Australian Leisure and Hospitality Group Pty Ltd & Anor v Dr Judith Stubbs & Anor

The principles 23The four elements of a claim for breach of confidence in equity were stated in Optus Network Pty Ltd v Telstra Corporation Ltd [2010] FCAFC 21; (2010) 265 ALR 281 to be: "39 ... There are four elements: (a) the information in question must be identified with specificity; (b) it must have the necessary quality of confidence; (c) it must have been received by Telstra in circumstances importing an obligation of confidence, and (d) there must be an actual or threatened misuse of the information without Optus' consent. See Smith Kline & French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health [1989] FCA 384; (1990) 22 FCR 73 at 87." (See also: Medic-Care Company Ltd v Hamilton Pharmaceutical Pty Ltd [2009] FCA 1220; (2009) 261 ALR 501, par 632.) 24It is generally sufficient to impose the equitable obligation if the circumstances are such that a reasonable person would have realised that the information was communicated in confidence, for example, information given to a professional person for the purposes of receiving that person's advice so long as the information was not common or public knowledge ( Rapid Metal Developments (Australia) Pty Ltd v Anderson Formrite Pty Ltd [2005] WASC 255, pars 71, 72; Protec Pacific Pty Ltd v Cherry [2008] VSC 76, par 43). 25The scope of the duty to preserve confidentiality was explained by Lord Millett in Bolkiah v KPMG [1999] 2 AC 222, pp 235-236: "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 the 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. ... It is of the highest importance to the administration of justice that a solicitor or other person in possession of confidential and privileged information should not act in any way that might appear to put that information at risk of coming into the hands of someone with an adverse interest." 26A court will intervene to restrain a threatened breach of duty if there is a real and sensible possibility of the misuse of confidential information ( Farrow Mortgage Services Pty Ltd (in liq) v Mendall Properties Pty Ltd [1995] 1 VR 1). The principle is applicable to the relationship of expert witness and client ( Protec Pacific par 62; Elliott v Ivey [Unreported, NSWSC 23 April 1998]). The fact that disclosure may be inadvertent is well recognised. In Carindale Country Club Estate Pty Ltd v Astill & Ors (1993) 42 FCR 307, p 313 Drummond J said: "... It has long been recognised that a solicitor who, with the best will in the world, is determined not to make use of one client's confidential information for the benefit of another client may still subconsciously draw on that information to the disadvantage of the former." 27The risk of disclosure of confidential information extends beyond intentional disclosure to unintended or unconscious disclosure. The degree of risk is measured with regard to the particular circumstances of the case, including the nature of the relationship between the parties, the nature of the information and the circumstances in which it was imparted, and the sufficiency of any proffered undertaking of non-disclosure ( Wimmera Industrial Minerals Pty Ltd v Iluka Mid West Ltd [2002] FCA 653, pars 25, 27, 35; H Lundbeck A/S v Sandoz Pty Ltd [2011] NSWSC 1297, par 16).

Determination 28The extent of the information provided to Dr Stubbs was disputed. The information had been provided electronically, but there was no documentary record of it as a result of the theft, on 26 January 2010, of the computer in which it was stored. The evidence depended upon the recollection of each of Mr Blair-Holt and Dr Stubbs. 29Mr Blair-Holt recalled that between May and June 2009 he provided either Dr Stubbs or Ms Lux with information including matter relating to the operations of the co-located BWS and Dan Murphy's stores at the Dalrymple Hotel, Queensland, and the Prince Mark Hotel, Victoria. He said the information would not have been provided had it not been requested by either Dr Stubbs or someone from her office. He said (aff 10.02.12): "15 I recall that the type of confidential information provided to the First Defendant both orally and via correspondence included: a. confidential sales trading figures with no gross margins for; i. The BWS Dalrymple store for the two years prior to 13 November 2006 and for the two years after that date; ii. The Dalrymple Dan Murphy's store for the two years after its opening; iii. The BWS Prince Mark store for the two years prior to 30 October 2008 and for the one year after that date; and iv. The Prince mark Dan Murphy's store for the one year after that date. This data compared BWS turnover from years both prior to and after Dan Murphy's was co-located with the BWS on the relevant site. b. Confidential budget and forecast figures for the Nowra BWS and the proposed Dan Murphy's Nowra store. c. Confidential retail strategies in establishing the First Plaintiff's liquor stores, applying to BWS and Dan Murphy's including: i. The different markets that each store targets; ii. Product pricing including profit margins forecasts; iii. Pricing differentiation; and iv. Business assessments regarding the co-location of BWS and Dan Murphy's." He said that the type of information referred to in sub-par (c)(ii) would have been about the different markets and pricing differentials. 30His evidence was that the information when given in 2009 was, and remains, confidential, commercially sensitive, and of value to a competitor. He said that it would not have been disclosed to a third party unless that party was retained for the purpose of providing advice. 31Under cross-examination, Mr Blair-Holt adhered to his evidence that information of the type described had been provided. He accepted that at the time there was no express communication that it was to be kept confidential. He also accepted that the information was provided for the purpose of the preparation of a social impact assessment which, if included in a report in support of the development application, would be disclosed to the public. However, he said his understanding was that Dr Stubbs would not submit a report to the Council before referring it to him. 32It was accepted that trading figures for the BWS and Dan Murphy's stores at Dalrymple and Prince Mark were provided. 33The effect of Dr Stubbs' affidavit and oral evidence was that she had no recollection of receiving the types of information described in sub-par 15(b) and (c) in Mr Blair-Holt's affidavit. She said that if any such information had been provided, she has no recollection of it, has made no use of it, and last read the documents in 2009. 34In cross-examination, Dr Stubbs was taken to passages of her report of June 2009 on the social impact of the proposed Dan Murphy's store (Ex 5) in which the source for a number of statements was identified in footnotes as "Correspondence with Ross Blair-Holt, Chief Operations Officer, ALH Group, 09 June 2009". In my assessment, the effect of Dr Stubbs' evidence overall, including as to her use of ALH Group's information in Ex 5, was that she did not deny, but could not recall, receiving the information which Mr Blair-Holt said he provided. 35Evaluation of the whole of the evidence on the issue leads to the conclusion that Mr Blair-Holt's evidence should be accepted. It also supports the findings on the probabilities, which I make, that ALH Group provided the information as described to Dr Stubbs and/or Ms Lux, and it was used for the report. 36With regard to the relevant principles, I also find, contrary to the defendants' submissions, that the information was imparted in circumstances of confidentiality, was identified with the requisite precision, and retained its confidentiality to the present time. Mr Blair-Holt's evidence on these matters supports these findings. It was uncontradicted, and I accept it. That Dr Stubbs accepted the information was confidential is indicated by the evidence that she has not disclosed it to any person, and has kept it securely since it was provided. Accordingly, in my opinion, the defendants' submissions on these issues must be rejected. 37The defendants also submitted that, by providing the information to Dr Stubbs for the purpose of a social impact assessment, ALH Group waived any claim that it was confidential. No authority was referred to. Mr Blair-Holt's evidence demonstrated, unsurprisingly, that it was not intended that any use would be made of a report which contained the information without his prior consent and approval. In my opinion, the submission was without evidentiary support, and is also rejected. 38The crucial question is whether there is a real and sensible possibility of the misuse of ALH Group's confidential information if Dr Stubbs was retained as the Council's expert witness in the Land and Environment Court proceedings. 39Under her retainer, she was required to meet MMJ's case on the social impact issue in opposition to the proposed development. Ordinary experience suggests the likelihood of discussion on the matter with Council's representatives, including its solicitors, which would not necessarily be confined to the merits of Mr Lette's conclusions based on the Ballina stores. In my opinion, it is quite possible that Dr Stubbs, as the Council's expert on this issue, would not accept these as the only, or best, comparable operations, and could inadvertently or subconsciously take into account the information concerning the operations of the co-located stores in Queensland and Victoria. Furthermore, although she might not now remember the detail of the other information, Dr Stubbs has already drawn upon it for the purposes of her 2009 report to ALH Group as being relevant to the social impact issue in support of the development application. This circumstance raises the possibility of subconscious or inadvertent disclosure in the pre-trial preparation of her evidence for the Land and Environment Court proceedings, or that she would be influenced, at least to some extent, by the information in the formulation of her opinion to the advantage of the Council. 40It is realistic to recognise, without casting doubt on her bona fides or honesty, that Dr Stubbs might have some practical difficulty in compartmentalising in her mind the various parcels of information, including the confidential information, to be considered in fulfilling her retainer by the Council. 41During the proceedings Dr Stubbs proffered an undertaking to the plaintiffs (Ex 4) to the effect that she would not use or disclose to any person, including the Council's solicitor or other representative, the information which Mr Blair-Holt described in his affidavit to be confidential. Nevertheless, in all the circumstances, I am unpersuaded that, however well intentioned, such an undertaking would be a sufficient safeguard against the risk of inadvertent or subconscious breach by Dr Stubbs of her duty. In my opinion, the appropriate remedy against the risk is an order restraining her from any pre-trial involvement with the Council or its representatives as an expert witness, or otherwise. 42It is for these reasons that the orders of 27 February 2012 were made. 43The question of costs remains outstanding. My prima facie view is that the appropriate order is that the defendants should pay the plaintiffs' costs of these proceedings. However, absent agreement, the parties should have the opportunity to make submissions on the issue, and for this purpose the parties are directed to arrange with my associate by 4pm 23 March 2012 for the matter to be re-listed.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 14 March 2012