Public Transport Ticketing Corporation v Integrated Transit Solutions Ltd

Judgment 1: The Public Transport Ticketing Corporation ( "PTTC" ) is a statutory corporation which entered into a contract with the defendants, Integrated Transit Solutions Ltd ( "ITSL ") and ERG Ltd, respectively ( "the ERG contract" ). I shall refer to the defendant organisations collectively as "ERG". 2The ERG contract, which involved ERG designing, building and installing an integrated ticketing and fare payment system for public transport in the greater Sydney area, commenced in 2003 and was terminated by PTTC in January 2008. PTTC alleges that ERG breached the contract in significant respects and delayed in its performance and that PTTC was not only entitled to terminate the contract but is also entitled to damages beyond the liquidated damages specified in the contract. ERG disputes that PTTC was entitled to terminate the contract and asserts that PTTC's termination was a repudiation of the contract which repudiation ERG accepted. ERG asserts that PTTC failed to procure sufficient engagement and support of transport operators, including Railcorp, the State Transit Authority and the Bus and Coach Association. 3Importantly, it is part of ERG's case that PTTC did not make all relevant decisions in relation to the ERG contract itself but involved the Minister for Transport and the NSW Cabinet in the process of, for example, determining whether the contract should be terminated. Indeed, ERG claims that the decisions made in relation to the contract, for example, the decision not to reduce the impact of delays by statutory authorities or government agencies and to terminate the contract were driven by political reasons and were not carried out in good faith. 4As part of the process of preparing its case for trial, ERG has sought discovery from PTTC and subpoenaed a number of entities. The State of New South Wales ( "the State" ) claimed public interest immunity in respect of a large number of documents. Following a decision by Einstein J (see Public Transport Ticketing Corp v Integrated Transit Solutions Ltd [2010] NSWSC 607), the Court of Appeal determined that some of the documents for which privilege was claimed were entitled to the privilege and some were not ( Public Transport Ticketing Corp v Integrated Transit Solutions Ltd [2011] NSWCA 60 (" the first Court of Appeal judgment" )). Subsequently, after ERG amended its pleadings, the Court of Appeal held that a number of documents which had been determined to properly be the subject of the public interest immunity claim were no longer entitled to privilege because of the change in ERG's case ( Public Transport Ticketing Corp v Integrated Transit Solutions Ltd [2011] NSWCA 200 ( "the third Court of Appeal judgment" )). 5The Court of Appeal did not deal with all of the documents in respect of which there was a contest but it established a regime which involved the appointment of special counsel for ERG who would be given access to all of the documents in respect of which a claim for privilege had been made and which had not been determined by the Court of Appeal in its decisions. Special counsel would not be permitted to reveal to ERG the contents of documents inspected for the purpose of resolving, and if need be, determining the privilege claims. This regime was implemented and Mr M J Leeming SC with Mr T W Marskell (appointed as special counsel) conducted their review of all of the documents more than three weeks ago, except for a bundle of 30 or so documents which were provided only very recently. Special counsel, in consultation with Mr R Lancaster SC and Mr R Bhalla of counsel who appear for the State, were able to agree on the outcome of the claim for privilege in respect of a number of documents. On 25 November, I heard arguments on various categories of documents and ruled on them, except for documents known as the " L category documents " (see the categorisation in the first Court of Appeal judgment), being reports of external consultants. The focus of attention was on the report by LEK Consulting Pty Ltd dated 22 August 2005 behind tab L2 of Confidential Exhibit A1 ( "the LEK 2 report" ). I understood that my decision on that document would provide guidance to the parties on all the other L category documents in dispute. 6The State had, prior to 25 November, served an affidavit of Mr Timothy Peter Reardon dated 9 November 2011 and Mr Leeming had indicated that he wished to cross-examine Mr Reardon, but Mr Reardon was not available on 25 November. I indicated a preliminary view against disclosure, but provided the parties with an opportunity to consider any further response from Mr Reardon and to consider whether in the light of that response Mr Leeming would still wish to cross-examine Mr Reardon, and an opportunity for the parties to provide further submissions. Mr Reardon did provide a confidential affidavit dated 28 November 2011. Mr Leeming has seen that and indicated that he no longer wished to cross-examine Mr Reardon. I have received further submissions from both Mr Leeming and Mr Marskell on the one hand, and from Mr Lancaster and Mr Bhalla on the other on the issue of the LEK 2 report. It is that report that is the subject of these reasons. 7Both parties agree that a useful summary of principles relevant to public interest immunity is found in Murrumbidgee Groundwater Preservation Association v Minister for Natural Resources [2003] NSWLEC 322. In that case, there were identified three classes of "Cabinet documents" and there can be no doubt that the only relevant category here is that described as "any documents which relate to the framing of government policy at a high level". The protection of government from the harm which may be caused by disclosure is to be weighed against the interest of ensuring that justice can be effectively administered. 8Reference should also be made to the decisions of the Court of Appeal in relation to this matter, and in particular [42]-[57] of the first Court of Appeal judgment and Commonwealth v Northern Land Council (1993) 176 CLR 604 at 614-620. 9Reports of independent consultants containing those consultants' views on matters which may be relevant to policy-making seem to be at the low end of the spectrum of documents for which a claim for public interest immunity can be made. I nevertheless proceed on the basis of the State's evidence that the reports were prepared for the purpose relating to informing the preparation of a Cabinet minute on the topic of framing reform or for it to be annexed to a Cabinet minute (see paragraph 12 of the affidavit of Mr Andrew Nicholls dated 27 June 2010 and paragraph 20 of Ms Natalie Pelham's affidavit of 13 September 2011), although it is conceded that the LEK 2 report did not in fact go to the Cabinet. The fact that it deals with matters of policy back in 2005, even though consideration of issues of fare reform remain of current political concern, is also a factor to be taken into account. 10In dealing with another category of documents, the "E category documents", the Court of Appeal accepted that documents which discussed the ERG contract and steps to be taken under the contract were required to be disclosed, even if those documents also included "policy issues" and were part of a power point presentation to the Budget Cabinet Committee in 2007: see [55] and [109] of the first Court of Appeal judgment per Allsop P (with whom Hodgson JA and Sackville AJA concurred) and [6] of the third Court of Appeal judgment. 11Mr Leeming, in his submissions, referred to various paragraphs of the ERG's outline of the case and relevance of documents sought dated 23 November 2011 ( "ERG Outline" ). Mr Lancaster, in a detailed analysis of the submissions of ERG on forensic purpose, argued that no forensic purpose was demonstrated, particularly focusing on what ERG had asserted and what PTTC had said in reply in the substantive proceedings. Mr Lancaster says that there is no dispute that PTTC did not implement changes to simplify its business rules and fare structure prior to termination of the ERG contract. 12The LEK 2 report does not relate to the ERG contract - it is focused upon issues relevant to ticketing policy - and my initial reaction was that it was unlikely that anything said by a consultant in 2005 could have a bearing on the case. However, in further reflection I have come to the conclusion that in weighing the competing considerations, including the fact that the document would normally attract privilege, the balance favours disclosure of the LEK 2 report for the following reasons: (1)The LEK 2 report was clearly marked as being an expression of opinion by the consultants (LEK Consulting Pty Ltd) and not intended to reflect the views of anyone else but them and it is not suggested that it contains information emanating from Cabinet. The LEK 2 report records that information contained in it "has been complied from information supplied by the Ministry of Transport...and other publicly available information" (see page 286 of Confidential Exhibit A1). (2)The LEK 2 report was provided by the NSW Government to PTTC at a time when the ERG contract had already commenced (it is listed in PTTC's discovered documents). This is not to say that privilege otherwise available was lost because it was provided to the PTTC; ERG does not assert that privilege was waived and see Air Canada v Secretary of State for Trade (No 2) [1983] 2 AC 394 at 436 per Lord Fraser. Rather, it is to focus on the fact that PTTC, who is the other party to the contract, had been provided with material that may have been taken into account in reaching a decision in respect of the ERG contract. (3)Whilst I agree that some of the matters relied on by Mr Leeming do not provide support for ERG's contention on forensic purpose, ERG does say that it is part of its case that termination of the ERG contract was "motivated by reasons other than the alleged non-performance of the contract; and specifically, inter alia, political unwillingness to deliver fare reform by the time necessary for the Tcard system": see page 53 of the ERG Outline. By paragraph 117 of the Amended Commercial List Response, ERG alleges that there was a concern that the implementation of the T-card would be a "public relations nightmare" and that the Cabinet had decided that PTTC should terminate the contract before the election. (4)Since ERG will contend that the previous Government wished to avoid making decisions on fare reform and that that was its real reason for wishing to terminate the ERG contract, I think it could be of assistance to ERG to establish what changes PTTC or the Government had been advised were desirable and what, if any, the consequences would be. ERG therefore has a forensic interest in identifying the matters of fare reform to which PTTC had been alerted and to test whether those matters of which it had been appraised had any bearing on PTTC's decision-making. It could also be relevant to testing whether the relevant Minister was aware of the matters contained in the LEK 2 report, and if so, whether these had any impact upon the decisions made in relation to the ERG contract if and to the extent that the Minister or Cabinet determined what steps should be taken under the ERG contract. I should point out that a prcis of evidence of the Honourable Mr John Watkins, who was Minister for Transport at the time of termination of the ERG contract, has been provided to ERG which indicates that the former Minister will emphatically deny the allegations made by ERG as to the reasons for which decisions were taken or encouraged. (5)Documents already required to be produced include the issue of fare reform, for example the document marked E34(b) at pages 370-375 of Confidential Exhibit 3. I think the Court is entitled, in considering whether disclosure should be made of the LEK 2 report (and documents of this nature), to take into account the fact that items of a similar kind are already known to ERG.