Macquarie Generation v Coal & Allied Industries Ltd

THE RESPONDENT'S MOTION AND SUPPORTING EVIDENCE 6 By its notice of motion, the respondent seeks an order that Phillip John Ward be permitted to inspect the confidential documents upon a "confidentiality undertaking" being given. (By that instrument, an undertaking is given that, without the applicant's consent or the Court's leave, the contents of the confidential documents will not be disclosed, except to a Judge of the Court, counsel and solicitors, and any independent expert retained by the respondent who has given a similar undertaking. The respondent accepts that Mr Ward is not an "independent expert", and that for this purpose the respondent has retained Dr Jonker, whom the applicant accepts is an independent expert.) 7 In support of the motion, the respondent relies, inter alia, upon the evidence given by Mr Ward in his affidavit, sworn 29 August 2001, relevantly as follows: · Mr Ward is a consultant to the Rio Tinto Group of companies ("the Group"). The respondent is a member of the Group. · He practised as a solicitor in a private practice in Sydney between 1973 and 1975, when he began employment with Rio Tinto Limited as a legal officer (Corporate Counsel). From 1983 until 1989, Mr Ward held several executive offices in the Group. In 1989, Mr Ward left the Group. · Since 1990, the Group has retained Mr Ward as a consultant to manage a number of cases of complex commercial litigation, but he has not occupied any management role in the Group since 1989. 8 However, in cross-examination, Mr Ward agreed that he is a director of Rio Tinto Collieries Pty Ltd, which is another member of the Group. The cross-examination proceeded as follows: "Do you recall a company known as Rio Tinto Collieries Pty Ltd?---Yes. That is a company wholly owned by Rio Tinto Limited, isn't it?---Yes. It is a financial corporation which ordinarily the Financial Corporations Act 1974 would have applied but it has been exempted from compliance with that Act, is that right?---I don't know, Mr Jackman. Do you have any knowledge of the activities of Rio Tinto Collieries Pty Ltd?---I am aware that I am a director of it but my understanding is that it's a dormant company … which doesn't carry on any activities within the Rio Tinto Group. What is the basis of that understanding, Mr Ward?---Information that has been conveyed to me by Rio Tinto and I have signed a statutory document but it's not an active company and I am assured of such. It has got issued capital of 3 million dollars, do you recall that?---I don't recall it, Mr Jackman but it may well do. It could well have had past activities, it is not an active company in recent times when I have been a director. Well, when do you say it last had business activities, Mr Ward?---I don't know, Mr Jackman. I have been a director for about - since about 1998 I suspect. In what circumstances did you become a director of Rio Tinto Collieries Pty Ltd?---I became a director in the course of some litigation that I was involved in and advice that I was involved in in relation to Arco and the issue became whether or not I could participate in seeing information relating to the Blair Athol Joint Venture and so, I was made a director of the company so that I could see such information and therefore, have the obligations as a director of [a] related corporation to view the information. Can I stress to you, Mr Ward, that you are one of three current directors, the others being Mr Cusach and Mr Falconer. Are you aware of that?---Yes. Mr Barry Cusach is the managing director of Rio Tinto Australia, is he not?---Yes, he is, Mr Jackman. Mr Ian Falconer is the company secretary of Rio Tinto Ltd, is he not?---Yes, he is, Mr Jackman. They are both in senior management of Rio Tinto Ltd aren't they?---They both hold those positions and therefore, are in management of Rio Tinto Ltd, yes. Now, have you got your affidavit in front of you?---Yes. Will you turn to paragraph 16?---Yes. Is the last sentence of paragraph 16 true?---Yes, Mr Jackman. Don't you recognise Mr Ward that you need to qualify the last sentence of paragraph 16 at least to recognise that you are a director of Rio Tinto Collieries Pty Ltd?---Mr Jackman, I just said that the Rio Tinto Collieries to the best of my knowledge has no active function it is certainly not a business unit of the group. A business unit of the group is a unit such as Rio Tinto's coal division, Rio Tinto's iron ore division, Rio Tinto's aluminium division or whatever. Rio Tinto's Collieries as far as I am aware, and I am given every assurance to this effect, is a dormant company sitting along side a number of dormant companies that may or may not have had a role in the past but has no[ ] role at the present and Mr Cusach, Mr Falconer, myself or other people in the Group may well be filling the position of its directors but there is no active business to be managing and no decisions to be made of a business nature. You don't know as you have said in your evidence a few minutes ago when that company ceased having any operative business activity, is that so?---I know from when I joined that it didn't have any such activity so from the time I've been a director I know that it hasn't had any business activity. You don't know what business activity it may have in the future, do you?---If it does in the future I will obviously, be called upon as a director to become part of it and I would then resign as a director because the intention was that I'd be a director of this dormant company and so I wouldn't be remaining a director if it became in any way active. Can you do me the courtesy of answering my question. You don't know what business activity it will have in the future?---I don't Mr Jackman." 9 The respondent also relies upon the affidavit evidence of Stephen Ernest Nigel Cleese, sworn 29 August 2001, relevantly as follows: · Mr Cleese, a solicitor, is Rio Tinto Limited's Vice-President - General Counsel. · The Group has been involved, from time to time, in significant commercial litigation. In such cases, it is necessary to assign a dedicated person to manage the litigation and provide the Group's external legal advisers with information and instructions. This requires a knowledge of the Group's corporate structure, an ability to micromanage the litigation so as to reduce the need for the involvement of senior executives, unless required for decisions, and a knowledge of the technical issues. · Mr Ward is able to provide these services, and the Group would be substantially prejudiced in the conduct of this litigation if Mr Ward were not to have access to the confidential documents, as it would be deprived of his litigation management capabilities, including his considerable knowledge of the coal industry. · Mr Ward is in a very different position from any of the Group's executives, who have line responsibility for a business unit such as the coal business. Mr Ward is a consultant retained by the Group and he receives instructions on specific projects from time to time. He does not have the Group's authority to make business decisions for it.

CONCLUSIONS ON THE RESPONDENT'S MOTION 10 Reference should be made to the authorities in this area, to which attention was drawn in argument. 11 In Warner-Lambert Co v Glaxo Laboratories Limited (1975) RPC 354, the English Court of Appeal considered the extent and conditions of discovery relating to confidential information in patent proceedings. The defendants had given discovery of their process of manufacture to the plaintiffs' counsel, solicitor, patent agent and an expert, on their undertaking not to divulge this information to any others (including the plaintiffs themselves) and further not to use such information except for the purposes of the action. The defendants were further willing to include, among those persons, another expert appointed by the plaintiffs in the U.K. However, the plaintiffs required disclosure to be given, in addition, to (1) their chief executive (2) their general counsel in the U.S.A., (3) their patent counsel in the U.S.A. and (4) an Italian scientist resident and employed by them in Italy. 12 It was held (as the headnote indicates) - (1) the governing principle was that the court should resolve the conflict of interests of the parties by ordering a controlled measure of discovery to selected individuals upon terms ensuring that there should neither be use nor further disclosure of the confidential information to the prejudice of the defendants, and yet so that the plaintiffs would have a free full degree of disclosure as would be consistent with adequate protection of any trade secret of the alleged infringer; the authorities did not purport to lay down a form of universal order in such circumstances, nor did they indicate that the court might not in appropriate circumstances at a later stage in the action, direct disclosure to a wider class of persons or on a different basis; and that the court must in each case decide what measure of disclosure was appropriate, to whom it should be made and on what terms that disclosure should be given; (2) although parties to litigation were generally entitled fully to know what had been disclosed to their legal and technical advisers, so as to be able to make judgments of their own, this principle must be subject to modification if trade secrets are to be protected, and in appropriate circumstances the court may even be justified in wholly excluding disclosure of secret material from a particular party; (3) as the defendants' process was such that it was impossible to ascertain from the end-product itself which of a number of possible chemical processes had been used in its manufacture, and having regard also to the fact that it was virtually impossible to police any terms imposed upon the disclosure asked for by the plaintiffs, further conditional disclosure should only be given to the plaintiffs' chief executive. 13 Buckley LJ (with the agreement of Russell LJ and Orr LJ) said (at 360 - 361): "The plaintiff in the present case, being a corporate body, can only acquire knowledge and make decisions by living agents. Its legal and expert advisers are for the relevant purpose its agents to acquire knowledge but they are not authorised to make any major decisions on the company's behalf such as, for instance, a decision whether to continue to abandon the action. Such a decision should be made by the company, not by its legal advisers, and still less by its scientific advisers. It must be made by a duly authorised officer or agent or body of agents such as a managing director or the board of directors of the company. We do not know whether Mr. Burke Giblin, the principal executive officer of the plaintiff company, has sufficient technical knowledge to enable him to understand the niceties of the technical information which has been disclosed in the present case. It may be that he has not, but Mr. Gratwick for the plaintiff company has stated that he finds himself unable to advise Mr. Burke Giblin in any helpful and intelligible sense without either expressly or by implication disclosing the nature of that technical information. In these circumstances I for my part do not consider that it would be right to refuse to let Mr. Burke Giblin know the information. If, however, it is to be disclosed to him, this should, in my judgment, be on terms that he will not disclose it to anyone else without the consent of the defendant or by the leave of the court. I do not consider, however, that at present, at any rate, disclosure should be made to anyone else. The legal issues which arise are questions of English law. The plaintiff company has English legal advisers of the highest calibre, who by the disclosure already made have full knowledge of the facts. On the patent aspects of the case and the technical issues involved, there will be available to Mr Burke Giblin the advice of the plaintiff company's English patent agent and of one or more nominated scientific experts in this country, all of whom also enjoy or will enjoy full disclosure of the relevant information. If disclosure is to be made to Mr. Burke Giblin himself, there could of course be no objection to his consulting with, and obtaining advice from, any of these advisers. In this way it seems to me that the plaintiff company will have available to it fully adequate means of obtaining technical and professional advice. I do not wish in any way to disparage the distinction or ability of the plaintiff's legal advisers in the United States of America, but they are not qualified experts in the field of United Kingdom patent law. Nor do I in the least question the value of Dr. Arpesella's knowledge, which seems to be extensive, of the process covered by the two patents in suit, but for reasons which seemed good to the learned Judge and with which I agree, connected with the absence of any patent protection in Italy, I do not think that it would be right to order disclosure to Dr. Arpesella. No satisfactory sanction has been suggested to which recourse could be had if any of the persons to whom disclosure is sought were to fail faithfully to observe any term or undertaking to maintain confidentiality." 14 Warner-Lambert was followed and applied in this country in Ex parte Fielder Gillespie Limited (1984) 2 QdR 339 at 341; in Magellan Petroleum Australia Limited v Sagasco Amadeus Pty Ltd (1994) 2 QdR 37 at 38 - 39; and in Mackay Sugar Co-Operative Association Limited v CSR Limited (1996) 63 FCR 408 at 412 - 413. It was, however, distinguished in Décor Corporation Pty Ltd v Australian Housewares Pty Ltd, 26 October 1998, Sundberg J, unreported (see below). 15 After Warner-Lambert was decided, in Harman v Secretary of State for the Home Department [1983] 1 AC 280, Lord Keith observed (at 308) that discovery forms part of English legal procedure - "… because the public interest in securing that justice is done between parties is considered to outweigh the private and public interest in the maintenance of confidentiality. But the process should not be allowed to place upon the litigant any harsher or more oppressive burden than is strictly required for the purpose of securing that justice is done." 16 Whilst the general principle stated in Harman has always been accepted in Australia, experience has shown that, in some contexts, its application can be difficult. 17 Thus, in Re Palmer Tube Mills Limited, 10 December 1991, unreported, Lockhart J ordered that a lawyer, who was the partner in charge of the case and also a non-executive director of certain companies, be included in those having conditional access to confidential documents or confidential information. Lockhart J, however, refused access in the case of another lawyer, Mr Rogers, who had commercial interests. His Honour said (at pars 9 - 10): "9. …. But Mr Rogers is a non-executive director of the three applicants in the case; he is a shareholder in the first applicant and he … has a very good working knowledge of the applicants' business and of the steel tube and pipe industry generally. Mr Rogers is one of the principals of a company, InterFinancial Limited, for whom he works and devotes a large amount of his time. One of the principal clients of that company is one or more of the applicants. The advice which is given by Interfinancial Limited and therefore by Mr Rogers to and in relation to the applicants is on corporate matters which go obviously to the heart of their business and its planning and strategy. 10. Mr Rogers … sets out problems that would arise if confidential documents are not exposed to him in the case and it is obvious to me that he would respect whatever flows from a person having access to confidential documents. But I feel that Mr Rogers' involvement through the directorships of the applicants and through his involvement with Interfinancial Limited and its close link to the applicants is such, in the light of the issues of this case and the parties to this case, that it would not be right that he is included in the category of persons to whom confidential documents may be exposed. Not only do I think that would be not right in itself, but also within the broad but nevertheless still wise maxim that justice must not only be done but appear to be done, it would not give the respondents confidence in the integrity of those who advised the applicants if Mr Rogers were to have access to documents of the kind which I have described. Nor would the community feel any such confidence. That, I think, is an important consideration. I also think that it would not be fair to Mr Rogers himself to allow him to be placed in this position of access to confidential documents. It would put him, I think, in a thoroughly invidious position and I would not like to see him exposed to that and the risks which might flow from it. I emphasise again that I do not suggest for a moment that, if Mr Rogers had access to the documents, he would not do other than respect the orders that would be made for confidentiality. Nor is it suggested that he would not do so." 18 In Mobil Oil Australia Ltd v Guina Developments Pty Ltd (1995) 33 IPR 82, a case, as here, of parties operating in the trade, Hayne JA (with the agreement of Winneke P and Phillips JA) cited Harman (at 86) and went on to say (at 88 - 89): "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 completing 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."

19 The approach taken by Lockhart J in Re Palmer Tube Mills Limited was implicitly followed recently by Sundberg J in Décor who said (at 6): "But in [Warner-Lambert and Magellan Petroleum] the party whose representative was permitted to inspect the documents was a large corporation with many employees. In such a case it is realistic to expect that disclosure of documents to a chief executive or the director responsible for the litigation on terms which prevent him communicating it to those at the relevant research or operating level will not destroy the confidentiality of the documents. But in the present case disclosure to Messrs Ince and Kinnear is disclosure to the whole of [Housewares]. They are its only two operatives. The observations of Hayne JA [in Mobil] about the destruction of confidentiality and the impossibility of putting trade secrets out of one's mind are particularly apposite in such a situation. As was said in Warner-Lambert and Mobil Oil, each case must depend on its own facts. For the reasons I have given, I am not satisfied that the matters relied on by the respondents outweigh the well-founded fear Décor has about disclosing its trade secrets to a competitor …. Having considered all the factors relied on each way, I am satisfied that the balance falls in favour of making the order sought by Décor. If so advised the respondents can apply later to extend the range of persons to whom access to the documents should be granted. Cf Warner-Lambert at 358 and Mobil Oil at 40." 20 In the present case, the ultimate question then, as Morritt J put it in Arab Monetary Fund v Hashim (1989) 1 WLR 565 (at 577) is: "[T]he court can direct that facts disclosed by one party are not disclosed to the other party provided, of course, that they are disclosed to someone on that party's side, who can effectively deal with the matter." (Emphasis added.) 21 As Hayne JA observed in Mobil, it will ordinarily suffice, where parties in the trade are involved, if legal representatives and independent experts are given the confidential information, the assumption being that they can effectively deal with the matter at hand on behalf of the client. The question now is whether Mr Ward should also be included in the confidential circle. The answer must, as the authorities hold, depend upon the particular circumstances - in all their dimensions. 22 As has been seen, the outcome in Warner-Lambert was very much influenced by counsel's statement that he was "unable to advise [his client's CEO] in any helpful or intelligible sense without expressly or by implication discussing the nature of the technical information." (Emphasis added.) Counsel for the respondent gave the Court a similar assurance here, by reference to Mr Ward. I accept the assurance so far as it goes, expressed as it is (necessarily) in general terms. 23 There remains, however, the critical question of devising a mechanism to deal with the process of disclosure by counsel to Mr Ward which ensures that no more is disclosed than is necessary for the proper conduct of the litigation, so that fairness in the litigious process is preserved vis-à-vis both parties. In other words, whilst, in a particular context, some disclosure may be necessary, it does not follow that full disclosure is required. Here, it is not possible to generalise. In my view, if full disclosure of particular information is to occur, the respondent's counsel will need to obtain the applicant's written consent to that course, or if not, to satisfy the Court that a full disclosure is necessary. In other words, there may be areas where a summary of the effect of certain information may be sufficient for present purposes. 24 Since, in my view, it is not appropriate to generalise in this area beyond the foregoing, I propose to make no order on the motion save to stand it over generally, with liberty to restore. If that liberty is to be exercised, as indicated, I will entertain any specific application upon the above footing, that is (in the absence of consent), upon receipt of the respondent's counsel's assurance that particular information is proposed to be communicated to Mr Ward in a particular form and that disclosure of anything less than this would prejudice the proper conduct of the respondent's case. I would then hear the applicant, and rule, on this question in confidential session on that specific issue. That is to say, whilst I accept the general assurance now given by the respondent's counsel, the manner of its application in a specific context is a matter for the Court to determine in the particular circumstances then at hand, and in this respect, the applicant is entitled to be heard, on a case-by-case basis. 25 In the circumstances, I will make no order for costs of the motion to date.

ORDER 26 I make the following order: 27 Motion stood over generally, with liberty to restore.

I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beaumont.

Counsel for the Applicant: Mr I Jackman, Mr M Leeming

Counsel for the Respondent: Mr N Young, Mr Collinson

Solicitor for the Respondent: Allens Arthur Robinson