Confidentiality
59 In light of the conclusion I have earlier reached, it is not necessary for me to consider whether the relevant materials are confidential and such as could not be disclosed under any relevant exception to the constraints on disclosure contained in the confidentiality agreement, and, so far as relevant, the joint venture agreement. However, I deal with both those matters briefly now.
60 The starting point is clause 5(d) of the Confidentiality Agreement. This permits disclosure of confidential information, where that information is:
"required to be disclosed under applicable law or by a governmental decree, order, regulation or rule or by any legal process, whether or not the requirement arises independently or as a result of any action taken by the Receiving Party before or after the date of this agreement."
61 Clause 12 of the Confidentiality Agreement provides a warranty and representation that the disclosing party has the right and authority to disclose its Confidential Information to the Receiving Party.
62 Clearly enough the words starting "whether or not" remove any possible argument that the disclosure could not be "required to be disclosed under applicable law" where that requirement arises by virtue of an action, here issuing a Part A Statement following announcement of an offer, taken by the Receiving Party OMVA. It is true that the parent company OMVA received the material, but OMVA as the Receiving Party is by clause 6 of the Confidentiality Agreement permitted to disclose it to "an Affiliate of the Receiving Party". No suggestion was made that the "Receiving Party" namely OMVA has failed to ensure that the Affiliate to whom disclosure is made, is made aware of the confidential nature of the Confidential Information.
63 However, the Plaintiff contends that while concededly OMVA and OMV could not have been on notice of any constraint under the joint venture agreement applicable to the Disclosing Party, Gulf Canada Resources Limited, OMVA is now on notice of a constraint under the joint venture agreement, namely that contained in clause 14.01(b). It then contends that if now, being informed of such constraint, OMVA seeks to include the relevant information from the Information Memorandum, on the assumption that it is obliged by law to do so, it is on notice of the constraint and cannot do so. This is because there is no applicable exception to the constraint in the joint venture agreement which would free Gulf to impart it to OMV and through OMV to OMVA, or which would free OMVA in turn to disclose it in the Part A Statement.
64 Thus the Defendant contends that the fact that OMV and OMVA believed, in good faith, that the exception in its Confidentiality Agreement was one that Gulf was entitled to make does not alter the fact that OMVA is now aware of the confidential nature of the information and of the fact that it can only be disclosed with the consent of all joint venture parties. In Malone v Commissioner of Police [1979] 2 All ER 620, it was held that where confidential information has been disclosed to a third party, who at the time of disclosure is unaware of any breach of any obligation of confidence but subsequently becomes aware of that breach, the third party becomes obliged to maintain the confidentiality of the information.
65 Sir Robert Megarry V-C (at page 634) held that
"if A makes a confidential communication to B, then A may not only restrain B from divulging or using the confidence, but may also restrain C from divulging or using it if C has acquired it from B, even if he acquired it without notice of any impropriety. See the authority cited in Snell's Equity, one of which, Printers & Finishers Ltd v Holloway [1963] 1 WLR 1 at 7 was put before me. In such cases it seems plan that, however innocent the acquisition of the knowledge, what will be restrained is the use or disclosure of it after notice of the impropriety."
In this case, notice of a breach of the confidentiality obligation under the Joint Operating Agreement was given by the Plaintiff's solicitor to the Defendant's solicitors by letter on 29 April 1999.
66 To this contention, the Plaintiff has two answers. The first is that a relevant exception does apply in clause 14.01(b), namely (aa) read with (dd). Second, in any event either such conflict is to be overridden by giving cl 17 paramountcy over the private duty of confidentiality, or as the Defendant prefers, there is no such conflict simply because in these special and particular circumstances, the Defendant has altered its position in good faith by incurring binding legal obligations and in circumstances where the rights of third parties, namely shareholders in the Plaintiff, would otherwise be deprived of a bid.
67 So far as the relevant exception is concerned, clause 14.01(b)(i)(aa) is said to apply because OMVA is a "bona fide intended assignee" of the relevant Gulf company, which has entered into a "similar undertaking of confidentiality …… in favour of all the Parties". Note the undertaking only has to be "similar", not "the same".
68 It is then contended that whilst para (dd) of the clause 14.01(b)(i) does not contain the extra words in the Confidentiality Agreement starting with "whether or not the requirement arises independently ……" nonetheless all that is required is a "similar" undertaking and such an undertaking so qualified is sufficiently similar. That contention is disputed by the Plaintiff who contends that the words in the exception in clause 14.01(b)(i)(dd), only contemplate being subjected to applicable mandatory laws requiring disclosure where this is not the result of an action which the party has independently chosen to take, such as here announcing a takeover offer and lodging a Part A Statement.
69 The Plaintiff relies on the judgment of Moynihan J in Queensland Coal Pty Ltd v Arco Resources Limited & Ors [1998] QSC 222 (20 October 1998) which involved disclosure in a registration statement required pursuant to the United States Securities Act 1933. However, the wording in that case was different from the wording in clause 14.01(b) in that the words used were: "required pursuant to necessarily applicable legislation ……." [my emphasis]. Moynihan J held that the clause in the agreement before him "is absolute in that it does not qualify or juxtapose necessity by linking it with other considerations; for example expedience or convenience so as to provide a margin of discretion …… the test of stark necessity is a strict one reinforced by the limitation 'if and to the extent required' in clause 18.1(b) …… I do not think that the Securities Act 1933 is necessarily applicable legislation in terms of clause 18.1(b)."
70 Here, there is no requirement that the legislation be "necessarily applicable". All that is necessary is that there be a requirement of any applicable laws, with no provision precluding the recipient of the information from subjecting itself to a compulsory disclosure law as would arise on the making of a takeover offer.
71 However, even if I were wrong in that conclusion, I am satisfied that the only obligation of confidentiality which applies to OMVA, if any applies at all, is an equitable obligation to maintain the confidentiality of that which it now has notice but did not have notice at the relevant times. These times were when it issued the Part A Statement and earlier when it entered into the Confidentiality Agreement and expressly negotiated words which left no room for argument that it was free to bid and disclose compulsorily as a result.
72 Having subsequently lodged and served its Part A OMVA has radically altered its situation by being subjected to an obligation to proceed with its bid which arose before OMVA had any notice of any constraint indirectly applicable via the joint venture agreement. In those special and particular circumstances, and having regard also to the interests of innocent third parties being shareholders in Cultus who would otherwise be deprived of an offer, I am satisfied that OMVA is not precluded by any such equitable obligation, if it exists, from disclosure of the relevant confidential information.
73 Finally, even if there were a conflict between cl 17 and a private equitable duty of confidentiality, cl 17 must prevail. These circumstances are very different from those before Brownie J in Austen & Butta Ltd v Shell Australia Ltd (1992-93) 10 ACSR 556, where the relevant offeror had entered into a consent order precluding the offeror from disclosing information obtained from the target in confidence. Brownie J concluded that the Defendant's consent to the grant of the interlocutory injunction required the Defendant to show a significant change in circumstances or that new facts had been discovered which rendered enforcement of the earlier order unjust. At 561, Brownie J made clear that he was not deciding the kind of case now before me:
"It may also be that, in another case, an offeror may be permitted to disclose in a Part A statement material which he obtained in confidence or in breach of fiduciary duty, but this question does not arise for decision now. Nor is it necessary to decide now whether a target company must in any event disclose the relevant information in its Part B statement, although the language of s750, Part B, cl 13 seems to be fairly explicit.
It may also be that, in other circumstances, an offeror who is in possession of information which is confidential to the target company cannot make a Part A statement without offending against the provisions of s750 Part A, cl 17, or without exposing himself to some claim by the target company for relief; and it may follow that, in such a case that s750 means that he cannot make a takeover offer at all; but neither of these questions needs to be decided now."