documents from being used, by a party to litigation, and the solicitor of the party to litigation, has been decided in Lord Ashburton v Pape [1913] 2 Ch 469. Mr Pape was a bankrupt. Lord Ashburton was a creditor of Pape, who opposed Pape's discharge from bankruptcy. Lord Ashburton had, previously, written letters to his former solicitor, Mr Nocton, which were privileged. Pape served on one of Mr Nocton's clerks a subpoena requiring him to produce the letters in the bankruptcy court. The clerk took the letters to the court, and, before the subpoena was called on, handed the letters to Pape. Pape's solicitors, Langford and Redfern, took copies of the letters, and returned the originals to Pape. Lord Ashburton commenced litigation against Pape, Langford, Redfern, and Nocton, seeking an injunction restraining the defendants from, in effect, disclosing the contents of the letters, or parting with them, otherwise than to the plaintiff or by deposit in court. An interlocutory injunction was granted by Neville J, requiring Pape to hand over to Nocton all original letters from Lord Ashburton to Nocton in his possession or control. There was also an order restraining Pape, Langford and Redfern, their servants and agents,

"… until judgment or further order from publishing of making use of any of the copies of such letters or any information contained therein except for the purpose of the pending proceedings in the defendant … Pape's bankruptcy and subject to the direction of the Bankruptcy Court."

142 Lord Ashburton appealed against the inclusion of the exception in the interlocutory injunction.

143 In Calcraft v Guest [1898] 1 QB 759 the English Court of Appeal had dealt with the admissibility of copies of privileged documents. The action was one where Mr Calcraft sued for trespass in a fishery. The substantial question concerned the upper boundary of that fishery. The plaintiff succeeded at trial. On appeal, the defendant wished to rely on some documents which had been discovered since the trial. The documents in question were proofs of witnesses, and rough notes of evidence used in defence of an earlier action for trespass in that fishery. Mr John Calcraft, a predecessor in title of the present plaintiff, had financed the defence of that earlier action. (Thus, though the report does not expressly say so, it seems a reasonable inference that Mr John Calcraft was one of the persons entitled to the legal professional privilege in those proofs of witnesses and notes of evidence.) The proofs of witnesses and notes of evidence had remained with Mr John Calcraft's solicitor, until that solicitor's practice was wound up, and were then placed in storage. It was from that storage that the present appellant had obtained the proofs of witnesses and rough notes of evidence. They made copies of the documents. The plaintiff (the 1898 Mr Calcraft) threatened legal action, and the originals of the documents were thereupon handed over to him. The question for the court was whether the copies were admissible in evidence. Lindley MR (with whom Rigby and Vaughan Williams LJJ agreed) held that the copies were admissible, notwithstanding that the originals were privileged.

144 When Lord Ashburton v Pape was heard, the argument for the appellant started out by giving a précis of the principle in Calcraft v Guest, namely (at 471):

"Communications which have passed between a client and his solicitor before any dispute has arisen between the client and his opponent are privileged from production, so the original letters cannot be used. If, however, an instrument in the hands of a solicitor which is privileged from production comes improperly into the hands of a stranger who makes a copy of it, the secondary evidence so obtained is admissible in case of notice to produce the original being duly given, and the production resisted on ground of privilege."

"But in this case there has been a breach of confidence on the part of Nocton. Pape obtained the letters from him, and a person who obtained privileged letters from anyone who is in a fiduciary is in no better position than the trustee himself. The equity prevails against persons deriving under the breach of contract or duty: Tipping v Clarke (1843) 2 HARE 383; Morrison v Moat (1851) 9 HARE 241."

146 Thus, the argument pointed to an essential difference between Calcraft v Guest, and Lord Ashburton v Pape. In Calcraft v Guest, while the documents in question were privileged, that privilege was one owed to Mr John Calcraft. All the report tells the reader about the relationship between Mr John Calcraft, and the 1898 Mr Calcraft, is that Mr John Calcraft was a predecessor in title of the 1898 Mr Calcraft, so far as the fishery was concerned. There is no basis in the report of Calcraft v Guest for finding that any obligations of confidence, which might have been owed by Mr John Calcraft's solicitor to Mr John Calcraft, (and also, presumably, by the people into whose hands the proofs of witnesses and rough notes of evidence had come) were owed to the 1898 Mr Calcraft. Thus, a difference between Calcraft v Guest and Lord Ashburton v Pape was that in Lord Ashburton v Pape Lord Ashburton was a plaintiff who was owed an equity of confidence, in relation to the papers in question.

147 The Court of Appeal allowed the appeal, striking out the exception which had been contained in Neville J's interlocutory injunction. Cozens-Hardy MR said, at 472:

"Now, the question is raised that that exception is wrong, and that the injunction ought to go to the full extent until the trial of the action, namely from publishing or making use of any of the copies of letters or information contained therein. In my opinion the contention of the appellant is right."

148 After referring to authorities to show that a recipient of confidential information can be restrained from using it, Cozens-Hardy MR went on, at 472:

"Apart, therefore, from these pending or threatened proceedings in bankruptcy, it seems to me to be perfectly clear that the plaintiff can obtain the unqualified injunction which he asks for. Now, can it make any difference that Pape says "I want, by means of these copies, to give secondary evidence in the bankruptcy proceedings?" In my opinion that is no ground for making any distinction. The rule of evidence as explained in Calcraft v Guest [1898] 1 QB 759 merely amounts to this, that if a litigant wants to prove a particular document which by reason of privilege or some circumstance he cannot furnish by the production of the original, he may produce a copy as secondary evidence although that copy has been obtained by improper means and even, it may be, by criminal means. The court in such an action is not really trying the circumstances under which the document was produced. That is not an issue in the case and the court simply says "Here is a copy of a document which cannot be produced; it may have been stolen, it may have been picked up in the street, it may have improperly got into the possession of the person who proposes to produce it, but that is not a matter which the court in the trial of the action can go into." But that does not seem to me to have any bearing upon a case where the whole subject matter of the action is the right to retain the originals or copies of certain documents which are privileged. It seems to me that, although Pape has had the good luck to obtain a copy of these documents which he can produce without a breach of this injunction, there is no ground whatever in principle why we should decline to give the plaintiff the protection which in my view is his right as between him and Pape, and there is no reason whatever why we should not say to Pape in pending or future proceedings, "You shall not produce these documents which you have acquired from the plaintiff surreptitiously, or from his solicitor, who plainly stood to him in a confidential relation." For these reasons I think the appeal ought to be allowed so far as it asks, and only so far as it asks, to strike out the exception."

149 When Cozens-Hardy MR said, "without a breach of this injunction", I take him to be meaning, "without a breach of the injunction granted by Neville J". Further, while the case before the court concerned an interlocutory injunction, in this passage Cozens-Hardy MR seems to be stating principles which would apply even on a final hearing. If that is so, then to that extent the remarks are obiter dicta; even so, they are, in my respectful view, a correct application of principle.

150 While the basis of the order made in Lord Ashburton v Pape was that the documents were confidential, the particular form of order which it was appropriate to make was also influenced by the fact that the documents were the subject of legal professional privilege. When a court grants a remedy to enforce an equity of confidence, it aims to provide a remedy which ensures that the defendant gains no advantage from there having been a breach of confidence. In Ashburton v Pape, if the breach of confidence had not occurred, the copied documents would never have been made, and would not have been available to tender in evidence. It is well in accord with the principle on which a remedy for breach of equitable obligations of confidence is founded, that copies so made should not be, ever, tendered in evidence.

"I agree that the better view seems to me to be that although it is true that the principle which is laid down in Calcraft v Guest [1898] 1 QB 759 must be followed, yet, at the same time, if, before the occasion of the trial when a copy may be used, although a copy improperly obtained, the owner of the original can successfully promote proceedings against the person who has improperly obtained the copy to stop his using it, the owner is nonetheless entitled to protection, because, if the question had arisen in the course of a trial before such proceedings, the holder of the copy would not have been prevented from using it on account of the illegitimacy of its origin. If that is so, it decides this case. There is no question here as to the facts, and on them it is quite clear that these copies ought never to have got into Mr Pape's possession in any shape or form."

152 I confess I have difficulty in understanding the first sentence that I have just quoted. My difficulty arises from the use of the word "because". If, however, "because" were replaced with "notwithstanding that", the sentence is readily intelligible, and consistent with the views of Cozens-Hardy MR. Further, it is clear from the final sentence that Kennedy LJ regards that as important that these copies should never have been in Mr Pape's possession at all.

153 Swinfen Eady LJ said, at 475, that the act of Mr Nocton's clerk in handing over the letter was a gross breach of his duty of confidentiality, and that by that means Pape had obtained possession of the letters and had proceeded to copy them, and still kept the copies. He continued.

"The principle upon which the Court of Chancery has acted for many years has been to restrain the publication of confidential information improperly or surreptitiously obtained or of information imparted in confidence which ought not to be divulged. Injunctions have been granted to give effectual relief, that is not only to restrain the disclosure of confidential information, but to prevent copies being made of any record of that information and, if copies have already been made, to restrain them from being further copied, and to restrain persons into whose possession that confidential information has come from themselves in turn divulging or propagating it."

"If the defendant has obtained copies of books, it would very probably be by means of some clerk or agent of the plaintiff and if he availed himself surreptitiously of the information, which he could not have had except from a person guilty of a breach of contract in communicating it, I think he could not be permitted to avail himself of that breach of contract.

That is Pape's position here. If he is allowed to retain possession of these copies or to divulge the contents, he is availing himself of the breach of contract by Brooks the clerk, by means of which these letters have come into his hands."

"Then objection was raised in the present case by reason of the fact that it is said that Pape, who now has copies of the letters, might wish to give them in evidence in certain bankruptcy proceedings, and although the original letters are privileged from production he has possession of the copies and could given them as secondary evidence of the contents of the letters, and, therefore, ought not to be ordered either to give them up or be restrained from divulging their contents. There is here a confusion between a right to restrain a person from divulging confidential information and the right to give secondary evidence of documents where the originals are privileged from production, if the party has such secondary evidence in his possession. The cases are entirely separate and distinct. If a person were to steal a deed, nevertheless in any dispute to which it was relevant the original deed might be given in evidence by him at the trial. It would be no objection to the admissibility of the deed in evidence to say that you ought not have possession of it. His unlawful possession would not affect the admissibility of the deed in evidence if otherwise admissible. So again with regard to any copy he had. If he was unable to obtain or compel production of the original because it was privileged, if he had a copy in his possession it would be admissible as secondary evidence. The fact, however, that a document, whether original or copy, is admissible in evidence is no answer to the demand of the lawful owner for the delivery up of the document, and no answer to an application by the lawful owner of confidential information to restrain it from being published or copied."

156 In Goddard v Nationwide Building Society [1987] 1 QB 670 the English Court of Appeal considered another case where a note to which legal professional privilege attached (being legal professional privilege of the plaintiffs - 678G) came to be in the hands of the defendants. The plaintiffs were in the process of suing the defendants. The defendants used the privileged note as the basis for an amendment to their defence. The plaintiffs applied to have those portions of the defence struck out, and sought an injunction restraining the defendant from using or relying on the copy note, and requiring the defendant to deliver up the note and any further copies which it might have made of that note. That application succeeded. May LJ, at 683 said:

"I confess that I do not find the decision in Lord Ashburton v Pape logically satisfying, depending as it does upon the order in which applications are made in litigation. Nevertheless I think that it and Calcraft v Guest [1898] 1 QB 759 are good authority for the following proposition. If a litigant has in his possession copies of documents to which legal professional privilege attaches he may nevertheless use such copies as secondary evidence in his litigation; however, if he has not yet used the documents in that way, the mere fact that he intends to do so is no answer to a claim against him by a person in whom the privilege is vested for delivery up of the copies or to restrain him from disclosing or making any use of any information contained in them.

157 Nourse LJ, at 684D, agreed with this proposition. Nourse LJ also stated some propositions in which he contrasted the rule of evidence established by Calcraft v Guest, and the equitable jurisdiction reaffirmed in Lord Ashburton v Pape. He says, at 685:

"Second, although the equitable jurisdiction is of much wider application, I have little doubt that it can prevail over the rule of evidence only in cases where privilege can be claimed. The equitable jurisdiction is well able to extend, for example, to the grant of an injunction to restrain an unauthorised disclosure of confidential communications between priest and penitent, or doctor and patient. But these communications are not privileged in legal proceedings and I do not believe that equity would restrain a litigant who already had a record of such a communication in his possession from using it for the purposes of his litigation. It cannot be the function of equity to accord a de facto privilege to communications in respect of which no privilege can be claimed. Equity follows the law …

Fourth, once it is established that a case is governed by Lord Ashburton v Pape [1913] 2 Ch 469 there is no discretion in the court to refuse to exercise the equitable jurisdiction according to its view of the materiality of the communication, the justice of admitting or excluding it or the like. The injunction is granted in aid of the privilege which, unless and until it is waived, is absolute. In saying this, I do not intend to suggest that there may not be cases where an injunction can properly be refused on general principles affecting the grant of a discretionary remedy, for example on the ground of inordinate delay."

158 The decision in Ashburton v Pape has been referred to in the High Court without any adverse comment: The Commonwealth of Australia v John Fairfax & Sons Ltd (1980) 147 CLR 39 at 50 per Mason J; Baker v Campbell (1983) 153 CLR 52, at 68, per Gibbs CJ.

159 The decision in Ashburton v Pape has been applied in a series of cases where documents the subject of legal privilege have, by mistake, come into the hands of an opposite party to litigation. In each case, the courts have made orders aimed at undoing the mistaken disclosure - Guiness Peat Properties Ltd v Fitzroy Robinson Partnership [1987] 1 WLR 1027; Hooker Corporation Ltd v Darling Harbour Authority (1987) 9 NSWLR 538; Webster v James Chapman & Co [1989] 3 All ER 939; Derby & Co Ltd v Weldon [1991] 1 WLR 73.

160 In Director of Public Prosecutions (Cth) v Kane (1997) 140 FLR 468 Hunt CJ at CL considered a situation where, by mistake, the DPP had sent to the solicitor for some accused persons an internal memorandum which drew together facts, and advice received from counsel, the case officer, the informant police officer, and the Senior Assistant Director of Public Prosecutions in the Sydney office, concerning an application made by the accused that the committal proceedings be discontinued. His Honour made orders restraining the defendants from using or otherwise dealing with the document, and requiring them to deliver the document up to the DPP. The basis of that decision was expressly stated to be both the equitable obligation of confidence, and legal professional privilege (at 486).

161 In Deputy Commissioner of Taxation v Rettke (1995) 31 IPR 457 Cooper J considered a situation where Mr Rettke, a public servant employed in the Australian Tax Office, was engaged in litigation with the Commission for the Safety, Rehabilitation and Compensation of Commonwealth Employees. He annexed to an affidavit filed in those proceedings a copy of a tax return (then 17 years old) of a taxpayer. Mr Rettke said that a copy of that taxpayer's file had been sent to him, unsolicited. The court held that the contents of the file were confidential information, and ordered Mr Rettke to deliver up to the Deputy Commission of Taxation all copies of the taxation return in his possession power of control, and:

(a) in the performance of his duties as an officer within the meaning of that term as defined in section 16 of the Income Tax Assessment Act; or

(b) in proceedings pending in the Administrative Appeals Tribunal between Rodney Noel Rettke and Comcare if it be held to be relevant and admissible by the Tribunal,

Rodney Noel Rettke by himself his servants and agents or otherwise be restrained from disclosing to any person the contents of the 1978-1979 taxation return of NL, A and D Land Trading as NL Land & Co." (at 465)

162 In Sullivan v Sclanders (2000) 77 SASR 419 the South Australian Full court considered a situation where Sclanders was suing Sullivan, concerning a business venture which Sullivan and Sclanders had formerly operated. Sclanders came into possession of various copied documents. The copies were obtained by the original of the documents being surreptitiously removed from Sullivan's room, the copies made, the originals returned to Sullivan's room, and the copies sent off to Sclanders. Sclanders sought an order from the Supreme Court that he be permitted to seek legal advice about the contents of the documents. That order was made, at first instance. On appeal, it was held that an obligation of confidentiality attached to the documents, and that orders should be made restraining the use of that confidential information. Gray J said, at 424:

"A person who has confidential information belonging to another may be restrained from using it without the owner's consent, by injunction. Equity acts in regard to the unconscionable circumstances in which the confidential documents were obtained and disseminated. Equity may grant relief from the consequences of reprehensible conduct. To be effective, this relief may bind third parties who have come into possession of the information and can protect the defendants from oral or written dissemination or other use.

The granting of equitable relief as sought in this matter does not preclude the truth from being ascertained. Discovery and production, either pre action or during an action, will ensure that the relevant documentary material is available, according to the ordinary rules of procedure. If the documents are relevant, then they will be discovered and produced, subject to claims of privilege.

163 The orders made included orders requiring Sclanders to file an affidavit identifying all copies made, an order that all copies be brought into court, sealed, preserved and not opened without an order of the judge of the court, and orders:

"that the statement of claim be struck out, sealed, preserved and not opened without an order of a judge of this court

that the plaintiff be at liberty to file a fresh statement of claim making no use either directly or indirectly of the confidential documents or their contents

that the plaintiffs be restrained from disseminating or making use of the contents of the confidential documents" (at 431)

164 There has been some legislation which deals with a problem, which parliaments evidently perceived, of obligations of confidentiality sometimes inhibiting performance of more public duties. The Protected Disclosures Act 1994 provides a number of protections, including (under section 21) protection from liability, "despite any duty of secrecy or confidentiality or any other restriction on disclosure" to disclosures made to a precisely defined group of authorities, a member of parliament, or a journalist. However, the provisions of the Act apply only to a disclosure made by a "public official" (section 8).

165 Commonwealth legislation also provides protection to certain federal public servants who report breaches or alleged breaches of a code of conduct to identified office holders (Public Service Act 1999 (Cth) section 16; Parliamentary Service Act 1999 (Cth) section 16. See also Whistleblowers Protection Act 1993 (South Australia), Whistleblowers Protection Act 1994 (QLD), Public Interests Disclosure Act 1994 (ACT). The South Australian and Queensland legislation can apply (at least in some circumstances) to relieve private sector employees from their obligations of confidentiality - but that legislation is not part of the public policy which is to be applied in deciding the legality or enforceability of the contractual obligation on which GIO here sues.

166 The partial release of obligations of confidentiality for public officials, under the Protected Disclosures Act 1994, mirrors to some extent the way that equitable principles of confidentiality operate differently when applied to private individuals, to the way they operate when applied to governments: the Commonwealth of Australia v John Fairfax & Sons Ltd (1980) 147 CLR 39 at 51-53 per Mason J, Minister for Mineral Resources v Newcastle Newspapers Pty Ltd (1997) 40 IPR 403 at 408-409 per Young J.

167 That parliaments have, comparatively recently, enacted legislation to permit "whistleblowing" but have not made it extend to someone in the situation of Mr Burton, is an indication that there is no public policy which prohibits the enforcement of the confidentiality obligations which GIO here seeks to enforce.

Comparing a Plaintiff's Situation in Suing a Natural Person, and Suing a Corporation

168 When a plaintiff sues a natural person defendant, and that defendant has confidential information which is relevant to the case, the defendant is able to make that information available voluntarily to the plaintiff if it so chooses. If the defendant chooses not to, the plaintiff can, in some circumstances, obtain that confidential information through processes of discovery, and interrogatories. To the extent it is not able to obtain the information through discovery and interrogatories, the plaintiff must do without.

169 Any corporation must necessarily carry on its activities through natural persons. When a corporation discloses confidential information to a natural person, on terms that this information will be used only for the purposes of the corporation, the person to whom the information is disclosed comes under a constraint, which affects what would otherwise be his freedom of action, to voluntarily disclose that information. If a corporate defendant is sued, and has disclosed confidential information to an employee, which is relevant to that litigation, for the courts to permit enforcement of that restraint on the employee places the plaintiff in the same situation it is in when it sues a natural person who has confidential information. If justice can be properly administered in the one case, it can likewise be properly administered in the other.

Conclusion on Whether Enforcement of the Contract Contravenes Public Policy

170 Having surveyed these principles which the community has already adopted formally by law, I can see no basis for holding that a former employee, who has been entrusted with his employer's confidential information, and has promised not to disclose it, ought be free on grounds of public policy to disclose that information to a solicitor, if he so wishes, and if the solicitor bona fide wishes to receive that information for the purpose of advancing litigation which the solicitor is in the course of running.

171 In Re Morris, Jordan CJ said that the court could also look at principles which the community as a whole has already adopted tacitly by the general course of corporate life. No specific evidence on that matter was put before me. As a matter of judicial notice, I do not find that there is any definite principle which this community adopts in the general course of its corporate life, whereby former employees are free to disclose their former employer's secrets to a solicitor who wishes to use those secrets in litigation against the former employer.

172 In these circumstances, I do not find that public policy requires the terms of the confidentiality undertaking to be treated as void, or for the court to decline to enforce them, to the extent that the confidentiality undertaking prohibits Mr Burton from disclosing confidential information to MBC.

173 An alternative basis upon which MBC and Mr Burton oppose the grant of an injunction is that the court will not confer the cloak of confidentiality on information which discloses an iniquity.

174 As Gummow J has demonstrated in Corrs Pavey Whiting & Byrne v Collector of Customs (VIC) (1987) 14 FCR 434 the famous epigram of Wood V-C in Gartside v Outram (1856) 26 LJ Ch (NS) 113, at 114, that "there is no confidence as to the disclosure of iniquity" was made in the context of deciding the scope of an implied obligation of good faith in an employment contract. That being the proper sphere of operation in the decision in Gartside v Outram, it is not directly applicable to the present case, where there is an express obligation of confidentiality. In case another court takes a different view concerning this matter, however, I shall make some observations about how the "no confidence in iniquity" principle might apply in the present circumstances.

175 In Corrs Pavey Whiting & Byrne v Collector of Customs (1987) 14 FCR 434 Gummow J, at 451 ff considered the supposed "public interest" defence to breach of confidence, and what could be drawn from Gartside v Outram. His Honour concluded at 454:

"From this consideration of Gartside v Outram I conclude that that case provides insufficient basis for an "public interest defence" of the kind that, in its name, has been developed in the recent English authorities. The truth as to what Gartside v Outram decided is less striking and more readily understood in terms of basic principle. It is that any court of law or equity would have been extremely unlikely to imply in a contract between master and servant an obligation that the servant's good faith to his master required him to keep secret details of his master's gross bad faith to his customers."

"Finally, if there be some other principle of general application inspired by Gartside v Outram, it is in my view of narrower application than the "public interest defence" expressed in the English cases. Such a narrow principle would not be concerned with contractual protection of confidence. Where the plaintiff asserts a contractual right, the law of contract, supplemented by equitable defences where equitable relief is sought, sufficiently deals with the situation. Any principle of the kind I am now considering will be applied in equity where there is no reliance on contractual confidence. That principle, in my view, is no wider than one that information will lack the necessary attribute of confidence if the subject matter is the existence or real likelihood of the existence of an iniquity in the sense of a crime, civil wrong or serious misdeed of public importance, and the confidence is relied upon to prevent disclosure to a third party with a real and direct interest in redressing such crime, wrong or misdeed."

176 As the present case is one where the plaintiff relies on contractual protection of confidence, the principle articulated by Gummow J in the last sentence of the passage just quoted, has no room to apply.

177 The present status of a "public interest" defence in Australia in an action for breach of confidence in equity's exclusive jurisdiction is not clear. Both before, and after, the decision of Gummow J in Corrs Pavey there was some (though not universal) acceptance of the line of cases developed in England, in part on the basis of Gartside v Outram, whereby there was a "public interest defence" to actions for breach of confidence in equity's exclusive jurisdiction. By a "public interest defence" I mean a defence whereby it is the task of the individual trial judge to decide whether, in the circumstances of the individual case before him or her, the public interest is better served by enforcing, or not enforcing, an obligation of confidence. In The Commonwealth of Australia v John Fairfax & Sons Ltd (1980) 147 CLR 39 at 56-57 Mason J (sitting as a single judge of the High Court) said, "It has been accepted that the so called common law defence of public interest applies to disclosure of confidential information." (This statement does not make clear whether it "has been accepted" by courts, or by the parties in the instant case.) In David Syme & Co Ltd v General Motors-Holdens Ltd [1984] 2 NSWLR 294 Hutley AP said, at 305-306:

"The case for the appellant was that there had to be a balancing between the interests of the respondent and the confidentiality of its material and the right of the public to know and the right of the press to assist the public to know and that on a proper weighting of these interests no injunctions should have been granted. I am unable to accept the basis of the appellant's case. This is not a case in which the right of confidentiality is destroyed by iniquity: see Initial Services Ltd v Putterill [1968] 1 QB 396. This is a case in which the technical information must be of high commercial value and is a trade secret upon the acquisition which great sums of money have been, and may be expended. It is something in which a right of property is recognised: see Scott v Scott [1913] AC 417 at 443. This right of property is not to be taken away from its proprietor without good reason … if the correct way to approach the matter were to weigh the interest of the respondent in confidentiality of its technical and project information and the interest of the public to know, represented by the professional disseminator of information, namely, the newspaper, there could be only one answer: industrial progress is more worthy than satisfied curiosity. However, in my opinion, there is no question of weighing one against the other at all. The proprietary right in its confidential information of this kind is not to be weighed against other circumstances, except in cases where questions of iniquity are involved."

178 Samuels JA, at 309, rejected the notion of confidence as property, and agreed with the remark of Lord Denning MR in Woodward v Hutchins [1977] 1 QLR 760 at 764, that, "In these cases of confidential information it is a question of balancing the public interest in maintaining the confidence against the public interest in knowing the truth." Samuels JA went on, at 310, to say, "It therefore seems to me, without finally determining the matter, that the parties before us were correct in perceiving their dispute to depend upon a balance of competing interests. I deal with the matter on that footing."

179 Street CJ adopted the approach, at 297-298, of setting out the appellant's submission (which summarised circumstances which English cases had held to justify disclosure of confidential information in the public interests) said (at 298),

"I do not, however, wish to be taken to accede either to the proposition that there is a common thread running through the categories put forward by the appellant or to that proposition that, if there be a common thread, it is crystallised in the formulation of principle put forward. No matter how benevolently one views the approach advocated by the appellant, the evidentiary material in the present case does not establish any error on the part of the learned judge of first instance involving this concept of public interest."

180 In Westpac Banking Corporation v John Fairfax Group Pty Ltd (1991) 19 IPR 513 at 525 Powell J said:

"I turn, then, to the question of the public interest, as I indicated in Spycatcher [Attorney General for the United Kingdom v Heinemann Publishers Australia Pty Ltd (1987) 8 NSWLR 341] (NSWLR at 382), it seems to me that the law in this area has now progressed to the stage where the so called "iniquity rule" has been subsumed in a more general rule, namely, that publication of otherwise confidential material might be permitted in cases in which there is shown to have been some impropriety which is of such a nature that it ought, in the public interest, be exposed. However, as I also sought to point out in Spycatcher (NSWLR at 380), a decision that, in a particular case, information might be allowed to be published, does not inevitably lead to publication to the community at large being permitted: cf and cp Francome v Mirror Group Newspapers Ltd [1984] 1 WLR 392; Lion Laboratories Ltd v Evans [1984] 3 WLR 539 (Powell J went on to say that the "balancing" exercise could rarely be carried out satisfactorily at an interlocutory stage of proceedings.)

181 However, the view that there is no "public interest defence" of the type I have described has also had its supporters.

182 In Castrol Australia Pty Ltd v Emtech Associates Pty Ltd (1980) 33 ALR 31 Rath J, at 53-57 reviewed the development which had occurred in England of the "no confidence as to disclosure of iniquity" dictum. He noted (at 54) that Viscount Finlay in Weld-Blundell v Stephens [1920] AC 956 at 965-6 said:

"It would be startling if it were the law that an agent who is negligent in the custody of a letter handed to him in confidence by his principal might plead in defence that the letter was libellous. There may, of course, be cases where some higher duty is involved. Danger to the State or public duty may supersede the duty of the agent to his principal."

At 55, Rath J quoted from the judgment of Ungoed-Thomas J in Bellof v Pressdram Ltd [1973] 1 All ER 241, where Ungoed-Thomas J said:

"The defence of public interest clearly covers, and, in the authorities does not extend beyond, disclosure, which as Lord Denning MR emphasised must be disclosure justified in the public interest, of matters carried out or contemplated, in breach of the country's security, or in breach of law, including statutory duty, fraud, or otherwise destructive of the country or its people including matters medically dangerous to the public; and doubtless other misdeeds of similar gravity. Public interest, as a defence in law, operates to override the rights of the individual (including copyright) which would otherwise prevail and which the law is also concerned to protect. Such public interest, as now recognised by the law, does not extend beyond misdeeds of a serious nature and importance to the country and thus, in my view, clearly recognisable as such."

"This passage, in my respectful view, expresses no more than a reasonable elaboration of Viscount Finlay's "higher duty" concept, and is an acceptable statement of the law as to the defence of public interest in an action for breach of contract … . what is particularly important in Ungoed-Thomas J's formulation of principle is his emphasis on the gravity of the conduct that may give rise to the defence. If there is to be a defence labelled public interest, some such confinement of its vague boundaries is in my view essential."

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