Seven Network (Operations) Limited & Ors v James Warburton

Confidential Information 6Nonetheless, as I have mentioned, there are established exceptions to the principle of open justice and transparency. One of those exceptions is the protection of trade secrets and genuinely confidential information that might assist competitors. If it were otherwise, the operation of the system of justice may result in injustice to a person or entity whose legitimate confidentiality is exposed and infringed. 7Whether information is confidential is a question of fact. Some of the criteria that are frequently relevant to the resolution of that factual question include whether the employee has acknowledged that the information is confidential or whether it was plainly made known to him that the employer regarded it as confidential; whether skill and effort were expended to acquire the information; whether the information is jealously guarded by the employer and not made readily available to all employees; and whether the usages and practices of the industry support the assertion of confidentiality: Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317 at 334 (Kirby P). Sometimes, of course, the sensitive and confidential nature of the information, and the advantage to competitors if it is disclosed, will be immediately apparent on the face of the document. 8If it is proved that documents were created in circumstances of confidentiality and that the confidentiality has been retained and is maintained, and if it is clear that the publication of the information in the documents will provide an advantage to competitors and be damaging to the party seeking to restrict access, then the case for invoking one of the exceptions to the principle of open justice will be made out. But the onus of demonstrating the confidentiality of the information rests squarely on the party seeking to restrict access. And as I said, the restriction must be no more than is necessary to avoid an injustice.

The Documents 9In this case the plaintiffs seek to impose restrictions on access to four commercial documents. The first is a management equity participation deed dated 10 December 2007. The plaintiffs seek to restrict access to the whole of that document except for sections 1, 2, 3, 4, 17, 18, 20 and 22. Only those sections have been referred to in the openings and, I have been informed, only those sections will be referred to in the course of cross-examination or submissions. It follows that it will only be necessary for me to refer to those sections in my judgment. It will not be necessary for interested persons to have access to other sections in order to understand my reasons. 10The content of the deed deals with the detail of the equity participation scheme which operates for the benefit of senior executives and management in the Seven Network Group. Each of the parties to the deed has expressly agreed that it is confidential. Each agreed not to disclose its contents or its effect except in limited circumstances. It is obvious that if the deed were not kept confidential, it could enable competitors of the Seven Network Group to understand the incentive arrangements which operate with the group and the remuneration levels of senior management. This private information might facilitate the poaching of staff - an apparent feature of the industry. For those reasons it seems to me appropriate that I accede to the application and restrict access to all but the sections which have been identified. 11The second document is a proprietary document of Kohlberg Kravis Roberts & Co L P (KKR). It is unique to that firm. KKR is a private equity investment firm that has a substantial economic interest in the Seven Network Group. The document is described as an illustrative management equity plan dated 12 December 2006. It is a statement of the factors and considerations that KKR uses in connection with the standard form of management equity participation plan which it customarily proposes when making investments as part of its global business as a private equity investor. In this case, the illustrative plan belonging to KKR has no direct relevance to the issues in dispute, other than that it preceded, and formed the basis of, certain provisions of the management equity participation deed to which senior management subscribed. I accept that this document should be kept confidential. No useful purpose would be served by making it available and harm to KKR may result if access to it were not restricted. 12The third document is a term sheet dated 15 December 2006. It is not in final form. It preceded the management equity participation deed and sets out certain principal terms which were proposed to be implemented in the final deed. Those principal terms were included for discussion purposes prior to any binding agreement being made. The term sheet is indicative, among other things, of the importance placed by KKR on the inclusion in a management equity plan of non-compete restraints on senior executives preventing any post-employment competition against their employer. What is of primary importance in this case are the terms of the restraints against competition as they were finally agreed and included in Seven's management equity participation deed. The term sheet by itself is of no particular relevance, but its contents are confidential and should remain so. 13The fourth document is a list of 53 employees of the Seven Network's management team who were proposed to be approached to become participants in the management equity plan. The list of employees includes reference to the total remuneration of each of them and their management equity participation level. No useful purpose would be served by making this confidential information publicly available. Unwarranted harm may well ensue if it were made available. Nearly all of the names on the list are not persons involved in the issues in this case. But even the information in relation to Mr Leckie, Mr Warburton and one or two others who are witnesses is of limited relevance and need not be made available in the interests of justice.

Conclusion 14For those reasons I will make the orders for confidentiality sought by the plaintiffs in relation to those four documents.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 12 May 2011