[2011] VCAT 1920
General information, not legal advice.
Victorian Civil and Administrative Tribunal
2011-10-05
Original judgment source is linked above.
'Before a solicitor retained by a party or employed by the EPA provides a copy of the Unredacted EPA Documents to an expert retained by that party or employed by the EPA:
(a) within the State of Victoria, the solicitor must provide to Dual Gas a signed confidentiality undertaking from the expert to the Tribunal in the form of Annexure A to these orders;
(b) outside the State of Victoria, the solicitor must provide to Dual gas a signed confidentiality undertaking from the expert to the Tribunal and Dual Gas in the form of Annexure B to these orders;
(2) The solicitor must refrain from providing the expert with the Unredacted EPA Documents for a period of one clear business day after the confidentiality undertaking is provided to the solicitors for Dual Gas ('Maddocks') and Maddocks has expressly acknowledged receipt to the relevant party, in order for Dual Gas to consider whether it has any objection to the expert being provided with a copy of the Unredacted EPA Documents;
(3) In the event that Dual Gas has such an objection, Dual Gas is to notify the solicitor in writing within the one clear business day referred to above and, unless the relevant parties agree otherwise:
(a) the determination of the objection will be referred to the Tribunal; and
(b) the Unredacted EPA Documents must not be provided to the expert, pending the determination by the Tribunal of the objection.'
The orders are prefaced by the statement that they are subject to further order of a judicial member of the Tribunal.
In proceedings between business competitors, it may be necessary to impose limits on a competitor's ability to inspect discovered documents containing commercially sensitive trade secrets. In such circumstances inspection typically is confined to legal representatives and, if appropriate, expert witnesses. Reference is made to the decision of Hayne JA in Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] VicRp 54; [1996] 2 VR 34 ('Mobil'). In particular, reliance is placed upon the following passage which, subsequently, has been cited in other cases:
'Once the documents are inspected by the principals of the trade rival the information which was revealed is known to the trade rival and cannot be forgotten. Confidentiality is destroyed once and for all (at least so far as the particular trade rival is concerned). To say that the trade rival is bound not to use the documents except for the purposes of the action concerned is, in a case such as this, to impose upon that trade rival an obligation that is impossible of performance by him and impossible of enforcement by the party whose secrets have been revealed. How is the trade rival to forget what internal rate of return the competitor seeks to achieve on a new investment of the kind in question? How is the party whose hurdle rate has been revealed to know whether the rival has used the information in framing a tender? Thus, if the trade rival may inspect the documents concerned, the confidentiality of the information in them is at once destroyed. Is that necessary for the attainment of justice in the particular case?'
The last question posed by his Honour perhaps summarises the test which is to be applied.
'I accept that Dr Franklin (the expert in question) is now mainly engaged as a consultant and he is not presently intending to embark upon any enterprise which would involve him in manufacturing charcoal by this or any other method. He is a professional adviser in this field and he appears to be retained by a number of large undertakings in the industry. But one can well imagine the situation in the future ... in which Dr Franklin is asked about the possibility of doing something along the lines which Hotrox claims to do and, having gained the information he would gain on the inspection which he desires to carry out, would be in a quandary as to whether, directly or indirectly, to make use of that information in advising his client. And there would be the danger that he may subconsciously disclose something which was covered by his agreement to keep matters learnt on the inspection confidential. It would seem to me that unless he declined to advise any client interested in pursuing a process similar to that of the respondent, there would always be the danger that he would, however unwittingly, make a disclosure which would imperil the confidentiality which he has agreed to preserve.
... the new design permits the elimination or reduction of upstream large size air separation for gasification ...
(In a further response in relation to this last-mentioned point, Mr Molesworth directed us to paragraphs 26-33 of the affidavit of Mr Tsesmelis).
(a) At the outset we say that it is not a matter of Dual Gas telling the EPA what expert witnesses it may or may not call. It is not a matter of Dual Gas telling the Tribunal what expert witnesses may or may not be called. This is so irrespective of the role of the EPA as 'watchdog' or as representing the people of Victoria. Whilst it doubtless has those roles and whilst there may be a great public interest in the manner in which evidence is placed before this Tribunal and in how it conducts such a hearing, in the circumstances prevailing these factors do not seem to us to assume the almost paramount importance argued for them by Mr Molesworth. The fact of the matter is that, in the Orders of 19 September 2011, a process or regime was set up pursuant to which Dual Gas could make the very objection and application which have been made. It has complied with the Orders of the Tribunal. It has taken the necessary steps. It is entitled to challenge the provision of the Unredacted Documents to the experts in question.
(b) We are satisfied that Mr Tsesmelis is a potential trade rival of Dual Gas within the meaning of the decision in Mobil, and particularly as expanded upon in Hotrox. In Hotrox what was said by Hayne JA in Mobil was followed and applied and indeed referred to as a 'compelling statement'. We shall return to that. However, what we note more immediately in Hotrox is that the expert in question, Dr Franklin, was, like Mr Tsesmelis, a consultant or professional adviser. He was such in the same field of endeavour (charcoal manufacturing) as Hotrox, effectively the objector. In the present case we are satisfied that the field of endeavour in which Mr Tsesmelis has years of experience and in which he operates as a consultant and professional adviser is the same as that in which Dual Gas operates. Whether it be described as coal technology, clean coal technology, alternative fuels technology, syngas technology or the like, the fields of professional activity and endeavour overlap.
We would then refer to the following extracts from the judgment of Sheppard AUJ in Hotrox at paragraphs 51 and 52:
I recognise that Dr Franklin is not a trade rival of Hotrox. That distinguishes this case from the Mobil case. But each case must be dealt with on its own facts and circumstances ... Nothing that I have said is intended to attribute any dishonest motive or intention to Dr Franklin. What has been said simply states the reality of the matter. I accept that Dr Franklin is now mainly engaged as a consultant and that he is not presently intending to embark upon any enterprise which would involve him in manufacturing charcoal by this or any other method. He is a professional adviser in this field and he appears to be retained by a number of large undertakings in the industry. But one can well imagine a situation in the future - and this was postulated in argument - in which Dr Franklin is asked about the possibility of doing something along the lines which Hotrox claims to do and, having gained the information he would gain on the inspection which he desires to carry out, would be in quandary as to whether, directly or indirectly, to make use of that information in advising his client. And there would be the danger that he may subconsciously disclose something which was covered by his agreement to keep matters learnt on the inspection confidential. It would seem to me that unless he declined to advise any client interested in pursuing a process similar to that of the respondent, there would always be the danger that he would, however unwittingly, make a disclosure which would imperil the confidentiality which he has agreed to preserve.
It is for all those reasons that I consider that the Master's conclusion that the risk of disclosure was slight was a clear error and indicates a miscarriage of the exercise of his discretion. It follows that leave to appeal should be granted and that the appeal should be allowed.
If, in the above extracts, one were to substitute the name of Mr Tsesmelis for that of Dr Franklin, that of Dual Gas for that of Hotrox, and the area of enterprise as being coal technology or clean coal technology for that of charcoal manufacturing, one could basically be talking about the same case and the observations of Sheppard AUJ would be apposite indeed. We consider it to be a helpful and persuasive decision.
(c) The fact that the area of endeavour in which Mr Tsesmelis, via Protos Consultancy International Pty Ltd, performs consultancy work overlaps with the area in which Dual Gas operates is underlined by the fact that, on behalf of clients, he made various enquiries concerning technology of the parent company of Dual Gas. These enquiries, some of which were made on behalf of CCT, related to such matters as whether the coal gasifier technology was licensed and whether or not 'the gasifier is entrained flow type' - we would refer to paragraphs 22-26 of the affidavit of Mr Welfare of 27 September 2011. The details requested were not supplied, but what seems to us to be of some significance is the fact that Mr Tsesmelis made such enquiries. It tends to emphasise that his area of 'trade' expertise and that of Dual Gas do in fact overlap.
(d) Furthermore, given the nature of the consultancy of Mr Tsesmelis via Protos Consulting International Pty Ltd, we do not consider it necessary to go to some ultimate and very precise description of the technology or operations involved.
The very fact that the EPA seeks to use him as an expert in this case and that he has obviously been prepared to accept such a role, and bearing in mind what is sworn to in his affidavit concerning his experience and qualifications, points to the fact that his expertise as a consultant extends to matters relating to the demonstration project at the heart of this case and to areas which may relate to the technology and intellectual property of Dual Gas. If he is not an actual trade rival of Dual Gas, to employ the type of wording used in Hotrox one can well imagine a situation in the future where a client of his consultancy asks about the possibility of doing something along the lines which Dual Gas claims to do. He would then be in the quandary referred to by Sheppard AUJ. The fact that he is an active consultant in relation to this area of activity seems to us to be significant. If he were being proposed as an expert witness and, for example, had retired from the industry or moved permanently into another area of operation, the situation might be different. However, he is being proposed as an expert in an area in which he is still active.
(e) If the above be the case, then what was said by Hayne JA in Mobil also has application. We have already set out in paragraph 13 above, part of which is the compelling statement referred to by Sheppard AUJ. We would again refer to it.
We would point out that, in Mobil, inspection of documents had been directed on terms that included an undertaking as to confidentiality. As is apparent from the observations of Hayne JA set out above, the appeal was successful notwithstanding the existence of the confidentiality undertaking. Just as the observations of Hayne JA were considered applicable, if not compelling, in Hotrox, they are similarly applicable to the present case. Once Mr Tsesmelis is seen as a potential trade rival, the very difficulties referred to in Mobil and Hotrox arise.
(f) Further, it seems to us that Mr Tsesmelis could be described as not just a potential trade rival, but as an actual one. As he has sworn in his affidavit, in his capacity as director and principal consultant of Protos Consulting International Pty Ltd he has a partnering agreement with CCT and is a member of CCT's technical team as a 'Senior Consultant'. We are satisfied that CCT is a trade rival of Dual Gas. There is force in the submission of Mr Elliott to the effect that the statement of Mr Tsesmelis that CCT is, in essence, not interested in coal gasification technologies does not appear to be correct. Its own brochure exhibited to the affidavit of Mr Welfare seems to state to the contrary. Under the heading 'What does our technology offer?' it specifically refers to gasification and, on the same page of the brochure and immediately following the above, under the heading 'The Process' is a diagram specifically showing coal and natural gas going into a gasifier. Further, in so far as there is a conflict between the affidavit material of Mr Tsesmelis and that of Mr Welfare in relation to the situation prevailing, we prefer and accept that that of Mr Welfare to the effect that CCT operates '... in the same sphere of technological research and development, involving the gasification of coal in order to produce value-added products' - see paragraphs 15 and following of the affidavit of Mr Welfare of 27 September 2011. We would also refer to the material which Mr Welfare obtained from the CCT website.
(g) In short, we accept that Mr Tsesmelis is a potential trade rival of Dual Gas by reason of his activities as a consultant. We accept that he is an actual or direct trade rival by reason of his agreement and association with CCT. We accept that CCT is a trade rival of Dual Gas. We are of the view that the decisions in Mobil and Hotrox apply. In addition, we accept the submission that Idoport is a case dealing with suppression orders and is not as directly on point as the decisions in Mobil and Hotrox. That is not to say that it is of no assistance or is totally irrelevant, but the other decisions referred to seem to us to be more cogent.
(h) The ultimate question posed by Hayne JA in the extract from Mobil set out above could be paraphrased as being whether inspection and the confidentiality which is thus destroyed is necessary for the attainment of justice in the particular case. An aspect of this, and one discussed in Hotrox, is whether another sufficiently qualified expert can be retained. There is no evidence to suggest that, in the present case, that poses an insuperable problem. Indeed, it was argued by Mr Elliott that the EPA already possesses or has retained such experts. He also indicated that, if the application of Dual Gas was successful, it may be that the upcoming hearing date may have to be vacated and the timetable previously ordered adjusted. This would be to afford to the EPA the opportunity of engaging another expert should it so desire. In our view, on the basis of the material before us, it is not necessary for the attainment of justice in this particular case that the confidentiality of the information be destroyed in the manner referred to in Mobil and Hotrox.
(i) As no material of substance in relation to this last-mentioned issue has been placed before us, we can only say that we are not persuaded that justice could not be delivered if, should the EPA elect to attempt to replace Mr Tsesmelis as an expert, it be given the opportunity so to do.
In summary, we can say that Mr Tsesmelis, both because of his consultancy and because of his direct links with CCT, represents both a potential trade rival and an actual trade rival to Dual Gas. There is no argument but that the information under discussion is confidential. There is no argument but that the project under consideration is a demonstration one and that the costs involved run to many, many millions of dollars. No argument was raised in opposition to submissions that Dual Gas has extremely valuable intellectual property contained in or associated with the project. When these matters and all of the above are taken into account, it seems to us that Dual Gas is entitled to succeed in its application.
Dual Gas
EPA [2011] VCAT 1920