(a) The election rules,
(b) Consent to use of the company name under article 16, and
(c) Any policy as to paid election advertisements in The Open Road.
79 As to the first of these there were election rules published by the board which dealt with the election of directors for the election to be held in 2001. These contained information on nomination provisions with protocols and rules for candidates' and groups' biographical information which would be inserted in the election sendouts to members for the purposes of the election. It did not concern itself with any of the matters referred to in (b) or (c) above.
80 Article 16 of the Constitution of NRMA provided that no member shall without consent in writing of the association publish, inter alia by way of advertising to the public using the letters "NRMA" or the name "National Roads and Motorists' Association". During July Ms Kelly had had some requests for use of those names. One she received in connection with the election was from Mr Sanchez. She made inquiries and was informed that consents under the article had been given in the past by her predecessor. She then drafted a protocol for granting consents under the article and advised those in charge of the election of the details. The protocol set out the substance of the provisions of the article and that consent was required from the Company Secretary. It also provided that candidates were not able to pass themselves off as endorsed by the NRMA. All advertisements which required consent pursuant to article 16 were required to be factually correct, not defamatory and not likely to mislead or deceive any member. On 3 August 2001 she gave a consent to Mr Sanchez under the protocol. She noted that it was in order for his group to place an ad in the next edition of The Open Road for publication on the basis of agreed text. His group placed an advertisement in The Open Road for September/October 2001. Another group being "Members Voice" also inserted an advertisement in that issue without consent under article 16, which was required, as the advertisement used the name of the plaintiff.
81 There was no documentary evidence tendered in this case that in any way suggested that there was ever any policy governing election advertising in The Open Road prior to the 2001 elections. Ms Kelly was cross-examined on the matter and it is apparent that she had no knowledge of such a policy. She had been Secretary for 18 months and had made no inquiries as to whether there had previously been a policy in place. Ms Kelly had an inquiry about the matter from Mr Geeson, a director, and she responded to him on 24 August 2001 in these terms: --
"I had discussed this issue with Ms B. Collins who is in charge of The Open Road, the response is that advertisements will be able to be placed in T. O. R. for commercial rates subject to such advertisements not being misleading and deceptive, defamatory, in breach of any requirements under the Constitution of the company or objectionable from the public policy perspective. Mr Mick Gallagher and his Members Voice group have indicated they will be placing an advertisement in the next edition of Open Road, however it is a level playing field. Any other group or candidate has the same opportunity."
82 Given Ms Kelly's knowledge and in particular the lack of any inquiry that she had made as to whether any such policy did exist in the past there is no basis for suggesting that there was such a policy. Certainly there is nothing to suggest that Ms Kelly knew that there had been such a policy in the past.
83 The piece of confidential information with which I am concerned is that the election advertising policy for The Open Road had been changed to disadvantage one group in the current election. These submissions suggest there was a strong public interest based upon a hindsight consideration of the steps taken in relation to creation of the protocol, its publication or lack thereof against a background which presupposed some past electoral rules about election advertising in The Open Road. Another way of looking at it is to consider whether confidentiality would attach to the subject matter in any event in the circumstances that existed at the time.
84 I have earlier referred to the substantial part that the NRMA plays in public affairs in New South Wales. It seems to me that the topic of election to office as a director of the NRMA is a matter of great interest to the members. Accordingly, any matter concerning the way in which the elections for the office were conducted will also, I would have thought, be a matter of great interest to the members. In my view, a change in the policy which disadvantaged one group, standing for the then current elections, is a matter of considerable importance. There was a procedure for election mail outs giving biographical information on candidates and the members had received this information. Election advertisements were about to appear in The Open Road magazine. All these matters are not confidential. In these circumstances it seems to me that any suggestion that a change to the policy for advertising in The Open Road of itself is confidential is not likely to be accepted. Matters of public interest do not, in these circumstances, have to be considered.
The rules regarding elections are already in the public domain
85 It was submitted that because of disclosures, the matter was already in the public domain. See Johns v ASC (1993) 178 CLR 408 at 461; Attorney General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109 at 124; Attorney General v Punch Ltd [2001] 2 WLR 1713 at 1726. Given my conclusion above it is not necessary to pursue this matter.
Conclusion on the strength of the case for breach of confidence in respect of information given to the fifth defendant
86 For the reasons I have expressed I think that there is very little likelihood of obtaining an injunction or damages in respect of the disclosure of a possible change to the election rules of The Open Road.
Breach of fiduciary duty
87 This is the foundation for the proceedings, based upon a breach of the code of conduct, to which I have already referred.
Sections 182 and 183 of the Corporations Act
88 Section 182 provides that a director, secretary, other officer or employee of a corporation must not make improper use of their position to
(a) gain an advantage for themselves or someone else; or
(b) cause detriment to the Corporation.
89 There was a submission that there might be some advantage to be gained from currying favour with a journalist. I doubt this and think that the relevant subsection is the latter, namely, causing detriment to the Corporation. Section 183 provides that a person who obtains information because they are, or have been, a director, officer or employee of the Corporation must not make improper use the information to:
(a) gain an advantage for themselves or someone else; or
(b) cause detriment to the Corporation.
90 Once again it is detriment which is important if these cause of action are to be pursued. The evidence of damage caused by the leakage of board discussions arguably would support a breach of s183 (b).
The emerging tort of invasion of privacy
91 It was suggested that as a result of the decision of the High Court in ABC v Lenah Game Meats (2001) 185 ALR 1 that this cause of action might be available. The submissions were that it raises the possibility of relief of an additional kind, namely:
(a) whether there should be an identifiable tort of invasion of privacy, and
(b) whether a corporation should have the benefit of such a tort.
92 As to the latter question, it was submitted
"That three out of the six members of the court indicated that in their view, further development of the law in that field will be to the benefit of natural rather than artificial persons (at paragraphs [58], [132]). However, the Chief Justice (at paragraph [43]), and Kirby J, at paragraph [191], did not think it necessary to embark on a consideration of the question, whether such a tort should be restricted to natural persons. Callinan J generally appears to be in favour of the development of such a tort, and would not appear to restrict it to natural persons: paragraphs [313] - [336]."
93 Without meaning any disrespect to the submissions I would think that if any such tort was the only cause of action available a case brought solely on that cause of action would be highly speculative.
The first and second and third defendants' information
The directors' code of conduct
94 The disclosure of two separate board deliberations clearly indicates a course of conduct that might have serious ramifications for the board and the plaintiff company. Although the disclosure of a paper that dealt with the privileges and benefits to which directors are entitled could perhaps be said to be only something of an embarrassment to the directors, disclosure of dissent about the wisdom of bringing defamation proceedings I would have thought would be a serious breach of the code of conduct.
Breach of confidence
95 There are two different areas to consider in respect of information given to the second and third defendants. The first seems to be fairly clear. The whole or part of Ms Kelly's paper prepared in respect of the directors' expense policy has been made available to the journalist. That policy clearly related to the reimbursement of directors' expenses and associated matters. Ms Kelly's paper gave general advice of a legal nature from her position as group general counsel.
96 The other area concerned the article on the 31st August in which reference was made to some of the directors seeking to stop the legal actions mounted against Channel 9 and CBD's employer John Fairfax Holdings and the reasons for the dissent. There is nothing in the evidence to suggest that the actual paper prepared by Ms Kelly entitled "Recent Legal Developments" was made available to the journalist. As that report is clearly privileged it could be thought that any disclosure of that report would be a serious breach of confidence, which would have the possibility of causing detriment to the plaintiff.
97 It was submitted that there are a number of reasons why the case was not a strong one in respect of information disclosed as to the first, second and third defendants. First, the subjects of disclosure were matters to which no obligation of confidence attached. Second, that it is an ambit claim without any attempt to specify the relevant confidential information. Third, the disclosures relate to trivial matters. Fourth, the issues are already in the public domain or fifth have subsequently entered the public domain. Sixthly discretionary reasons. Seventh, no detriment and thus no claim for equitable compensation.
The subjects of disclosure were matters to which no obligation of confidence attached
98 The first matter concerned advice on the grant of an indemnity to directors. I am prepared to infer that the paper was made available to the journalist. The actual policy was attached to it but I would not infer that it was made available to the journalist having regard to what was said in the published article. The question which arises is whether the information is likely to attract confidence. The grant of indemnity to directors is commonplace and regulated by the Corporations Act. It would be a rare company that did not grant such indemnities. It is in the members' interests to have some such indemnity granted. The actual detail of the advice given in the paper was extremely general. In my view it could not be said to have the necessary element of confidentiality.
99 The second matter concerns the report of dissent over the legal actions against Channel 9 and CBD's own employer John Fairfax Holdings. It was submitted that the costs involved in such litigation and the potential for a public relations fiasco is not a matter of confidence. Although the unknown nature of costs and the potential for a public relations fiasco are matters that are notorious, I would have thought that the knowledge that the board was divided on the issue might be important confidential information so far as the potential defendants to the action were concerned.
An ambit claim without specifying the relevant confidential information
100 So far as the first matter is concerned it is very obvious that the confidential information is the contents of Ms Kelly's paper which was made available to the board and ultimately the journalist. The second matter of confidential information is the fact of dissent on the board about the proceedings.
The disclosures relate to trivial matters
101 On the first matter, namely, the indemnity paper, I would not have thought these were trivial. On the second matter, to the extent that there is confidential information concerning the dissent at board level, given the subject matter, such is far from trivial. It concerns an expensive piece of litigation involving matters which were said to affect the reputation of the plaintiff company.
The issues are already in the public domain or have subsequently entered the public domain
102 It was submitted that in respect of the first matter it was already in the public domain by virtue of the article in the Herald on 29 June 2001. This is irrelevant as it is publication before the leak which is relevant. There does not appear to be any suggestion of the dissent concerning the defamation proceedings entering the public domain.
Discretionary reasons for no injunction
103 It was suggested that an injunction to restrain publication in respect of board discussions in a non specific general form would not lie. See NRMA v Geeson, Bryson J at para 25-32. This is so and as I have indicated any injunction to restrain board discussions would have to be limited to not breaching the code with perhaps some modification to cover, if it was thought necessary, a public interest defence.
No detriment and thus no claim for equitable compensation
104 I have already discussed this matter earlier. There is nothing to suggest that the first matter caused detriment. The second would cause detriment and its relevance is more important elsewhere.
Conclusion on the strength of the case for breach of confidence in relation to the information given to the second and third defendant
105 There is no case to be made out for disclosure of advice about directors' indemnities. The confidential information being the fact of dissent on the board about the defamation proceedings is best dealt with when considering the beach of the code of conduct.
Breach of fiduciary duty
106 As I have said this will be the foundation for any breach of the code of conduct.
Sections 182 and 183 of the Corporations Act
107 In respect of board dissent there may be an arguable case as I have mentioned above.
Summary as to the strength of the causes of action
108 In my view the only proposed cause of action which has any reasonable strength would be one to restrain a director from committing further breaches of the directors' code of conduct and the confidentiality undertakings if applicable. Such matters are important for the proper functioning of the board as publication of board discussions have the potential to cause harm to the plaintiff company. This cause of action arises from the disclosures to all of the defendants. One of the disclosures concerned the defamation action. The discussions included legal advice but fortunately that was not disclosed to the journalist. The matter to note is that the source was prepared to reveal to a journalist part of what was a very confidential matter discussed by the board. The other board discussion concerned advertising in The Open Road. Although I have concluded that such matters of policy would not be confidential, there is still a breach of the provisions of clause 15 of the Code because there has been no prior notification. Although expressed slightly differently clause 15 is apt to include matters of public interest. The provisions for notice are important as they give the company the opportunity, if it disagrees with the course proposed by the director, to act to restrain such a disclosure.
109 The ignoring of the procedures in clause 15 shows a clear disregard for the code which was adopted at the very meeting in June which discussed the directors' expense policy. The nature of the discussions at the meeting clearly brought the proceedings to the attention of the directors present. Those directors that were not present would no doubt have received their minutes of the meeting before the August board meeting.
110 Having regard to the likely deliberate breach of the code I would have thought that the case to restrain a director from further breaches would be strong. It would be more so if the same director was involved in both breaches.
General defences to the application
Public policy precludes preliminary discovery
111 There were a number of matters that were raised under this head by the fourth and fifth defendants. They really are matters which go to the nature of the discretion and the factors to be taken into account, which I will deal with later.
Necessity, an effective cause of action against others
112 In John Fairfax & Sons Limited v Cojuangco (1988) 165 CLR 346 the High Court said at page 357 the following: --
"A court will refuse an order for preliminary discovery if it appears that the applicant has an effective remedy against the newspaper or journalist without necessity for making such an order."
113 It was submitted that this passage meant that the Court should refuse the present action. Such a submission does not give appropriate weight to what the High Court was considering in that case. The case concerned a complaint about a defamatory publication in a newspaper and examined the relation between that rule and preliminary discovery in proceedings for defamation.
114 The full context of the quote above appears at p 356-7 as follows:-
"The newspaper rule is not capable of applying directly to proceedings under Pt 3, r. 1. The respondent to an application under Pt 3, r. 1 is not, as such, a defendant in a defamation action. Such an application is not an interlocutory proceeding in such an action. One very powerful reason for denying that the rule has a direct application to the present class of preliminary discovery is that the object of such an application is to ascertain the identity of an informant so that the applicant may sue him. The object of an interlocutory application in a defamation action is to obtain evidence, admissions or better particulars with respect to the issues for trial in the action. If the only object of such an application were to identify the defendant's source of information with a view to bringing an action against the informant, the purpose of the application would be foreign to the proceedings. Yet that purpose is the very object of an application for preliminary discovery.
On the other hand the policy considerations which underlie the existence of the rule are unquestionably factors to be taken into account in the exercise of the judicial discretion that Pt 3, r. 1 confers. If it were otherwise, the making of orders for preliminary discovery would undermine the status and strength of the rule in its application to defamation actions at the interlocutory stage. However, to say that the policy considerations behind the newspaper rule are relevant in an application for preliminary discovery does not mean that an applicant will fail unless he makes out a case of special circumstances. What an applicant must show is that the order sought is necessary in the interests of justice; in other words, the making of the order is necessary to provide him with an effective remedy in respect of the actionable wrong of which he complains.
Where an applicant complains of a defamatory publication in a newspaper a court will refuse an order for preliminary discovery if it appears that the applicant has an effective remedy against the newspaper or journalist without the necessity for making such an order. But where, as here, it appears that the newspaper and the journalist may well plead statutory qualified privilege under s 22 of the Defamation Act, a judge is entitled to exercise his judicial discretion in favour of making the order sought if the newspaper and the journalist do not relinquish that defence and the judge considers that the defence might well prevail."
115 As is apparent these are not defamation proceedings and hence the policy considerations underlying the newspaper rule are not "unquestionably factors to be taken into account in the exercise of the judicial discretion that Part 3 R 1 confers". They may have some part to play depending upon what is the actionable wrong of which the plaintiff complains.
116 As the discussion above shows it is only that promulgation of board discussion which is not in the interests of the company. It is for the prevention of the continuation of that course of conduct for which the plaintiff comes to court. In the context of that relief it would still be relevant to consider whether there is any "effective remedy" against any other person.
117 Here the first question that is said to arise is the meaning of "effective remedy". One view might be that the remedy against the newspaper or journalist must be coextensive with that available against the source. The second view is that an "effective remedy" is a remedy that is reasonably effective to do justice in the circumstances. I would have thought that there is no particular reason why the first should be adopted. The court in exercising its discretion as to whether or not it will permit the use of its procedure is considering the interests of justice generally and accordingly if some other legal proceedings might achieve those interests for the plaintiff then that is a good reason for not proceeding against the journalist or the newspaper using the present procedure.
118 To be an effective remedy it would have to prevent the continued leakage of board discussions on sensitive areas. In these circumstances actions against the defendants would be quite useless as whatever damage has been done as a result of the disclosures has already occurred. The chance of restraining the defendants from publishing future leaks would I think be quite remote. I am mindful that there are apparently some proceedings on foot against the Fairfax interests but the details of these are not in evidence. Damages for past publication against this particular newspaper will not prevent further damage. In these circumstances I do not see that there is an effective alternative remedy.
The nature of the discretion and the factors to be taken into account
Implied constitutional freedom
119 This topic occupied some time during the conduct of the hearing. I had the assistance of submissions from the Solicitor General for New South Wales, on behalf of the Attorney General of the state of New South Wales on the effect of the implied freedom on Part 3 R 1of the Supreme Court Rules. The matter has recently been addressed by the High Court in Lange v Australian Broadcasting Corporation (1997) 189 CLR 520. In that case the High Court considered the freedom of communication between people concerning political or government matters which enables the people to exercise a free and informed choice as electors. At page 560 the court had the following to say: --
"That being so, ss 7 and 24 and the related sections of the Constitution necessarily protect that freedom of communication between the people concerning political or government matters which enables the people to exercise a free and informed choice as electors. Those sections do not confer personal rights on individuals. Rather they preclude the curtailment of the protected freedom by the exercise of legislative or executive power. As Deane J said in Theophanous ((1994) 182 CLR 104 at 168. See also at 146-148), they are "a limitation or confinement of laws and powers [which] gives rise to a pro tanto immunity on the part of the citizen from being adversely affected by those laws or by the exercise of those powers rather than to a `right' in the strict sense". In Cunliffe v The Commonwealth 248 (1994) 182 CLR 272 at 326., Brennan J pointed out that the freedom confers no rights on individuals and, to the extent that the freedom rests upon implication, that implication defines the nature and extent of the freedom. His Honour said (Cunliffe (1994) 182 CLR 272 at 327):
"The implication is negative in nature: it invalidates laws and consequently creates an area of immunity from legal control, particularly from legislative control."
120 The way in which the freedom impacted upon other laws was elaborated upon by the High Court at pages 561-562 in these terms: -
"However, the freedom of communication which the Constitution protects is not absolute. Nationwide (1992) 177 CLR 1 at 51, 76-77, 94-95; ACTV (1992) 177 CLR 106 at 142-144, 159, 169, 217-218; Theophanous (1994) 182 CLR 104 at 126; Stephens (1994) 182 CLR 211 at 235; Cunliffe (1994) 182 CLR 272 at 336-337, 387; Langer (1996) 186 CLR 302 at 333-334. It is limited to what is necessary for the effective operation of that system of representative and responsible government provided for by the Constitution. The freedom of communication required by ss 7 and 24 and reinforced by the sections concerning responsible government and the amendment of the Constitution operates as a restriction on legislative power. However, the freedom will not invalidate a law enacted to satisfy some other legitimate end if the law satisfies two conditions. The first condition is that the object of the law is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government or the procedure for submitting a proposed amendment to the Constitution to the informed decision of the people which the Constitution prescribes. The second is that the law is reasonably appropriate and adapted to achieving that legitimate object or end. Different formulae have been used by members of this Court in other cases to express the test whether the freedom provided by the Constitution has been infringed. Some judges have expressed the test as whether the law is reasonably appropriate and adapted to the fulfilment of a legitimate purpose. Others have favoured different expressions, including proportionality. In the context of the questions raised by the case stated, there is no need to distinguish these concepts. For ease of expression, throughout these reasons we have used the formulation of reasonably appropriate and adapted."
121 One can see that the first issue is whether the relevant articles can be said to amount to "political discussion". If this is answered in the affirmative it is then necessary to consider the provisions of Part 3 R 1 of the Supreme Court Rules to see whether they are: -