Public Transport Ticketing Corporation v Integrated Transit Solutions & Anor

Evidence Act 1995 LEGISLATION CITED : Transport Administration Amendment (Public Transport Ticketing Corporation) Act 2006 Transport Administration Act 1988 (NSW) Uniform Civil Procedure Rules 2005

A3 v Australian Crime Commission [2006] FCA 894 Alister v The Queen (1984) 154 CLR 404 Attorney General for New South Wales v Stuart (1994) 34 NSWLR 667 Beneficial Finance Corporation Ltd v Commissioner of Australian Federal Police (1991) 52 A Crim R 423; on appeal (1991) 31 FCR 523; 103 ALR 167; 58 A Crim R 1. Burmah Oil Co Ltd v Governor and Company of the Bank of England [1980] AC 1090 CASES CITED : Cadbury Schweppes Pty Ltd v Amcor Limited [2008] FCA 88 Church of Scientology Inc v Woodward (1982) 154 CLR 25 Haj-Ismail v Madigan (1982) 45 ALR 379 Hooker Corp v Darling Harbour Authority (Supreme Court of New South Wales, Rogers J, 7 May 1987, unreported) Public Transport Ticketing Corporation v Integrated Transit Solutions [2009] NSWSC 54 R v Saleam (1989) 16 NSWLR 14 Somerville v ASC (1995) 60 FCR 319 The Commonwealth of Australia v Northern Land Council (1993) 176 CLR 604 Young v Quin (1985) 4 FCR 483; 59 ALR 225

Public Transport Ticketing Corporation (Plaintiff) Integrated Transit Solutions & Anor (First Defendant) PARTIES : ERG Limited (Second Defendant) Rail Corporation New South Wales State of New South Wales

Mr P Durack SC, Mr S Free(Plaintiff) COUNSEL : Mr W G Muddle SC, Mr J Arnott (First and Second Defendants) Ms C Needham SC, Mr Elliott (RailCorp) Mr P Hastings QC, Ms C Spruce, Mr R Bhalla, Mr J Mitchell (State of New South Wales)

Allens Arthur Robinson (Plaintiff) SOLICITORS : Norton Rose (First and Second Defendants) Henry Davis York (Railcorp) Crown Solicitor (State of New South Wales)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

2008/290313 Public Transport Ticketing Corporation v Integrated Transit Solutions & Anor JUDGMENT The notices of motion and sundry applications 1 There are before the court a number of notices of motion and sundry applications requiring to be dealt with as part of the case management of the instant proceedings. The nature of the proceedings 2 Some consideration of the background, giving rise to the present proceedings may be gleaned from the decision [Public Transport Ticketing Corporation v Integrated Transit Solutions [2009] NSWSC 54] treating with applications for security. 3 The Public Transport Ticketing Corporation [PTTC] is a statutory corporation having pursuant to the Transport Administration Act 1988 (NSW) the principal functions of:

i. establishing and managing a ticketing and fair payment system for public transport passengers and participating public transport operators in New South Wales and

ii. controlling and managing any funds within the ticketing and fair payment system that represent unused prepaid fees. 4 The first defendant is Integrated Transit Solutions Ltd. The second defendant is ERG Ltd [for convenience only both defendants are generally described as ITSL]. 5 The dispute arises from the plaintiff's decision to terminate a contract for the design, build and installation of an integrated smartcard-based ticketing and fare payment system for public transport in the greater Sydney area. Under the contract works were to be completed in stages and certain milestone events were provided for. 6 The plaintiff's contention is that none of the stages were achieved and that the first defendant's delay was very substantial. 7 The plaintiff has recovered the liquidated damages it was entitled to as a result of the delay, as well as a prepayment it made for the works, from security with which it was provided. 8 By the current proceedings, the plaintiff seeks to recover additional substantial losses which it claims to have suffered from the loss of the contract, consisting of large expenditure made in reliance on the contract which is said to be now wasted, costs that it claims it are continuing to be incurred in dismantling various equipment and other materials installed in connection with the contract which it contends will also be wasted, and the loss of the use of the monies expended that would have been recouped had the contract being performed. 9 The plaintiff also claims to recover those losses from the second defendant, namely the parent company of the first defendant, by virtue of a guarantee and indemnity given by the second defendant, on the same date as the contract was entered into, in respect of the performance by the first defendant of the contract 10 The first defendant has asserted that the plaintiff was not entitled to terminate the contract, that it regarded the plaintiff, by its notice of termination, as having repudiated the contract and has stated that it accepted such an alleged repudiation. The first defendant has also apparently asserted that it had suffered significant losses as a consequence of this alleged repudiation. 11 The defendants have identified the issues likely to arise in the proceedings as including:

1. Whether the plaintiff breached its obligations under the contract by: (a) failing to procure and progress fare reform;

(b) failing to procure sufficient engagement from the public transport operators;

(c) refusing to consider in good faith proposals that would have the effect of recovering some or all of the delays in completing the project;

(d) requiring the first defendant to perform out of scope work;

(e) failing to provide timely feedback, input and approvals of the documentation and systems developed by the first defendant as part of the project;

(f) failing to prevent the public transport operators from causing or contributing to the delays and difficulties of the project. 2. Whether the conduct of PTTC referred to in paragraph 1, or the conduct of the public transport operators independently of the conduct of PTTC, had the effect of preventing completion of the project in accordance with the project schedule.

Whether the plaintiff was entitled to issue the default notices to the first defendant on 24 September 2007.

Whether the plaintiff complied with its express and implied obligations in relation to the remedial programme submitted by the first defendant.

Whether the NSW Government made certain representations to the first defendant through its lobbyist and whether, by the making of those representation and the first defendant's reliance upon them, the plaintiff is estopped from alleging that it validly terminated the contract, from denying that the first defendant was entitled to further time to complete the contract and from alleging that by submitting the remedial programmed the first defendant evinced an unwillingness or inability to perform the contract in substance or at all.

Whether the plaintiff was entitled to terminate the contract on 23 January 2008 pursuant to an express right of termination.

Whether the plaintiff was otherwise entitled to terminate the contract on 23 January 2008 at general law.

If the answer to either 6 or 7 is yes, what is the quantum of the plaintiff's loss?

If the plaintiff has suffered loss as a result of the termination of the contract, is the liability of the first defendant limited under the contract?

If the plaintiff has suffered loss as a result of the termination of the contract, is any of that loss properly characterised as loss resulting from delay and therefore already fully recompensed by the payment of liquidated damages?

Whether there has been a breach by the second defendant of its obligations under the Guarantee.

If the answer to question 11 above is yes, whether and, if so, to what extent, the second defendant is liable for the losses claimed by the plaintiff in the proceedings. The approach taken to dealing with the sundry applications 12 It was agreed at the bar table that the efficient approach to dealing with those matters which still separated various parties was to commence with the amended notice of motion pursued by the State of New South Wales. I proceed accordingly. 13 The application

i. by the State of New South Wales is for an order excusing the plaintiff from making available for inspection to the defendants particular documents listed in the table that was annexed and marked A to the amended notice of motion. It is common ground that PTTC having given discovery of documents within agreed categories to ITSL and provided an affidavit verifying its discovery withheld from inspection in whole or in part a number of documents on the basis that they related to 'matters of state'. PTTC has in effect abandoned the conduct of its claim and in its place, the Crown in right of the State of New South Wales pursues the amended notice of motion.

ii. by ITSL [and ERG] seeks an order that PTTC produce for inspection the documents/parts of documents which were the subject of a claim by the State for public interest immunity. An overview of the contentions of ITSL 14 During the hearing of the notices of motion the court granted leave to ITSL to cross-examine certain of the witnesses put forward by the State in support of the claims for immunity. The evidence of these witnesses will be referred to below. 15 The defendant's anterior submissions had include the following:

i. By reason of rule 21.5(2) of the Uniform Civil Procedure Rules (UCPR) and section 131A of the Evidence Act 1995 (NSW) (the Evidence Act ), the provisions of section 130 of the Evidence Act govern the State's claims for immunity for production of the documents. In order for the State to succeed on its claims, it has the onus of establishing both that:

(a) the Claim Documents relate to matters of state;

(b) if they do, the public interest in permitting the defendants to inspect the Claim Documents is outweighed by the public interest in preserving the secrecy or confidentiality of the Claim Documents.

ii. The State cannot meet either limb of this test in relation to any of the Claim Documents.

iii. In support of the claims, the State relies upon the affidavits of Paul Miller, the Acting Deputy Director General (General Counsel) of the NSW Department of Premier and Cabinet, and Andrew Nicholls, the Acting Deputy Director General of the NSW Department of Transport and Infrastructure.

iv. The evidence of Mr Miller and Mr Nicholls establishes that the Claim Documents are all documents which were created, received or edited by the PTTC. At the core of the proceedings are two issues:

a) the causes of the delays in the delivery of the Project; and

b) whether the PTTC acted in good faith in purporting to terminate the Contract.

v. Section 130(4) of the Evidence Act describes when documents will relate to matters of state. The non-exhaustive list in s 130(4) contains several categories which can have no relevance in the current proceedings, which were commenced by the PTTC in the Commercial List and have a commercial character. These include documents which would prejudice national security or defence or the prosecution of a criminal or civil offence or reveal a confidential informant assisting the investigation of an offence. The only category that could conceivably apply is section 130(4)(f), which is to the effect that a document relates to matters of state if allowing ITSL and ERG to inspect it would prejudice the proper functioning of the government of New South Wales. This appears to be the category on which the State relies. However, allowing ITSL and ERG to inspect documents in which PTTC reports on its commercial activities to the Minister and his department cannot prejudice the functioning of the government of New South Wales. The PTTC's case is that it was running for a profit a successful business at least as well as any comparable business: see Further Amended Commercial List Statement, paragraph C1(c), at tab 1 of the Tender Bundle. The argument that Mr Miller and Mr Nicholls make in their affidavits is, to put it shortly, that if ITSL and ERG are permitted to inspect the Claim Documents, in future PTTC will not report to the Minister and his department and the Minister and his department will not request information from the PTTC.

vi. This is a common argument made by governments seeking to prevent disclosure of documents. However, in this case, it pays insufficient regard to the legal obligations imposed on the PTTC by section 35Z of the Transport Administration Act 1988 (NSW) to keep the Minister informed of the general conduct of its activities, and of any significant development in its activities. The inspection of the Claim Documents by ITSL and ERG can have no dampening effect, as asserted by Mr Miller and Mr Nicholls, because of PTTC's obligation at law to report to the Minister. 16 The submissions of ITSL sought to put forward four broad reasons why the claimed documents were not protected from disclosure by public interest immunity, as they are said not to relate to matters of state:

i. Commercial documents. The documents are reports from the PTTC, which was in a commercial relationship with ITSL for the delivery of the Project, to the Minister that was responsible for it and his department. Documents which are merely commercial, rather than traditionally governmental, will not attract public interest immunity: Hooker Corp v Darling Harbour Authority (SC (NSW), 7 May 1987, unreported) per Rogers J. The commercial and contractual nature of the relationship means that the documents are not ones which relate to matters of state. They relate to the implementation of a commercial project from which the PTTC sought to profit and the Minister and the NSW Government sought to benefit through the payment of dividends. The documents are akin to a subsidiary company reporting to the board and executives of a parent company.

ii. In the possession of a commercial government entity. An important fact is that the Claim Documents are all documents which were discovered by the PTTC, and were therefore in the possession of the PTTC. They are not documents which have been discovered by the State itself. If the documents truly related to matters of state, then they would not have found their way into the possession of the PTTC, which is a commercial government entity required by its constituting Act to operate as a successful business.

iii. Not current. The documents relate to the delivery of the Project by ITSL from 2003 to the termination of the Contract in 2008. Since that time, the PTTC has selected the Pearl Consortium (comprising the Commonwealth Bank of Australia, Cubic Transportation Systems (Australia) Pty Limited and Downer EDI Engineering Power Pty Ltd) as the new provider of an electronic ticketing system. Accordingly, the Contract and the Project which ITSL was delivering are of historical interest only, and the documents recording their delivery have no currency outside these proceedings. The State's interests cannot be compromised by the discovery to ITSL and ERG of documents relating to the conduct of a terminated project which has been replaced with a new project to be delivered by a different contractor. The assertions of currency by Mr Miller and Mr Nicholls should not be accepted.

The PTTC and the State have taken a selective approach to the documents over which a claim has been asserted. Documents recording communications between the PTTC and the NSW Government have been made available where it suits the purposes of the PTTC to have them available in the proceedings, and to be used by them in their affidavit evidence, and have been withheld where these purposes are not served. 17 In any event the submissions of ITSL contend that even if the documents do relate to matters of state, the balancing exercise favours inspection. The defendants in these proceedings face a damages claim brought by the PTTC of $77 million for monies allegedly spent by the PTTC and the NSW Government between 2002 and 2008 supervising the Project in addition to a claim for compound interest. Many of the documents relate to briefings to the Minister or meetings referred to in the PTTC's own evidence in support of its claim. The contention is that as a matter of fairness and in the interests of the Court having all relevant evidence put before it, ITSL and ERG should be permitted to inspect the Claim Documents. Some further background 18 ITSL has put forward what it contends to be relevant further background as follows:

i. PTTC and ITSL negotiated and agreed categories of documents for discovery. On 8 May 2009, the Court made orders by consent in relation to discovery. A copy of the consent orders, and the letter requesting that they be made, are at tab 3 of the Tender Bundle. Relevantly, paragraph 7 of the orders provided that PTTC must give discovery by 20 July 2009 of all documents which it had not already discovered that fall within Schedule 1- Part A and paragraph 8 of the orders provided that the PTTC must serve by 20 July 2009 a verified list of its discovery.

ii. On 31 August 2009, PTTC served a list of documents that it had discovered which purported to be verified for PTTC by an affidavit sworn on 31 August 2009 by Joanne Rees. A copy of the list of documents is at tab 4 of the Tender Bundle. In paragraph 4 of her affidavit, Ms Rees stated that she believed that the documents contained on DVDs served on the defendants by the solicitors for PTTC, Allens Arthur Robinson (Allens), on 6 dates between July 2008 and August 2009 were in the possession of PTTC. In paragraph 5 of her affidavit, Ms Rees asserted that documents contained on the DVDs and which are marked as privileged document are privileged from production on the grounds that they are inter alia "documents recording or constituting confidential information that relates to matters of state" .

iii. Ms Rees is an external consultant engaged by PTTC. In her affidavit, she describes herself as a "consultant lawyer". Accordingly the Law Society of New South Wales online directory, Ms Rees practises as part of the Ally Group Pty Limited (Ally Group). She is described on the Ally Group's website as its chief executive officer and founder. The work the Ally Group performs includes providing advice on government relations to its clients to assist them "in working with government on major commercial projects and procurement" . It asserts it can provide these services because of its "people's deep understanding of the policies and procedures of government [which] comes from direct experience" . Ally Group was a lobbyist registered in the NSW Government's Register of Lobbyists.

iv. Ms Rees' affidavit was deficient in that it did not comply with the requirement in UCPR 21.4(2) that an affidavit of verification must state, for any document claimed to be a privileged document, the facts relied upon as establishing the existence of the privilege.

v. On 4 November 2009, ITSL and ERG filed a notice of motion seeking inspection of the 354 documents discovered by PTTC that Ms Rees asserted were privileged on the basis that they related to "matters of state" .

vi. In response to the motion, PTTC filed an affidavit of a solicitor from Allens, Patrick Holmes. A copy of the affidavit is at tab 9 of the Tender Bundle. Paragraphs 19 to 21 of Mr Holmes' affidavit set out the process by which he had supervised the solicitors and paralegals of Allens who had selected the documents subject to a public interest immunity claim. His instructions to the solicitors and paralegals of Allens were that the claim should be made where "there was a reasonable basis for the claim being made and at least a reasonable prospect that the claim would be upheld if challenged, and only over such documents" .

vii. It is clear from these instructions that claims were made by PTTC on a very low threshold of "reasonable prospects" . In any event, the manner in which they were selected is no evidence that they relate to matters of state.

viii. On 20 November 2009, the State appeared before the Court and sought leave to intervene in ITSL and ERG's notice of motion and also file its own notice of motion seeking orders excusing PTTC from producing the 354 documents it had asserted a claim over. This Notice of Motion was filed on 27 November 2009 and a copy of it is at tab 10 of the Tender Bundle.

ix. On 25 January 2010, the State informed ITSL and ERG that it was dropping or varying its claim with respect to 139 of the documents. On 12 March 2010, the State filed an amended notice of motion, which addresses the Claim Documents only (with the exception of the additional documents over which a claim is asserted in correspondence). A copy of the amended notice of motion appears at tab 11. On 13 April 2010, the State filed a further amended notice of motion. A copy of which also appears at tab 11. Accordingly, 113 documents have been dropped from the claim since ITSL and ERG filed their notice of motion on 4 November 2009. The contention of ITSL is that apart from anything else, this demonstrates that the process of identification described by Mr Holmes was manifestly inadequate. However, the methodology applied by the State to drop some of the PTTC's claims and maintain others is far from clear. As dealt with below, the State has dropped claims over documents within categories of documents which it continues to press. This inconsistent and unexplained behaviour casts doubt on the credibility of the State's claims and its protestations of prejudice should the defendants be permitted to inspect the Claim Documents. The material legal principles 19 To my mind the submissions of ITSL in relation to the applicable legal principles which inform the parties respective entitlements are of substance. In short:

i. The obligation of PTTC to allow ITSL and ERG to inspect the documents it has discovered arises under UCPR 21.5(2). This rule provides that, within 21 days after service of the list of discovered documents or such other period as is ordered, the party giving discovery must, on request of the opposing party, produce for inspection the documents described in the list of documents as being within the party's possession, custody or power "other than privileged documents" .

ii. Pursuant to this rule, PTTC can properly refuse inspection of documents within the definition of "privileged documents" in the UCPR. The definition is found in the UCPR's Dictionary. "Privileged document" is defined to mean "a document that contains privileged information" . "Document" is defined to include "any part of a document and any copy of a document or part of a document" . "Privileged information" is defined to mean inter alia "information that relates to matters of state within the meaning of section 130 of the Evidence Act 1995" .

iii. Section 131A of the Evidence Act , which commenced on 1 January 2009, provides as follows: (1) If: (a) a person is required by a disclosure requirement to give information, or to produce a document, which would result in the disclosure of a communication, a document or its contents or other information of a kind referred to in Division 1, 1A or 3, and (b) the person objects to giving that information or providing that document, the court must determine the objection by applying the provisions of this Part (other than sections 123 and 128) with any necessary modifications as if the objection to giving information or producing the document were an objection to the giving or adducing of evidence. (2) In this section, "disclosure requirement" means a process or order of a court that requires the disclosure of information or a document and includes the following: (a) a summons or subpoena to produce documents or give evidence, (b) pre-trial discovery, (c) non-party discovery, (d) interrogatories, (e) a notice to produce, (f) a request to produce a document under Division 1 of Part 4.6.

iv. Section 130 is in Division 3 of Part 3.10 of the Evidence Act . Accordingly, it is necessary for the State, if it is to succeed in sustaining PTTC's objection to inspection of the Claim Documents, to demonstrate that the Claim Documents are ones to which section 130 of the Evidence Act applies, as modified by the operation of s 131A(1), because the context is in relation to a "disclosure requirement" within the meaning of s 131A(2).

v. Section 130(1) of the Evidence Act , modified in the manner required by s 131A(1) of the Evidence Act , provides as follows: If the public interest in giving information or producing a document that relates to matters of state is outweighed by the public interest in preserving secrecy or confidentiality in relation to the information or document, the court may direct that the information or document not be given or produced. vi. Section 130(4) of the Evidence Act , modified in the manner required by s 131A(1) of the Evidence Act , provides as follows: Without limiting the circumstances in which information or a document may be taken for the purposes of subsection (1) to relate to matters of state, the information or document is taken for the purposes of that subsection to relate to matters of state if adducing it as evidence giving or producing it would:

(a) prejudice the security, defence or international relations of Australia, or (b) damage relations between the Commonwealth and a State or between 2 or more States, or (c) prejudice the prevention, investigation or prosecution of an offence, or (d) prejudice the prevention or investigation of, or the conduct of proceedings for recovery of civil penalties brought with respect to, other contraventions of the law, or (e) disclose, or enable a person to ascertain, the existence or identity of a confidential source of information relating to the enforcement or administration of a law of the Commonwealth or a State, or (f) prejudice the proper functioning of the government of the Commonwealth or a State.

vii. Section 130(5) of the Evidence Act , modified in the manner required by s 131A(1) of the Evidence Act , provides as follows: Without limiting the matters that the court may take into account for the purposes of subsection (1), it is to take into account the following matters:

(a) the importance of the information or the document in the proceeding, (b) if the proceeding is a criminal proceeding-whether the party seeking to adduce evidence of have the information or document given or produced to it is a defendant or the prosecutor, (c) the nature of the offence, cause of action or defence to which the information or document relates, and the nature of the subject matter of the proceeding, (d) the likely effect of adducing evidence of giving or producing the information or document, and the means available to limit its publication, (e) whether the substance of the information or document has already been published, (f) if the proceeding is a criminal proceeding and the party seeking to adduce evidence of have the information or document produced to it is a defendant-whether the direction s to be made subject to the condition that the prosecution be stayed. 20 I accept that the text of section 130(1) of the Evidence Act imposes the onus on the party seeking to have the Court exercise its discretion to prevent disclosure of a document, because it is the person seeking to prevent the production of document that must demonstrate the document relates to matters of state and that the balancing test favours non-production. This is consistent with the position under the common law: Cadbury Schweppes Pty Ltd v Amcor Limited [2008] FCA 88 at [25]. The onus is a "heavy burden" requiring the proponent of immunity who is resisting production to "establish a 'real' rather than merely 'some' or 'any' detriment to the public interest from disclosure" of the documents: Somerville v ASC (1995) 60 FCR 319 at 354. 21 I further accept that the first step in the process of resolving an objection to production is to consider whether the relevant document relates to matters of state. As set out above, section 130(4) sets out various matters which, if the production of the document would cause that matter to occur, indicates that the document relates to matters of state. The matters referred to indicate that documents only relate to matters of state if they meet a high threshold and any document sent to or received by government, regardless of its contents, would not lightly be found to relate to matters of state. The various matters include if the inspection would prejudice Australia's national security and defence (section 130(4)(a)), the investigation or prosecution of a criminal or civil offence (section 130(4)(c) and (d)) or disclose the identity of a confidential informer (section 130(4)(e)). Although the State's submissions do not make it clear, the only matter in section 130(4) upon which it could rely would be a submission that the disclosure to ITSL and ERG would prejudice the proper functioning of the government of New South Wales (section 130(4)(f)), although the list is not exhaustive. 22 The following position correctly describes the current position:

i. If any of the Claim Documents is found by the Court to be a document that relates to matters of state, then the Court will have to weigh up the competing public interests of permitting inspection and secrecy. Emmett J described this task in A3 v Australian Crime Commission [2006] FCA 894 as follows at [19]: The question that falls for decision involves the balancing of a series of public interests. There is a public interest in having before the Court all relevant evidence upon which any party wishes to rely, as long, of course, as the evidence is admissible (the 'Full Evidence Interest'). There is also a public interest in ensuring procedural fairness between the parties to a proceeding, such that each party has knowledge of all of the evidence that has been admitted in the proceeding and is before the Court (the 'Fairness Interest'). Finally, for present purposes, there is a public interest in preserving secrecy or confidentiality in relation to material, the publication of which could be prejudicial to the administration of justice including the investigation and prosecution of criminal offences ('the Secrecy Interest'). ii. The "Full Evidence Interest" and the "Fairness Interest" described by Emmett J are both public interests relevant to the present application. In the present context, the public interest in fairness in litigation arises because it is important that PTTC, having entered into a commercial contract with ITSL, not have an advantage in litigation arising out of that contract by reason that the State, its owner and controller, seeks to prevent certain relevant documents, the Claim Documents, from being inspected by ITSL and ERG. There is a public interest in ensuring that parties that enter into contracts with government which have a commercial nature know that in future litigation the government will not be permitted to hold back documents relevant to the litigation on an assertion of public interest immunity and that the party will have the dispute with the government (particularly a claim for damages brought by the government) resolved by the court with the knowledge of all relevant information and documents, not just the documents that the government chooses to disclose in the evidence that it leads. The purpose of the s 130 of the Evidence Act is to give government entities control over the documents they discover in proceedings such that they obtain a forensic advantage in that litigation.

iii. The provisions of section 130 of the Evidence Act do not specify classes of documents which have an absolute immunity and all documents that relate to matters of state must be subjected to the balancing exercise. This reflects the common law position that no class of documents is completely immune from production: Haj-Ismail v Madigan (1982) 45 ALR 379 per Lockhart J; Hooker Corp v Darling Harbour Authority (SC(NSW), 7 May 1987, unreported) per Rogers J.

iv. Contrary to the States submissions, there is no classification of immunity claims into class and contents claims under the Evidence Act . For example, under the provisions of the Evidence Act , the production of documents recording the deliberations of Cabinet are not automatically considered to be documents that the disclosure of would prejudice the proper functioning of the government of New South Wales.

v. Further, the State submission that, in "the absence of any demonstration that a document will materially assist the case of the party seeking access even those [documents] entitled to a low level of protection will be protected" misstates that law. First, it seeks to reverse the onus. It is for the State on its motion to prevent inspection of the Claim Documents to demonstrate why the Claim Documents will not assist the case of the defendants and will not assist the Court to resolve the dispute. It cannot be for the defendants, who have not been permitted by the State to inspect the Claim Documents, to seek to demonstrate their relevance. Second, it ignores that the matter that the Court is required to have regard to under section 130(5)(a) of the Evidence Act is not whether the document will "materially assist" the case of the party seeking access but the importance of the document in the proceedings. For example, a document may not materially assist the case of a party, but may be important because it would assist the Court to resolve the issues in dispute or because it contradicts or explains the case of the party's opponent. Third, it ignores the other factors that the Court is required to take into account under section 130(5) of the Evidence Act , such as the nature of the subject matter of the proceeding (section 130(5)(c)), the likely effect of allowing inspection (section 130(5)(d)), whether there are means available to limit publication (section 130(5)(d)) and whether the substance of the information has already been published (section 130(5)(e)). 23 The State makes the submission that the records of cabinet deliberations will generally not be revealed in a civil case, and refers to the decision of the High Court in The Commonwealth of Australia v Northern Land Council (1993) 176 CLR 604. The State puts the position too highly in this submission. This statement in the judgment was qualified. It was said to apply only to cabinet deliberations "which remain current or controversial". Further, the provisions of the Evidence Act mean that factors set out in s 130 (5) must be considered by the Court even if the documents relate to current or controversial Cabinet deliberations before directing that inspection not be permitted. Returning to the background to the proceedings 24 As has already been observed, section 130(5) stipulates that the Court must take into account the nature of the cause of action or defence to which the information the State seeks to protect relates and the importance of the information in these proceedings. In order to do that, it is necessary to set out briefly what are the issues in the proceedings:

i. From 20 February 2003 until 6 February 2007, TAC administered the Contract through people seconded from RailCorp, the STA and Sydney Ferries and the Ministry of Transport (which is now the NSW Department of Transport and Infrastructure) (the MOT). The actions of the TAC in relation to the Contract were ultimately managed by a group which described itself as "the Shadow Board" and comprised representatives of RailCorp, the STA, Sydney Ferries, the MOT and the NSW Department of Treasury (the Treasury).

ii. On 1 July 2006, the Transport Administration Amendment (Public Transport Ticketing Corporation) Act 2006 commenced. The Act amended the TAA to insert the provisions with respect to the PTTC. The effect of the amendments was to create on and from 1 July 2006 the PTTC pursuant to section 35R of the TAA.

iii. By reason of section 35U of the TAA, PTTC has a Board which consists of:

b) not fewer than 3 and not more than 7 members appointed by the relevant Minister from time to time. iv. The PTTC, by reason of section 35R of the Act, is prohibited from employing any staff. Accordingly, since its creation, its functions have been carried out by staff seconded from RailCorp, the STA, Sydney Ferries and the MOT.

v. The PTTC is subject to the control of the Minister for Transport from time to time (the Minister). Pursuant to section 35Y(1) of the TAA, the Minister may give the PTTC written directions in relation to the exercise of its functions and the PTTC must comply with those directions. The PTTC is subject to a continuous reporting obligation to the Minister pursuant to section 35Z of the TAA. This section provides that the PTTC must:

a) keep the Minister informed of the general conduct of its activities, and of any significant development in its activities; and

b) supply the Minister or a person nominated by the Minister with any information relating to its activities that the Minister or person may require.

vi. At the time the PTTC was created and until 5 September 2008, the Honourable John Watkins was the Minister (Mr Watkins). From 5 September 2008, the Honourable David Campbell MP has been the Minister. 25 ITSL next contends as follows:

i. On 6 February 2007, Mr Watkins made the Transport Administration (Transfer of Transport Administration Corporation Integrated Ticketing System Contracts) Order 2007. This order purported to vest the PTTC with the TAC's assets, rights and liabilities arising from inter alia the Contract and the Commercial Rights Deed and direct that any act, matter or thing done in relation to such assets, rights or liabilities by TAC would be taken to have been done by the PTTC.

ii. On 24 September 2007, the PTTC purported to initiate a process provided under the Contract for the identification and remedying of designated events of default, by issuing purported 'default notices' to ITSL.

iii. ITSL disputed the validity of the default notices, but nevertheless proceeded to prepare and submit to the PTTC a remedial programme for remedying the events of default alleged or asserted by the PTTC.

iv. The PTTC did not accept the remedial programme and purported to terminate the Contract on 23 January 2008. The PTTC also purported to terminate on this date at general law.

v. The case of ITSL and ERG is set out in its Commercial List Response dated 14 May 2010 to the PTTC's Further Amended Commercial List Statement and the Particulars to the Commercial List Response to the Further Amended Commercial List Statement. A copy of the Commercial List Response and the Particulars appear at tab 12 and 13 respectively. Their case is that the PTTC was not entitled to terminate the Contract, either pursuant to the relevant contractual process or at general law. Accordingly, the PTTC's purported termination was a repudiation of the contract. ITSL accepted the PTTC's repudiation on 25 January 2008 and terminated the Contract on that day.

vi. One element of the defendants' case is that, in issuing any notice, forming any opinion, exercising any right or power, or doing anything under the termination provisions of the Contract, PTTC was required to act reasonably and/or good faith and could not exercise the termination provisions because it or the Operators had caused or contributed to delays and difficulties on the Project.

vii. One of the reasons that the defendants say that PTTC did not act reasonably and/or in good faith was that it failed to take into account when exercising its rights the Relevant Circumstances set out in paragraphs 5 to 53 of the Commercial List Response. In short, the Relevant Circumstances include:

a) the failure of the PTTC and the NSW Government to initiate or procure the progress and implementation of fare reform, despite knowing that it was required to carry out the Project, caused or contributed to delays and difficulties on the Project;

b) the PTTC caused or contributed to delays and difficulties on the Project by failing to procure sufficient engagement, support and cooperation by RailCorp, the STA and Sydney Ferries;

c) the PTTC caused or contributed to delays and difficulties on the Project by complying with a direction from Mr Watkins that the PTTC must not consider or discuss any proposals from our clients to recover the delays experienced in completing the Project;

d) the PTTC caused or contributed to delays and difficulties on the Project by requesting our clients, at the bequest of RailCorp, the STA, Sydney Ferries, the MOT or Mr Watkins , to carry out out-of-scope work;

e) the PTTC caused or contributed to delays and difficulties on the Project by failing to provide timely feedback, input and approval to the design of the Project, because it relied on the Operators, the MOT or Mr Watkins to review the design and would not provide feedback, input or approval without the permission of some or all of the Operators, the MOT or Mr Watkins;

f) RailCorp (and PTTC by failing to procure otherwise) materially caused or contributed to delays and difficulties in the Project by:

1. failing to provide full details of the functionality of its existing system, including in relation to its accounting system, financial data system, vending machines, ticket gates and ticket office terminals;

2. failing to provide timely feedback, input and approval to the design of the Project;

3. insisting on the replication of its existing system to an extent greater than functional equivalence;

5. failing to inform ITSL of software upgrades to its EFTPOS systems;

6. failing to approve or endorse the exit criteria for testing in relation to the IIIT Stage Gate;

7. overstating the extent of issues to the Incident Review Board;

8. failing to notify ITSL of testing errors in a timely manner; 9) describing errors in a misleading and unclear manner; g) STA (and PTTC by failing to procure otherwise) materially caused or contributed to delays and difficulties in the Project by: 1) failing to provide accurate data to ITSL in a timely manner; 2) delaying the installation of equipment in buses; 3) failing to supply buses in a suitable condition for installation; 4) refusing to permit automatic upgrading of buses; 5) failing to train its staff properly. 26 The defendants also allege the Relevant Circumstances were breaches of the Contract by the PTTC that prevented the completion of the Project on time and the prevention principle meant that there were no breaches of the Contract by ITSL. However, the proposition is that PTTC did not take the Relevant Circumstances and its own breaches into account, despite being aware of the same and the extent to which they had contributed to the delays and difficulties experienced on the Project. 27 A central contention put forward by ITSL when dealing with the submissions and evidence of the State is that such evidence failed to explain the selective approach that the PTTC had taken to whether to disclose certain documents. The approach taken by the State in supporting its amended notice of motion 28 Mr Hastings leading counsel for the State took the court to a number of authorities including The Commonwealth of Australia v at Northern Land Council (1993) 176 CLR 604 where it the full High Court observed inter alia as follows:

It should be observed at the outset that the documents for which the Commonwealth claims immunity from disclosure are documents which record the actual deliberations of Cabinet or a committee of Cabinet. They are not documents prepared outside Cabinet, such as reports or submissions, for the assistance of Cabinet. Documents of that kind are often referred to as Cabinet documents. When immunity is claimed for Cabinet documents as a class and not in reliance upon the particular contents, it is generally upon the basis that disclosure would discourage candour on the part of public officials in their communications with those responsible for making policy decisions and would for that reason be against the public interest. The discouragement of candour on the part of public officials has been questioned as a sufficient, or even valid, basis upon which to claim immunity. On the other hand, Lord Wilberforce has expressed the view that, in recent years, this consideration has "received an excessive dose of cold water". 5

But it has never been doubted that it is in the public interest that the deliberations of Cabinet should remain confidential in order that the members of Cabinet may exchange differing views and at the same time maintain the principle of collective responsibility for any decision which may be made. Although Cabinet deliberations are sometimes disclosed in political memoirs and in unofficial reports on Cabinet meetings, the view has generally been taken that collective responsibility could not survive in practical terms if Cabinet deliberations were not kept confidential. 6 Despite the pressures which modern society places upon the principle of collective responsibility, it remains an important element in our system of government. Moreover, the disclosure of the deliberations of the body responsible for the creation of state policy at the highest level, whether under the Westminster system or otherwise, is liable to subject the members of that body to criticism of a premature, ill-informed or misdirected nature and to divert the process from its proper course. 7 The mere threat of disclosure is likely to be sufficient to impede those deliberations by muting a free and vigorous exchange of views or by encouraging lengthy discourse engaged in with an eye to subsequent public scrutiny. Whilst there is increasing public insistence upon the concept of open government, we do not think that it has yet been suggested that members of Cabinet would not be severely hampered in the performance of the function expected of them if they had constantly to look over their shoulders at those who would seek to criticise and publicise their participation in discussions in the Cabinet room. It is not so much a matter of encouraging candour or frankness as of ensuring that decision-making and policy development by Cabinet is uninhibited. The latter may involve the exploration of more than one controversial path even though only one may, despite differing views, prove to be sufficiently acceptable in the end to lead to a decision which all members must then accept and support. [614 - 616]

In the last sentence in the passage which we have just quoted, Gibbs ACJ was referring no doubt to the outcome of a balancing process in a case where the detriment to the public interest involved in disclosure was outweighed by the public interest in the advancement of justice. In a case where a document fell into a class of document the disclosure of which would be injurious to the public interest regardless of the contents, a court could conclude that "disclosure would not really be detrimental to the public interest" only in circumstances where there was a competing public interest, such as the public interest in the advancement of justice, which outweighed the public interest in the preservation of confidentiality. To inspect the contents of documents as a matter of course would be to disregard the basis of the immunity for a document falling within the class described. The apparent dilemma is, we think, to be resolved by recognising that the classification of claims for immunity into "class" claims and "contents" claims is indeed often rough and imprecise. In many so-called "class" cases a court may find it necessary to consider a document, inspecting it if necessary, in order to determine whether it does in truth fall into a class which attracts immunity. The contents of the document may have a bearing on that question as may the topic with which it deals, particularly if it is no longer current or controversial.

Where, however, a document clearly falls within a class which attracts immunity, a different approach is called for. Documents recording Cabinet deliberations upon current or controversial matters, such as the records in question in this case, are an example. Obviously, there are extremely strong considerations of public policy weighing against their production regardless of how significant disclosure of their contents might be to the case of one side or the other in the proceedings in which the claim for immunity is raised. 11 However, as we have said, the immunity which membership of the class confers is not absolute and that is so even if, as in the case of records of Cabinet deliberations, the highest degree of protection against disclosure is warranted. 12 Nevertheless, where it is established that a document belongs to a class which attracts immunity, a court will lean initially against ordering disclosure. Whether the circumstances of a particular case will be sufficient to displace the considerations which favour immunity depends to a large extent upon the nature of the class. In the case of documents recording the actual deliberations of Cabinet, only considerations which are indeed exceptional would be sufficient to overcome the public interest in their immunity from disclosure, they being documents with a pre-eminent claim to confidentiality. The process of determining whether an order for disclosure of documents in that class should be made remains one of weighing the public interest in the maintenance of confidentiality against the public interest in the due administration of justice, but the degree of protection against disclosure which is called for by the nature of that class will dictate the paramountcy of the claim for immunity in all but quite exceptional situations. [617-618] 29 Mr Hastings also cited Attorney General for New South Wales v Stuart (1994) 34 NSWLR 667 where Hunt CJ at Com Law observed as follows:

"…are indisputably covered by the informer immunity. Those statements relating to the current charges have already been produced. Those statements made by Mr A which do not fall within those two categories are relatively few in number. The magistrate's rejection of the immunity claimed appears to have been based upon the absence of any detail as to the continuing nature of the police inquiries in relation to those matters.

There was no application to cross-examine the Senior Assistant Com­missioner in relation to the assertion in his affidavit that these were "continuing investigations". There is, of course, no right to cross-examine such a deponent upon his affidavit, and leave to permit such a cross-examination is granted only very rarely; more usually, the party claiming immunity will be requested by the judge instead to produce further evidence which overcomes any defect in the claim which may be apparent on the face of evidence already produced: Young v Quin (at 486; 228; 489; 231; 495; 237); Beneficial Finance Corporation Ltd v Commissioner of Australian Federal Police (at 553; 197-198; 31). There was no application by the respondent for such evidence to be produced, and no concern was expressed by the magistrate as to the continuing nature of the police inquiries until he gave judgment rejecting the claim of public interest immunity. That was a serious procedural error.

But, in any event, the Commissioner could not properly have been required to produce the details the absence of which led to the magistrate's criticism where such a production would necessarily have led to the disclosure of some of the very information for which immunity was claimed, as it would have here. The necessary effect of the absence of such information before the magistrate may perhaps be deplored, in that it denies the party against whom the claim of immunity is made the fullest opportunity of debating the issue: cf Church of Scientology Inc v Woodward (1982) 154 CLR 25 at 61; Alister v The Queen (at 469). The remedy, however, if there were a genuine concern as to the validity of the claim that the policy investigations are continuing, was to obtain further evidence which did not reveal that information. The magistrate did not seek such evidence, and he was in error in rejecting the claim on that basis.

The third matter upon which the Attorney-General relies concerns the need for the party seeking access to documents to demonstrate a legitimate forensic purpose before any balancing exercise between the conflicting aspects of the public interest can be undertaken. I earlier quoted authority for that need: Burmah Oil Co Ltd v Governor and Company of the Bank of England (at 1113-1114, 1129); Alister v The Queen (at 412, 414, 438). The concept of legitimate forensic purpose is not confined to claims of public interest immunity. It arises whenever a party seeks access to documents for which he has issued a subpoena; where objection is taken, a party who is unable to show that it is at least "on the cards" that such documents will assist his case is not entitled to have access to such documents simply to see whether they may do so: R v Saleam (at 17-18). He is not entitled to conduct a fishing expedition. The need to show a legitimate forensic purpose arises even if the claim of public interest immunity fails. It is therefore a pre­requisite before the balance required for that claim can be struck."[681] 30 Mr Hastings contended that the proper approach was for the court to examine the documents said to be protected by the claim for immunity. The evidence given by the witnesses called for cross-examination by ITSL The evidence of Mr Miller 31 Mr Miller had made two affidavits, the first on 25 January 2010 and the second on 12 May 2010. 32 In paragraph 10 of his first affidavit he objected to disclosure of documents in categories A to H and M on the grounds of public interest immunity. His evidence that was that he personally was the decision maker who determined to assert the claim to immunity in relation to the documents in those categories. However he had not personally carefully read each of those documents which had been exhibited to his affidavit in detail. 33 His evidence was that he had perused the documents to ensure that they fell within the particular categories and were as described in his affidavit. However he had received a draft affidavit from someone else. 34 His evidence included the following:

Q. And did you determine which of the documents exhibited to your affidavit went into which category, or did someone else do that first? A. A little bit of both. The selection of the documents came before the affidavit was drafted, and I was involved in reviewing documents to determine whether they would be exhibited to the affidavit or not….

Q. And how was it then that you first came to consider whether a claim for public interest immunity might be available in relation to any of the documents discovered by PTTC? A. It was raised with me by the Crown Solicitor's Office.

Q. And how did you determine from among the many, many documents discovered in the proceedings, which to review for public interest immunity? A. The Crown Solicitor would have done an initial review and I would only have reviewed a small subset of the documents that were discovered.

Q. So I think you said earlier you received a draft of your affidavit. What had you done in relation to the advancement of any claim for public interest immunity before the time at which you received that draft? A. To be honest, I can't remember. I think there were meetings beforehand, but I'd also been shown other documents which I'd made a call on that shouldn't be exhibited to the draft affidavit. But there might have been meetings beforehand with the Crown Solicitor discussing generally.

Q. Who prepared your affidavits in the proceedings? A. The initial draft was prepared by the Crown Solicitor. I reviewed it and made changes to it. I think before it came to me, a principal legal officer in my branch also reviewed it and made comments on it, but the initial draft was prepared by the Crown Solicitor, the final draft was approved by me.

Q. So you weren't the person who formulated the sentences and paragraphs, they came to you first in a draft prepared by someone else, did they? A. Well, I didn't formulate the paragraphs in the initial draft that came to me, but there are edits that I made and the paragraphs I put in were formulated by m e.

Q. And are you able to indicate which of the parts of the affidavit that you added to the draft that you'd received? A. No, I can't do that.

Q. Are you able to indicate to his Honour which of the parts of the affidavit you edited from the draft you received? A. No. I reviewed the entire draft and I made changes throughout. I can't be more specific than that. I do - yeah, I can't be more specific than that. 35 Later he gave evidence that in making his affidavit he had not taken into account at all the degree of relevance or significance that the documents over which he claimed immunity may have in the proceedings because he had not read the pleadings in the case and only had a general understanding of the case itself. 36 He further conceded that in each place in his affidavit where he had deposed that he was informed by someone, it was the case that he had not actually communicated with that person directly at all on that subject but had been informed by the Crown Solicitor in that regard. The evidence given by Mr Nicholls 37 Mr Nicholls had sworn two affidavits, one on 27 January 2010 and the other on 5 February 2010. 38 He is currently acting as Deputy Director General of the Department of Trance bought and infrastructure. 39 Under cross-examination he gave evidence including the following:

Q. Mr Nicholls, were you personally the decision maker who determined to assert the claim to public interest immunity in respect of categories I to L referred to in your affidavit? A. I was the Acting Deputy Director-General at that time, and so the matters were brought before me in that acting capacity. I understand that there had been discussions prior to that with the Deputy Director-General in terms of the approach that was being taken. I reviewed the documents at the time and I was satisfied with that approach and signed the affidavit.

Q. Well, did you review only documents which were presented to you as documents which were presented for the purpose of having your agreement that they were immune from production? A. Yes.

Q. You didn't review any wider class of documents? A. No, I didn't.

Q. And did you receive a draft affidavit for you to sign? A. I believe I did, yes.

Q. And did you draft that or was it prepared for your consideration? A. It was prepared for my consideration. 40 In relation to category K, he was questioned as to whether his objection to inspection of those documents was that they conveyed the minister's views on a particular subject. His answer was:

A. They convey views from the director general to the minister and so the basis of objection was that the director general needs to provide frank advice to the minister and for the minister then to be able to consider that without it being a matter brought into the public domain. 41 In relation to exhibit AN 1 to his affidavit he gave the following evidence:

Q. And is the position that the claim in respect of those documents is on the basis that they convey the minister's views or the director general's views? A. The minister's views.

Q. Now are you aware of any criteria which was applied in making or not making the claims in respect of documents disclosing the minister's views? A. The criteria was the confidentiality of matters that are corresponded between the director general and the minister and vice versa.

Q. If there are other documents in respect of which a claim was initially made but then abandoned, which expressed the minister's views on a subject, you are not aware of why that is so? A. No. The vital issue 42 Both of the witnesses cross-examined had received drafts of the affidavits for consideration by them and each received documents which had been preselected and placed into categories for them. 43 In those circumstances their evidence amounted to little more than a confirmation that they regarded those documents as falling within the particular categories and appropriate for a claim for Crown immunity. It is however quite clear that there was no evidence of a consistent application of principle for the selection of documents which attracted immunity. 44 When taken in cross-examination to examples of particular documents in respect of which there was originally a claim to Crown immunity which was substantially reduced, the evidence in chief was simply silent as to the change of position and as to any criteria or consideration applied in the abandonment of the claim earlier made. One only example in respect of the cross-examination of Mr Miller concerning category F was that he was no more than the notional decision maker but he only conveyed the instruction after it had been approved by Cabinet and he would not have done so had Cabinet not approve the release of the particular documents. 45 In truth the materials put forward by the State's witnesses fell far short of discharging the requirement that there be some form of transparency in relation to how there had been determined from amongst the many documents discovered those to be reviewed for public interest immunity. 46 It was important for the Court to have before it from the State, evidence upon which the court could rely in order to be in a position to understand what were the criteria by reference to which it came to be contended that particular documents were described as Cabinet minutes. To my mind it became clear from the above-described cross-examination that the proponents had insufficient knowledge of that process [and insufficient knowledge of the issues in the proceedings] to satisfy the court as to what the above-described criteria were. Decision 47 A considerable number of documents have been put before the court by the State for its private consideration in terms of states claim to public interest immunity. 48 In circumstances where the evidence put before the court by the State fell far short of being regarded as transparent in terms of such criteria as may in truth have been mobilised in sifting out documents said to be Cabinet documents or related and therefore to attract 'public interest immunity] it seems entirely inefficient for the court itself to endeavour to spend many hours endeavouring to guess what such criteria might have been. 49 The simple fact is that the State bears the onus of seeking to have the Court exercise its discretion to prevent disclosure of documents. In that regard the State is the person seeking to prevent the production of material documents and must demonstrate that the material documents relate to matters of state and that the balancing test favours non-production. The onus is a heavy burden requiring a proponent of the immunity who is resisting production to "establish a 'real' rather than merely 'some' or 'any detriment to the public interest from disclosure" of the documents: cf: Cadbury Schweppes Pty Ltd v Amcor Limited [2008] FCA 88 at [25]; Somerville v ASC (1995) 60 FCR 319 at 354. 50 In any event even if a considerable number of the documents do relate to matters of State, subject to what is said below, the balancing exercise favours inspection. The defendants in these proceedings face a damages claim brought by the PTTC of $77 million for monies allegedly spent by the PTTC and the NSW Government between 2002 and 2008 supervising the Project in addition to a claim for compound interest. Many of the documents relate to briefings to the Minister or meetings referred to in the PTTC's own evidence in support of its claim. I accept that as a matter of fairness and in the interests of the Court having all relevant evidence put before it, ITSL and ERG should be permitted to inspect the Claim Documents. 51 Having perused a deal of the allegedly confidential documents, in the unusual circumstances which obtain, the principled exercise of the relevant discretion is to withhold from the defendants only those documents which are identified in terms with the words ' Cabinet-In-Confidence'. 52 In the circumstances it is only those documents which are entitled to public interest immunity. 53 Subject to the matters referred to in the last two paragraphs, the amended notice of motion filed by the State of New South Wales on 12 March 2010 is to be dismissed. 54 It follows that in the first instance the documents placed before the court on a confidential basis will require to be returned to the State in order that it may remove only documents identified with the above-described words. Following that exercise all other documents sought by the defendants hitherto marked as confidential-not to be opened or inspected without the approval of a Judge, are to be made available to the defendants. 55 The Court will entertain arguments as to costs of the amended notice of motion filed by the State privately having invited written submissions. *****************

09/06/2010 - categories to read "A to H and M" not "H to M" - Paragraph(s) 32

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