Is the Report exempt as an Internal Working Document - Section 30(1)?

1. I view significant portions of the pages of Audit Stage 1 of the Report which have not been released and significant parts of Stage 2 of the Report as exempt under section 30(1).
2. A document is exempt under section 30(1) if:

1. disclosure would disclose matter in the nature of: * (i) opinion, advice or recommendation prepared by an officer or Minister; or * (ii) consultation or deliberation that has taken place between officers, ministers, or an officer and the Minister; 2. in the course of, or for the purpose of, the deliberative processes involved in the functions of an agency or Minister or of government; and

1. disclosure would be contrary to the public interest
2. Release of the Report would disclose matter in the nature of opinion. As is very common, if not essential, in audit reports, the Report is replete with opinions of the audit team about AAI.
3. The pages were prepared by an "officer". The term, "officer" is relevantly defined in section 3 of the FOI Act. In this situation, ISC, the auditor, is an "officer". VCAT has repeatedly ruled that consultants, including lawyers, when engaged by an agency are officers _(s_ee Davis SM in Mees v University of Melbourne at 31 and Koch v Swinburne University [2004] VCAT 1513). Here, the auditor was engaged by AAI from a select group of auditors pre-approved for the purpose by DHS. DHS was the entity requiring the production of the audit and paying for it. AAI was obliged to provide a copy of the Report to DHS as well as to AAI.
4. I do not accept that AAI is an officer of DHS. Unlike the auditor, it is not in substance engaged to provide opinion advice or recommendation to DHS. DHS engages it via a service agreement to provide services to disabled people.
5. The Report forms part of the deliberative process of DHS in thinking about AAI's future role as a funded disability service provider. Mr Butler's evidence on this issue is particularly relevant.
6. Its release would be contrary to the public interest. I accept DHS' evidence that it is working to create a system to ensure high quality service delivery to disabled people. The audit process is an important part of that system. In this case ISC and AAI undertook the audit on the basis it would be confidential. I accept the evidence of Mr Butler that to undermine that confidentiality risks harm to service delivery under the Quality Framework.
7. Concerning auditors, I took a similar view in Smeaton v Victorian WorkCover Authority (General) [2011] VCAT 1234 (4 July 2011). I said the general thrust of the AAT's and VCAT's decisions is clear. Releasing documents concerning audit processes is contrary to the public interest. I discussed (at greater length):
   1. Prescott v Auditor General of Victoria (1987) 2 VAR 93, where the AAT largely agreed with the Auditor General, that documents should not be released.
   2. Rabel v Gas and Fuel Corporation (Vic) (1989) 3 VAR 334, where Riskella DP said (page 341),

I have no difficulty accepting, as a general proposition, that the internal audit process ought to be protected so that its efficiency is not reduced and thereby the efficiency of the respondent is monitored.

1. Lapidos v Auditor General of Victoria (1989) 3 VAR 343, where Riskella DP said (page 350),

It would require a formidable public interest to outweigh the public interest in preserving and protecting the deliberative processes of the Auditor-General's Department.

1. Kotsiras v Department of Premier and Cabinet [2003] VCAT 472, where Megay SM said (paragraph 24),

I have formed the view that disclosure of periodic internal audit reports containing recommendations that may or may not have been acted upon and that disclose systemic or other weaknesses that may or may not have been remedied, can only lead to confusion, unnecessary debate and speculation in circumstances where full reports from the Auditor General are available annually and satisfy the need for public accountability and satisfy the need to ensure proper adherence to accounting, monitoring and performance standards. This is particularly so where there is a continuous audit process undertaken in a climate of change in a fluctuating workplace.

Is the Report partially exempt under the personal affairs exemption - Section 33?

1. While Mr Tregale does not seek text exempted under section 33 of the Act, I take his concession to relate to disclosure that would involve the unreasonable disclosure of information relating to the personal affairs of any person including information that identifies any person or discloses their address or location or from which any person's identity, address or location can reasonably be determined.
2. I assume Mr Tregale's concession relates to the names and addresses and telephone numbers of people. I have another concern. While it is difficult to tell, it could well be that comments by interviewees in Stage 2 of the audit if released could allow them to be identified, particularly by Mr Tregale who has a long involvement with AAI. The interviewees understood they were being interviewed in confidence and would not be identified in the report. However, it is not necessary to go through the report guessing what the information may be, given the other exemptions I have upheld.
3. On reading the full copy of the report provided to me for this proceeding, while I agree that people's names and e-mail addresses and potentially other text identifying them are exempt, I do not accept the information adjacent to the "Audited Sites" box at page 1 of Stage 2 of the Report nor the property names and the related numerical information and the other exempted numerical information on those pages, can be exempted under section 33. I see no basis for concluding that information is exempt under section 33 (nor the other exemptions claimed).

Is the Report partially exempt under the trade secrets exemption - Section 34?

1. In my view, the Report is exempt under sections 34(1)(a) and 34(1)(b).
2. A document is exempt under section 34(1)(a) as a "trade secret" if:

1. Its disclosure would disclose information acquired by an agency; 2. Which was supplied to the agency by a business, commercial or financial undertaking; and

1. The information relates to trade secrets.
2. Clearly, the information was acquired by an agency, being DHS.

Supplied by a business, commercial or financial undertaking?

1. The Report was acquired either from:
2. AAI, or from ISC as AAI's agent, on the instructions of AAI. It seems to have also been acquired directly from ISC, given the auditors obligation as discussed above to provide a report to DHS within 20 days.
3. ISC is clearly a business, commercial or financial undertaking, being an auditing firm providing services for fee.
4. In my view, AAI is a financial undertaking for the purposes of section 34. On first impression, this seems an unlikely conclusion concerning a charitable body, with a volunteer board which accepts funding from DHS to provide services to disabled people. Further doubt is raised when considering that AAI is not a company. It is an incorporated association, which is prohibited from trading or securing pecuniary profits for its members under section 51(1) of the Associations Incorporation Act 1981.
5. The section says,

(c) as trustee, trade or secure pecuniary profit for persons who are members of the incorporated association.

1. Also, Mr Tregale submits while VCAT has previously accepted an organisation such as St John Ambulance as a commercial or financial undertaking, the organisations so far accepted have all been some form of company[1].
2. However, it is important to consider AAI now operates in environment created by DHS and the Disability Act, where AAI competes with "not-for-profit" and "for-profit" disability service providers. The for-profit providers are very likely to be classed as business commercial or financial undertakings. Presumably, they are providing much the same service as AAI in the same environment. This draws one to the conclusion that in this environment, AAI falls within the same category.
3. Also, previous decisions of the AAT and VCAT about companies, which at first glance may not appear to be business commercial or financial undertakings, and application of those principles in this case leads me to conclude that AAI falls into the same category. I focus on the nature of the activity, not the type of legal entity (company or association).
4. In Mildenhall v Department of Treasury (1994) 9 VAR the AAT considered the status of Melbourne Major Events Promotions Pty Ltd and Melbourne on Melbourne Grand Prix Promotions Pty Ltd. Fagan J found both companies were business commercial or financial undertakings, saying about Melbourne Major Events Promotions (page 367),

Many companies limited by guarantee in fact are clearly business, commercial or financial undertakings. It is common knowledge that there is a long history of establishments such as banks, supporting clubs, cultural organisations and the like which are clearly business commercial or financial undertakings yet conducted by companies limited by guarantee. It is to be observed that the restrictions on the powers to borrow, lend, purchase, lease and the like are not absolute but can be authorised by the Treasurer. The restrictions against being carried on for the purpose of profit or gain to its individual members does not prevent the company from being carried on for the purpose of profit or gain altogether. Profits or gains may be pursued but applied for the general lawful object of the company, for example, the acquisition of assets to be devoted to the objects of the company rather than the individual members. ... What a company does with its profits, gains and assets it acquires from its activities is a matter for it within the limits of its memorandum and articles and, in my view, restriction on their disposition does not of itself prevent it from being a company business, commercial or financial undertaking in all the cases. ...

Looking at what activities this company is and has been actually engaged in, it seems to me that it is in fact carrying on activities as a business, commercial or financial undertaking. It is involved in the business of attracting major cultural and sporting events to Victoria and encouraging private sector funding of those events. The events themselves are substantial business, commercial and financial undertakings, the Grand Prix itself being a major one.

1. In Australia Institute of First Aid and Emergency Care Providers Pty Ltd and Victorian WorkCover Authority 16 VAR 222, evidence was given that "St John Ambulance Victoria" undertook sales and training in first aid on a commercial basis, had an operations branch of approximately 2500 volunteer members, supported an ophthalmic Hospital in Jerusalem and provided voluntary services to the elderly the disabled and others. St John was in competition with other aid organisations, mainly the Red Cross, for donations. The St John CEO gave evidence that to disclose information about the amount of sponsorship from Victorian WorkCover would have a severe detrimental effect on the ability of St John to raise sponsorship. Mr Ball, SM of VCAT, decided St John was a business commercial or financial undertaking and disclosure of information was likely to expose St John unreasonably to disadvantage, thus meeting the test in section 34(1)(b).
2. While I note AAI is registered as a public benevolent institution, I assume St John Ambulance, which VCAT has decided falls within the definition, was also so registered.

1. I now turn to the last criteria under section 34(1)(a). In my opinion, the Report contains "trade secrets".
2. In Searle Australia Pty Ltd v Public Interest Advocacy Centre (1992) FCR 11, the Full Federal Court said (page 120, 121),

It appears to me the problem is one of definition: what are trade secrets, and how do they differ (if at all) from confidential information? Mr Poulton suggested that a trade secret is information which, if disclosed to a competitor, would be liable to cause real (or significant) harm to the owner of the secret. I would add, first, that it must be information used in trade or business, and, secondly, that the owner must limit the dissemination of it or it least not encourage or permit wide spread publication. ...

The indicia stated in [Re Organon (Aust) Pty Ltd v Department of Community Services and Health (1987) 13 ALD 558] were merely guides. It may be that the more technical the information is, the more likely it is that, as a matter of fact, the information be classed as a trade secret. But technicality is not required. Many valuable trade secrets could readily be understood by a lay person, if informed of them. ...

An aspect of the concept of "trade secrets" which was not discussed by the Tribunal is that the secrets must be used in or usable in the trade. A trade secret is an asset of the trade. Past history and even current information such as mere financial particulars, may be confidential. The law may protect the disclosure of such information by a person who has obtained it in the course of a relationship which requires confidentiality, such as that of employee, solicitor or accountant. But such information may not be a trade secret.

1. I am satisfied disclosure of the Report would disclose "trade secrets" of AAI, to the extent it sets out information which discloses AAI's systems and procedures which enable it to meet the Disability Standards and the Quality Framework. This information mainly appears in a table of documents at pages 2 to 6 of the Report's Stage 1.
2. Adopting the terminology in Searle set out above, I view the Report as containing AAI's trade secrets because I accept Ms Devereux's evidence that if the information was disclosed to a competitor, it would be liable to cause real (or significant) harm to the owner of the secret, AAI. In Searle the Court said, the secrets must be used in or usable in the trade. A trade secret is an asset of the trade. I am satisfied that is the case with AAI. The Australian Oxford Dictionary defines "trade" to include "business of a specified nature". In the context of this case, in my view AAI is in the business of providing services to people with a disability. It uses the information in question in the trade of providing services to disabled people.
3. In my opinion, the "guides" provided in Re Organon (Aust) Pty Ltd v Department of Community Services and Health (1987) 13 ALD 558, support the conclusion that disclosing the report would disclose AAI's trade secrets. I accept Ms Devereux's evidence and conclude:

1. the information is not of an apparently technical character that (but this is not required); 2. the information is not known outside AAI;

1. the Report is only known by AAI's Board and Senior staff;

1. AAI takes care to guard the Report; 2. the Report would be of value to AAI's competitors; 3. AAI dedicated substantial effort and money in developing information set out in the Report; and 4. It is difficult for others to acquire information set out in the Report. This is demonstrated by the approaches from competitors for the type of information set out in the Report.
2. I am not satisfied disclosure of the Report would disclose ICS' trade secrets. It has not given evidence on the issue. It is not self evident from the Report that this is so. The single email from ISC provided by Ms Devereux is insufficient evidence to support the conclusion that trade secrets would be disclosed.

Section 34(1)(b)

1. Turning to section 34(1)(b), with the criteria as to information required by an agency and AAI and ICS being business commercial or financial undertakings being met, the only other criteria to consider is whether disclosure will disclose matters which are not trade secrets but are matters of business commercial or financial nature and disclosure of the information would be likely to expose the undertakings unreasonably to disadvantage.
2. In my opinion, disclosing the Report would disclose matters concerning the business of AAI, which would be likely to expose AAI unreasonably to disadvantage. I view AAI as conducting business within this environment as described above. I accept the uncontroverted evidence of Ms Devereux about the significant disadvantage which AAI would suffer if information about its business processes was disclosed. I accept AAI keeps the information secret. If it was disclosed, competitors could catch up with AAI to AAI's detriment in terms of client numbers and funding.
3. I am aware Mr Tregale is not a competitor of AAI. However, if he gained the information, he may pass it on as he wishes. Also, release in this proceeding would create a precedent for release to competitors.
4. Given the lack of evidence concerning ICS, I am not satisfied disclosure of the Report would disclose matters relevant to ICS which are not trade secrets but are matters of business commercial or financial nature and disclosure of the information would be likely to expose the undertakings unreasonably to disadvantage.

Is the Report partially exempt under the obtained in confidence exemption - Section 35(1)(a)?

1. I am not satisfied the Report is exempt under section 35(1)(a).
2. A document is exempt on this basis if two limbs are satisfied:
   1. It would divulge any information or matter communicated in confidence by a person to an agency; and
   2. The information would be exempt if it were generated by an agency or minister.
3. As stated in Ryder v Booth, the question of whether the report was provided to DHS in confidence, "is a question of fact and it is unnecessary to raise the further question whether legal obligations of confidence set up by such communications".
4. I am not satisfied the Report was communicated in confidence.
5. The Report only discusses the confidential relationship between the auditor and AAI, as does the JAS- ANZ, Procedure Number 34, Requirements for Bodies Providing Audit Certification Disability Service Providers in Victoria, section 4.10.
6. DHS policy, as discussed above, requires that the report be provided to DHS. As acknowledged by Mr Butler, the policy says that at some stage it may release information with respect to individual disability service providers.

Section 25

1. Section 25 says,

(a) a decision is made not to grant a request for access to a document on the ground that it is an exempt document or that to grant the request would disclose information that would reasonably be regarded as irrelevant to the request;

(b) it is practicable for the agency or Minister to grant access to a copy of the document with such deletions as to make the copy not an exempt document or a document that would not disclose such information (as the case requires); and

(c) it appears from the request, or the applicant subsequently indicates, that the applicant would wish to have access to such a copy -

the agency or Minister shall grant access to such a copy of the document.

1. With a minor exception I am not satisfied it is practicable to produce a meaningful document. This is because what would be left after material is exempted under sections 30(1)(b), 33 and 34, would be the material already released, quotes from relevant DHS policies such as the Disability Service Standards and commentary about the audit methodology used by ISC.
2. I see it as practicable to release a small amount of information on a page which DHS has released to Mr Tregale. I assume Mr Tregale would wish to have access to such a copy.
3. Therefore I have varied DHS' decision in that the following information at page 1 of Stage 2 of the Report, which is the subject of this proceeding and which is in large part already released to the Applicant, is to be released:
   1. The information adjacent to the "Audited Site(s)" box; and
   2. The property names and the related numerical information and the other exempted numerical information on those pages.

1. Section 50(4) is known as 'the public interest override'. It says,

(4) On the hearing of an application for review the Tribunal shall have, in addition to any other power, the same powers as an agency or a Minister in respect of a request, including power to decide that access should be granted to an exempt document (not being a document referred to in section 28, section 29A, section 31(3), or in section 33) where the Tribunal is of opinion that the public interest requires that access to the document should be granted under this Act.

1. While I note Mr Tregale does not seek to invoke the section, for completeness I note that in my view there is no basis to conclude that the public interest requires access to the Report should be granted under the FOI Act.