Supreme Court of WA|2014-02-10|Before: Edelman J

CO-OPERATIVE BULK HANDLING LTD -v- BROOKFIELD RAIL PTY LTD [No 2] [2014] WASC 38 (10 February 2014)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : CO-OPERATIVE BULK HANDLING LTD -v- BROOKFIELD RAIL PTY LTD [No 2] [2014] WASC 38

Practice and procedure - Discovery and inspection - Confidential documents - Extent of confidentiality regime

Discovery and inspection ordered subject to restrictions

On 6 February 2014, I delivered reasons for decision in relation to this application for discovery and inspection.[1] In those reasons, I explained that the plaintiff, CBH, had sought discovery and inspection orders in relation to three categories of document provided to the Regulator, the Economic Regulation Authority. Those categories of document relate to matters in issue and are potentially subject to discovery and inspection orders.
On 7 February 2014, the parties agreed orders concerning part of the discovery and inspection. The first part of discovery and inspection involved documents which the defendant, Brookfield, provided to the Regulator in response to CBH's purported proposal for access to Brookfield's rail network. The documents provided by Brookfield to the Regulator are described by Brookfield in its submissions as its 'qualified determination'. I will use this expression, although I am aware there is dispute concerning the extent, if at all, to which Brookfield's determination was 'qualified'.
The qualified determination was provided by Brookfield to CBH the same day as the orders, 7 February 2014. The inspection of the qualified determination was subject to restrictive, agreed conditions. The restrictive conditions are annexed to these reasons as Appendix 1. Some of the restrictions include (i) limiting the persons with access to the qualified determination to lawyers and independent experts, (ii) requiring undertakings from the experts, (iii) express acceptance by the lawyers of their obligation not to use the documents for any purpose other than this litigation, and (iv) the return, destruction or erasure of the documents or information in the documents within 21 days after the conclusion of the proceedings and any appeal.
Although Brookfield has provided the qualified determination to CBH, it has not provided the attachments (including enclosures and annexures) to the qualified determination. On 7 February 2014, I directed that, by today, the parties file brief affidavit evidence and submissions concerning those attachments. I also directed Brookfield to provide me with the attachments themselves. Both counsel said that, from their relative perspectives, my inspection would not present any difficulty for me adjudicating the larger dispute.
Having considered the attachments, and having balanced the relative interests of the parties, I consider that the documents are of such significance, and might potentially be sufficiently confidential, that the protection of Brookfield's potential rights to maintain confidentiality requires the additional restrictions sought by Brookfield. Those additional restrictions include preventing the legal representatives of CBH who exercise a right of access to the attachments from taking part in negotiations, other than in these proceedings, or any arbitration.
The additional restrictions are not immutable. And they might only apply beyond the conclusion of this litigation if CBH is unsuccessful in establishing that it has a right to the documents. One basis upon which CBH might be unsuccessful is if it is concluded that the documents about which inspection has now been granted are documents which are confidential and about which CBH has no right to access.

Legal principles concerning restriction of confidential information

In Civic Video Pty Ltd v Paterson,[2] Pullin and Murphy JJA summarised some of the key principles to apply in relation to inspection of confidential documents. Their Honours explained the following (citations omitted):

[26] Confidentiality is not ordinarily a sufficient reason to deny inspection by the opposite party as the implied undertaking that the documents be used only for the purpose of the litigation will provide sufficient protection to the party producing them. However, other considerations arise where the documents in question are commercially sensitive and the relevant parties are trade rivals.

[27] In this context, when it is said that the information is 'commercially sensitive', what is meant is that 'a rival in the market place who obtains access to it may turn the material to the advantage of that rival and to the disadvantage of the party who seeks to keep it secret'.

[28] Where the relevant parties are trade rivals, and the documents in question contain confidential and commercially sensitive information, the court must strike a fair balance between the legitimate concerns of the party discovering the documents and the needs of the other party to the litigation.

[29] In relation to the court's duty to strike a fair balance, Hayne JA in Mobil Oil[3] observed:

Where, as here, the problem is one of balancing the needs of a party to the litigation and the legitimate concern of a trade rival to retain secrecy of commercially sensitive information, it may well be necessary to mould orders that will distinguish between the plaintiff, its officers, its legal advisers and experts. Again it may be accepted that generally a party is entitled to inspect the documents of an opposite party by itself its servants or its agents. But in the present kind of case, is it necessary to destroy the legitimate claim to confidentiality from trade rivals by permitting the principal of that rival to look at the documents? Is it sufficient to permit counsel and solicitors (and nominated experts) to do so? It is now commonplace in the courts for material to be made available only to the legal advisers of the parties and nominated experts. Of course such arrangements bring with them their own difficulties and are arrangements that should be adopted only where there is a need to do so; of course they are arrangements that may need to be reviewed as the matter progresses towards trial or as the trial itself proceeds. But they are arrangements that are made and should be made when doing so would strike a fair balance between the competing interests of the party seeking inspection and the party claiming confidentiality. No more specific rule can be laid down each case will fall for determination according to its own facts. In particular the nature and the content of the disputed documents is a matter that will usually, if not invariably, be of great importance in forming a conclusion and, if that is so, it will be appropriate for the judge to inspect the documents concerned (39 40).

[30] Some of the relevant matters in assessing whether a document should attract additional protection beyond the protection of the implied undertaking include the age of the information, the identity of the persons who will inspect the documents, and the reason or reasons why the inspection of particular documents is necessary ... More generally, a relevant factor is the degree of commercial sensitivity involved and the extent of any prejudice to the party giving discovery.

[31] The striking of a fair balance may need to be revisited as the matter progresses to trial.

In addition, in NAK Australia Pty Ltd v Starkey Consulting Pty Ltd,[4] in a passage approved on subsequent occasions,[5] Brereton J explained that the treatment of confidentiality restrictions governing the disclosure of documents by a defendant (compelled to come to Court) might require a stronger case for disclosure than the instance where compulsory orders for disclosure are sought against a plaintiff who initiates an action. Justice Brereton also explained that in more recent times it has become rare to exclude a party from knowledge of relevant information because decisions such as whether to continue or abandon litigation should be made by the party personally on advice, rather than by the advisors.
It is, of course, fundamental that the application of these principles will depend upon the particular facts and circumstances of each case.

The appropriate restrictions to be imposed upon any inspection of the attachments to Brookfield's qualified determination

The additional restrictions proposed by Brookfield in relation to the attachments are set out in Appendix 2 to these reasons. The most significant additional restriction is that which prevents the parties who inspect the attachments, including the legal advisers who do so, to refrain for two years from being involved in any negotiations for,

(i) the drafting of contracts or any other documents relating to any application for; or

(ii) any arbitrations in relation to,

access to the defendant's railway network, pursuant to the Railways (Access) Act 1998 (WA) (and/or the Railways (Access) Code 2000 (WA)) or otherwise.

Brookfield focuses upon the asserted confidentiality of the attachments and the effect which inspection of those documents would have on Brookfield. Three points about confidentiality must be made at the outset.
First, CBH submits that Brookfield's proposed restrictions are based on the alleged confidentiality of the documents but points out that this is a live issue in the proceedings. This is not a submission which assists CBH. It is not appropriate to attempt to resolve one of the substantial issues in dispute at this interlocutory stage, especially without any submissions on the point.
The proper way of approaching the issue of confidentiality is on the basis that it is possible that, at trial, Brookfield will establish the confidentiality of the documents and also that CBH is not entitled to them. The regime for discovery and inspection must therefore be carefully crafted to balance the rights which Brookfield might establish at trial with the need for CBH to be given a fair and reasonable opportunity to present its case at trial.
Secondly, any of the additional restrictions proposed by Brookfield will likely fall away if CBH is ultimately successful at trial in March 2014. At the very least, these restrictions will need to be revised in light of any reasons for decision if CBH is successful. There is no suggestion by CBH that it will suffer any prejudice by the additional restrictions in the few weeks between now and trial. So, the effect of the restrictions imposed on CBH in relation to the attachments will only cause prejudice to CBH if it turns out that CBH was not entitled to those documents, and that they are confidential.
Thirdly, as I have explained above, the striking of a fair balance between CBH and Brookfield is not a matter which is set in stone. It can be revised as the matter progresses to trial and, in this case, might be revised following any reasons given at trial even if Brookfield is successful.
In relation to the need for the additional restrictive conditions which it seeks, Brookfield relies on two affidavits from Mr Ivey, one of its instructed solicitors. The second affidavit from Mr Ivey, filed today, was heavily based on information from the Chief Adviser Commercial at Brookfield. The affidavits were provided to CBH, although the attachments to Brookfield's qualified determination were not.
Mr Ivey explains that the attachments to Brookfield's purported determination were two documents. The first is Brookfield's costing model. The second is a unit pricing report.[6]
As to the unit pricing report, Mr Ivey says that it contains the unit price for each piece of infrastructure comprising Brookfield's entire rail network,[7] and maintenance costs.[8] The infrastructure includes rail, sleepers, ballast, turnouts, tracklaying, bridges and so on.[9] The unit pricing report also includes some actual costs paid[10] and agreed prices paid, or payable, for goods and services in Brookfield's cost structures.[11]
As for the costing model, Mr Ivey says that it also incorporates the unit prices.[12] The costing model covers Brookfield's entire rail network (not merely the routes about which CBH has sought access)[13] and contains details of gross replacement value and annuity values for the infrastructure items as well as financing costs, contractor design and management fees.[14] The costing model contains operating costs and overheads for the previous period as well as budgets for those costs in significant detail.[15] It also contains details of how the overhead and operating costs are apportioned by Brookfield across the route sections of its rail network.[16]
Some of Brookfield's concerns, enunciated by Mr Ivey, do not justify any restrictions beyond those which CBH proffers. One example is Brookfield's concern that the information might be disclosed to other third parties, despite the strict and comprehensive regime already in place.[17] There is no justification for any apprehension that CBH's lawyers and expert witnesses would breach their express and detailed obligations in this way.
At heart, Brookfield's claim for the additional restrictions is that the disclosure of the additional documents will (i) give CBH a competitive advantage over Brookfield in respect of any rail access negotiations with Brookfield, and (ii) allow CBH to develop a strategy potentially to acquire and operate the Tier 3 lines on Brookfield's rail network.[18]
The second part of this claim should be rejected. The agreed restrictions in Annexure 1 to these reasons will already preclude CBH from using the information to develop a strategy potentially to acquire and operate the Tier 3 lines on Brookfield's rail network.
I find much more difficult the assessment of the extent to which, without the additional restrictions, CBH will obtain a competitive advantage in respect of any rail access negotiations, or arbitrations, with Brookfield. There are several factors which militate against the additional restrictions. They are:

(i) It is a significant step to take to restrict the lawyers for CBH who inspect the additional documents from involvement in negotiations, and any arbitration, with Brookfield other than in these proceedings.

(ii) This is particularly so in circumstances in which the lawyers will be bound only to use the documents for the purposes of these proceedings.

(iii) As can be gathered from Mr Ivey's affidavit, there is a great deal of detail in the attachments. More detail than almost any human could retain.

(iv) The evidence at the moment of how the information could, inadvertently, be used by Brookfield's lawyers in subsequent proceedings is vague.

Against these matters, however, is Brookfield's evidence concerning the extremely significant nature of the attachments, Brookfield's assertions of confidentiality, and the materiality of the information to its business enterprise. I have also inspected the attachments in light of this evidence. There is a real possibility that some aspects of the attachments, possibly some which might easily be retained in memory, might turn out in this litigation to be very important and potentially critical to subsequent negotiations or arbitrations. If this were the case then the position taken by CBH's lawyers in negotiations, or arbitration, might be affected by the relevant knowledge. Although CBH's lawyers are under a duty not to use the information for purposes other than these proceedings, circumstances might arise in which it is simply impossible to segregate relevant information and make a decision as if that information were not known. Information learned cannot be unlearned.
For these reasons, I consider that, as matters currently stand, the additional restrictions proposed by Brookfield are currently the price which CBH must pay for the right of its lawyers to inspect the attachments to Brookfield's qualified determination.

In my first set of reasons on this application, I explained the reasons why Brookfield's qualified determination related to matters in issue.[19] After having read and seen the attachments I remain of that view.
In the exercise of my discretion to order disclosure of the attachments to Brookfield's qualified determination I consider that the additional restrictions proposed by Brookfield are the appropriate price to be paid for the access to those documents of persons representing CBH or experts instructed by it.
However, it is also appropriate that this conclusion be revisited after trial in several weeks. The restrictions will not stand if CBH is successful. And, in light of the submissions and evidence at trial which is likely to be far more detailed, the restrictions might not stand, in their current form, even if Brookfield is successful.
Brookfield made submissions in support of an order that there be no costs of this application for discovery and inspection. CBH did not make submissions on the subject of costs. I will hear from the parties at the next directions hearing about this matter. In light of these reasons, and the possible need to revisit the appropriate restrictions after trial which might affect an assessment of Brookfield's success on this application, one possibility is that the costs of this application be reserved.

Appendix 1: Restrictions on inspection of the qualified determination

Inspection and use of the Brookfield purported determination be in accordance with orders 6-16.
Until further order and save for any documents that come into the public domain other than as a breach of these orders, access to the Brookfield purported determination obtained on discovery and inspection in these proceedings be restricted to:

(a) the plaintiff's legal advisors or employees of the plaintiff's legal advisors who are directly involved in the conduct of these proceedings being Tully Carmady, Chris Bailey, Hermien Bouman and Natalie Barker;

(b) the plaintiff's counsel being Anthony Willinge;

(c) subject to order 10, any expert witness engaged by the plaintiff's solicitors for the purpose of these proceedings (collectively Document Recipients).

Prior to the Brookfield purported determination being delivered or provided to a Document Recipient, or immediately upon copying or printing of the Brookfield purported determination, the Brookfield purported determination shall be stamped "Restricted Document" in bold type with a brief note indicating that:

(a) the document is subject to orders restricting its disclosure and use;

(b) restrictions apply to the persons who can have access to the document; and

(a) hold the Brookfield purported determination in strict confidence and not disclose, or cause or permit the disclosure of the Brookfield purported determination, except as permitted under these orders;

(b) only use the Brookfield purported determination for the purpose of the conduct of these proceedings on behalf of the plaintiff;

(c) not disclose, or cause or permit the disclosure to any person, any opinion as to the contents of the Brookfield purported determination except as permitted under these orders;

(d) not make, or permit the making of, photocopies or electronic copies of the Brookfield purported determination save for the inclusion of the Brookfield purported determination in:

(i) any draft report or report prepared by an expert; or

(ii) any submissions by counsel for use in the Proceedings;

(e) ensure that any copy of the Brookfield purported determination made in accordance with order 8(d) be marked as set out in order 8 above.

Before any expert witness is given access to the Brookfield purported determination the plaintiff's solicitors shall provide the expert witness with a copy of this order and such expert shall in writing acknowledge receipt of the order and shall give a written undertaking to abide by the terms of that order.
The format of pleadings, submissions, witness statements and expert reports and drafts thereof will be such that Brookfield purported determination is included in separate schedules, annexures or exhibits and stamped as per order 8.
Nothing in these orders prevents the legal advisors to the plaintiff from providing advice to the plaintiff solely for the purpose of taking instructions in relation to these proceedings provided that in doing so there is no disclosure of any of the content of the Brookfield purported determination.
Within 21 days after the conclusion of these proceedings and after the expiry of any appeal period, or if an appeal is lodged, after the determination of any appeal the Document Recipients must return all hard copies of the Brookfield purported determination to the defendant's solicitors and destroy or erase all electronic copies of the Brookfield purported determination.
For the avoidance of doubt, these orders do not apply to the Brookfield purported determination if it is obtained by lawful means otherwise than pursuant to discovery and inspection in these proceedings.
If the Plaintiff is required by law to disclose the Brookfield purported determination it shall first:

(b) tell the recipient of the existence of these orders and provide the recipient with a copy of these orders.

The plaintiff shall, via its legal advisors and counsel, seek orders from the Court at, or before, the commencement of trial as to how the Brookfield purported determination shall be protected if referred to in the course of any hearing.
If any Document Recipient becomes aware of any unauthorised use or disclosure of the Brookfield purported determination, the Document Recipient will, as soon as practicable, inform the defendant's solicitors.

Appendix 2: Brookfield's proposed restrictions on inspection of the attachments to the qualified determination

Only Authorised Persons shall be permitted access to Confidential Documents, or any part thereof.
Each Authorised Person must not disclose any Confidential Information (whether in the form of a Confidential Document or otherwise) otherwise than in accordance with the terms of his or her Confidentiality Undertaking unless these orders have been varied or vacated to permit further use of the Confidential Information (and in such cases the use of the Confidential Information will be limited to those uses permitted by the variation of these orders).

(a) means, subject to subparagraph (b), any of the following individuals who have signed, filed and served a Confidentiality Undertaking:

(1) Counsel for the Plaintiff, being Anthony Willinge;

(2) the Plaintiff's legal advisors or employees of the Plaintiff's legal advisors who are directly involved in the conduct of these proceedings being Tully Carmady, Chris Bailey, Hermien Bouman and Natalie Barker;

(3) independent industry expert witness(es) for the Plaintiff.

(b) except in relation to these proceedings being CIV 1066 of 2014 (Proceedings), does not include any person who will in the next two years be involved in any way in:

(2) the drafting of contracts or any other documents relating to any application for; or

access to the defendant's railway network, pursuant to the Railways (Access) Act 1998 (WA) (and/or the Railways (Access) Code 2000 (WA)) or otherwise.

the defendant's costing model (Costing Model); and
the unit pricing report (Unit Pricing Report),

provided to the Economic Regulation Authority (ERA) with the defendant's qualified determination in response to the plaintiff's Purported Access Proposal which was sent to the ERA on 17 December 2013 (Brookfield purported determination).

'Confidential Information' means the information contained in the Costing Model and the Unit Pricing Report.

'Confidentiality Undertaking' means an undertaking in the terms set out in schedule 1 to these orders.

'Purported Access Proposal' means the letter dated 10 December 2013 from the Plaintiff to the Defendant which purports to be a proposal for access pursuant to section 8(1) of the Railways (Access) Code 2000 (WA) to the railways network in Western Australia managed by the Defendant or its related bodies corporate.

CONFIDENTIALITY UNDERTAKING

I, [Name], being [counsel/solicitor/an independent expert witness] for the Plaintiff, undertake to the Defendant and to the Court that unless prior written consent of the Defendant is obtained, to do as follows:

For the purposes of this undertaking, the following terms:

have the same meaning as defined in the orders made by the Court on 10 February 2014.

I acknowledge that the Confidential Information has been provided to me in confidence and I will at all times keep it confidential, save for making the disclosures permitted by paragraph 4 below.
I shall use the Confidential Information only for the purpose of the conduct of these proceedings being CIV 1066 of 2014 (Proceeding) on behalf of the Plaintiff. I will not otherwise use the Confidential Information.
I shall not disclose or permit to be disclosed, either directly or indirectly, the Confidential Information (including but not limited to any electronic record thereof) to any person unless:

(a) the person is a judicial or administrative officer or employee of the Supreme Court of Western Australia and the disclosure is for the purpose of the Proceeding;

(c) disclosure to that person has first been approved in writing by the Defendant and that other person has signed an undertaking in the same form as this undertaking.

If I am required to disclose the Confidential Information pursuant to sub-paragraphs 4(a) or 4(b) above, I will take all reasonable steps to preserve the confidentiality of the Confidential Information being disclosed. This includes me taking all reasonable steps to:

(a) ensure that, should I require any Confidential Document to be used in evidence in the Proceeding, such document is tendered or adduced subject to a confidentiality order concerning the Confidential Information contained therein:

(3) in a section of an affidavit or witness statement,

(b) only openly disclose any Confidential Information at a hearing of the Proceeding:

(1) at which the Court is closed to everyone other than the persons referred to in paragraph 4 above;

If I become aware of any unauthorised use or disclosure of the Confidential Information I will, as soon as practicable, inform the Defendant's solicitors.
After the use of the Confidential Information for the purposes set out in paragraph 3 above, I will:

(a) ensure that any Confidential Document made by me or given to me, is destroyed;

(b) delete any record of the Confidential Information that has been entered by me into a computer database or other electronic means of data information storage; and

(c) certify in writing to the Defendant's solicitors that I have fully complied with the requirements of subparagraphs 7(a) and 7(b) within 7 days of the settlement, discontinuance or final determination of the Proceeding.

Except in relation to these proceedings being CIV 1066 of 2014 (Proceedings), I shall not for a period of two years commencing on the date of this undertaking be involved in any way in:

(b) the drafting of contracts or any other documents relating to any application for; or

access to the defendant's railway network, pursuant to the Railways (Access) Act 1998 (WA) (and/or the Railways (Access) Code 2000 (WA)) or otherwise.

I will file or cause to be filed at the Supreme Court of Western Australia, and will serve or cause to be served on the Defendant's solicitors, a copy of this undertaking.

[1] Co-operative Bulk Handling Ltd v Brookfield Rail Pty Ltd [2014] WASC 31.

[2] Civic Video Pty Ltd v Paterson [2013] WASCA 107 [26] - [31] (Pullin & Murphy JJA).

[3] Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] VicRp 54; [1996] 2 VR 34.

[4] NAK Australia Pty Ltd v Starkey Consulting Pty Ltd [2008] NSWSC 1136 [8] - [9].

[5] Drivetime Radio Australia Pty Ltd v Pivotal Creative Solutions Pty Ltd (t/as Broadcast GP) [2010] NSWSC 763 [10] (Brereton J); Lenark Pty Ltd v TheChairmen1 Pty Ltd (No 2) [2012] NSWSC 415 [13] (Black J).

[6] Affidavit of Mr Ivey, 10 February 2014, [7].

[7] Affidavit of Mr Ivey, 10 February 2014, [11].

[8] Affidavit of Mr Ivey, 10 February 2014, [12(c)].

[9] Affidavit of Mr Ivey, 10 February 2014, [11].

[10] Affidavit of Mr Ivey, 10 February 2014, [12].

[11] Affidavit of Mr Ivey, 10 February 2014, [12(d)].

[12] Affidavit of Mr Ivey, 10 February 2014, [13(a)].

[13] Affidavit of Mr Ivey, 10 February 2014, [13(b)].

[14] Affidavit of Mr Ivey, 10 February 2014, [13(c)].

[15] Affidavit of Mr Ivey, 10 February 2014, [13(d)].

[16] Affidavit of Mr Ivey, 10 February 2014, [13(e)].

[17] Affidavit of Mr Ivey, 10 February 2014, [16].

[18] Affidavit of Mr Ivey, 10 February 2014, [15].

[19] Co-operative Bulk Handling Ltd v Brookfield Rail Pty Ltd [2014] WASC 31.

CO-OPERATIVE BULK HANDLING LTD -v- BROOKFIELD RAIL PTY LTD [No 2] [2014] WASC 38 (10 February 2014)

At a glance

Court

Decision date

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Catchwords

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Judgment (93 paragraphs)

CO-OPERATIVE BULK HANDLING LTD -v- BROOKFIELD RAIL PTY LTD [No 2] [2014] WASC 38 (10 February 2014)

Legislation Cited (2)