Commonwealth of Australia v Trepang Services Pty Ltd
[2019] NTCA 2
•22 March 2019
CITATION:Commonwealth of Australia v Trepang Services Pty Ltd [2019] NTCA 2
PARTIES: Commonwealth of Australia
v
Trepang Services Pty Ltd
(ACN 149 489 065)
TITLE OF COURT: COURT OF APPEAL OF THE NORTHERN TERRITORY
JURISDICTION: CIVIL APPEAL from the SUPREME COURT exercising Territory jurisdiction
FILE NO:AP 2 of 2019 (21819597)
DELIVERED: 22 March 2019
HEARING DATE: 5 March 2019
JUDGMENT OF: Barr J, Mildren AJ and Riley AJ
CATCHWORDS:
CONTRACT – Interpretation – standard form contract between the Commonwealth and the respondent for provision of services to Immigration Detention Facility and Processing Centre – respondent’s obligation to deliver ‘Copies’ on termination of contract – interpretation of defined terms ‘Material’, ‘Contract Material’ and ‘Copies’ – primary judge reasoned that unrestricted definition of ‘Material’ and ‘Contract Material’ made no commercial sense – applied restrictive definition of ‘Material’ to limit the respondent’s obligation – held, primary judge erred in interpretation of defined terms – defined term ‘Contract Material’ properly included all material including documents or records in hard copy or electronic form created by the respondent in performing the contract – obligation to deliver or otherwise deal with ‘Copies’ to accord with unrestricted definition of ‘Material’ and ‘Contract Material’, subject to Departmental direction – judgment in favour of respondent set aside.
Prenn v Simmonds [1971] 1 WLR 1381; Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596; Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337; Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 343 ALR 58; Commonwealth of Australia v Trepang Services Pty Ltd [2018] NTSC 90, referred to
REPRESENTATION:
Counsel:
Appellant:D Robinson SC, B Ilkovski
Respondent: N Christrup SC
Solicitors:
Appellant:Clayton Utz
Respondent: HWL Ebsworth Lawyers
Judgment category classification: B
Number of pages: 18
IN THE COURT OF APPEAL
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWINCommonwealth of Australia v Trepang Services Pty Ltd [2019] NTCA 2
No. AP 2 of 2019 (21819597)
BETWEEN:
COMMONWEALTH OF AUSTRALIA
Appellant
AND:
TREPANG SERVICES PTY LTD
(ACN 149 489 065)
Respondent
CORAM: Barr J, Mildren AJ and Riley AJ
REASONS FOR JUDGMENT
(Delivered 22 March 2019)
Barr J and Riley AJ:
The Commonwealth has appealed the primary judge’s refusal to require the respondent to deliver up documents related to its contract with the Commonwealth for the provision of services to the Wickham Point Detention Facility (“the Facility”) and the Bladin Point Processing Centre (“the Centre”).
Pursuant to the contract, referred to as “the Services Agreement”, the respondent supplied or provided services relating to repair and maintenance; essential services (gas, electricity, water and telecommunications); cleaning and waste removal; and supplied fixtures, furniture and equipment. The contract ran for more than five years from 1 June 2011, but had come to an end prior to the hearing in the court below.
It was an express term of the contract (clause 5.3.4) that, upon expiration or termination, the respondent would “deliver to the Department or otherwise deal with all Copies as directed by the Department.” [1] The expression “Copies” was defined (clause 5.3.1) to mean “any document, device, article or medium in which Commonwealth Material, Contract Material or the Commonwealth’s Confidential Information is embodied.”
In the court below, the Commonwealth sought an order for specific performance and a declaration that specified documents or categories of documents set out in attachment ‘A’ to the originating motion came within the respondent’s contractual obligation to deliver “all Copies”. The respondent opposed the making of those orders. In brief, the issue for the primary judge was whether clause 5.3.4 obliged the respondent to produce all documents created in the performance of the contract.
The dispute in relation to the respondent’s obligation to deliver “all Copies” arose from competing interpretations of the defined term “Contract Material”. The definition of “Material” (a noun), from which the term “Contract Material” derives, was as follows:
Material includes information and the subject matter of any category of Intellectual Property right; …
The Commonwealth contended for a wide interpretation of the expression “Contract Material”.
The respondent contended for a restricted interpretation of the expression “Contract Material”. It submitted that, by reference to the relevant definitions in the contract and the surrounding context to clause 5.3.4, the term “Material” meant material which was either (1) confidential information or (2) material which was the subject matter of an intellectual property right; hence that “Contract Material” (defined to mean “all Material” created for the purposes of the contract) was similarly restricted. The respondent thus submitted that the scope of the “Copies” which it was required to deliver was limited to documents etc. which embodied confidential information or intellectual property.
The primary judge accepted the respondent’s submission, adding only that the expression “Material” and hence “Copies” must also include the information specially supplied by the Commonwealth for the purpose of performing the contract.[2]
Her Honour’s essential reasoning was that a court should approach the task of construction on the basis that the parties intended to produce a commercial result, one which made commercial sense.[3] Although the definition of “Material” was inclusive, “it must have limits which give sensible commercial content to the obligations imposed by clause 5.3 …” and that “it would make no commercial sense to construe the definition of ‘Material’ as including any information whatever, including any document”.[4]
The primary judge accepted the respondent’s submission that no commercial purpose would be achieved by a clause in the contract which obliged the respondent, on the expiration of the contract, to deliver to the Commonwealth every single document produced over many years of carrying out the contract at the Facility and the Centre, both of which were large complexes. Her Honour observed that this would amount to truckloads of documents and other material, most of it of no use or interest to the Commonwealth.
Her Honour’s conclusion in relation to clause 5.3.4 was as follows:[5]
What Trepang was obliged to do under that clause was to deliver up any document (or other thing) which embodied any information provided to Trepang by the Commonwealth for the performance of the Services Agreement; any Commonwealth confidential information and any Commonwealth intellectual property.
Her Honour refused the relief sought by the Commonwealth and ordered judgment for the present respondent.
Consideration
Unlike a number of other definitions in the contract, the definition of “Material” (set out in [5] above) was not exhaustive. Thus, the fact that “Material” was said to include “information and the subject matter of any category of Intellectual Property right”, made it clear that “Material” refers to a wider body of material in which the specified things were included. Because the definition of “Material” was inclusive, and for the reason explained in [15] to [17] below, we consider that “Material” means material generally, the obvious example being documents or records in hard copy or electronic form.[6] To the extent that confidential information and some category of intellectual property right might not otherwise come within the scope of the ordinary word ‘material’, they were expressly included.
The respondent contends on this appeal, and contended below, that “Material” did not include material generally, but was confined to confidential information and intellectual property. Senior counsel for the respondent referred to clause 5.1, headed “Commonwealth Material”, and clause 5.2, headed “Intellectual Property” in support of its contention that the term “Material” was restricted to material which was either confidential information or material which was the subject matter of an intellectual property right.
The respondent’s contention disregards the inclusive definition of “Material”, explained in [13] above. Moreover, there is a significant further obstacle to the acceptance of the respondent’s contention, namely the definition of the expression “Contract Material”, read with the express words of Item C in Schedule 1 of the contract, which we explain in [16] and [17].
The definition of “Contract Material” was, relevantly, “all Material: (a) created for the purposes of this Agreement, including the Contract Material specified in Item C …”. Item C then read as follows:
The Service Provider must supply the Department with the following Contract Material no later than 30 days consequent to the Effective Date:[7]
a.itemisation report of loose assets in the Premises (updated by the Services Provider as required);
b.Environment Management Plan for the Premises; and
c.emergency evacuation procedure, manual and map for the Premises.
The express terms of the contract thus made clear that the documents referred to in Item C were “Contract Material” within the agreed definition (and, by logical inference, were “Material”). The meaning of “Contract Material” thus extends well beyond the limited categories contended for by the respondent. Further, the notion of “Material” is not to be confined to intangible things, as contended by senior counsel for the respondent on appeal; it includes all material created by the respondent in performing the contract (“created for the purpose of this agreement”).
The conclusion in [17] does not conflict with the principles of construction of commercial agreements. When a court is required to consider the commercial purpose and objects to be achieved by a commercial contract, it does so from the perspective of a reasonable businessman placed in the position of the parties.[8] The contract between the Commonwealth and the respondent was not the only contract for the operation of the Facility and the Centre. This Court was informed, without objection, that there was at least one other contract (a contract for the provision of security services), and possibly also a separate contract for the provision of medical services. Senior counsel for the appellant submitted that it was entirely legitimate for the purposes of the Commonwealth to “have a handle” on all the documents created or brought into existence for the purpose of its contract with the respondent, just as for contracts with any other parties with whom the Commonwealth contracted for the operation – on its behalf – of the Facility and the Centre. We agree.
As to the concern of the learned primary judge (which led her Honour to interpret the contract in a way which limited the respondent’s obligation to deliver documents), senior counsel for the Commonwealth submitted that the contract did not necessarily require the delivery up of every single document, or “truckloads of documents and other material” as her Honour postulated. The respondent’s obligation was to “deliver to the Department or otherwise deal with all Copies as directed by the Department”. The Department could require the delivery of a limited number of documents or categories of documents, and direct that the balance be “otherwise dealt with” by the respondent, for example, stored at a given location or disposed of.
In our opinion, the fact that the Commonwealth might require the respondent to deliver or otherwise deal with a substantial volume of documents does not render a wide interpretation of clause 5.3.4 as one which makes no commercial sense. Indeed, it makes perfect commercial sense for the Commonwealth, burdensome though it may be for the respondent.
Conclusion
In our judgment, her Honour erred in the interpretation of the definitions of “Material” and “Contract Material”, and this led to an erroneous interpretation of clause 5.3.4.
The parties have requested that this Court decide the interpretation issue, and not then make consequential orders without hearing the parties. In the circumstances, we would propose to make an order setting aside the judgment entered for the respondent, and reserving the issue of consequential and other orders for further argument.
Mildren AJ:
I have had the advantage of reading the reasons of Barr J and Riley AJ. I generally agree with their Honours’ conclusions, but wish to add a few observations of my own.
First, as to the services to be provided by the respondent under the agreement, clause 1.1.1 of the agreement provides that “Services means the services described in item B (Services) and includes provision of the Contract Material to the Department.” So, the provision of the Contract Material to the Department is, in itself, one of the Services which the respondent was contractually obliged to perform. This is apparent from clause 3.1.2 which provides that the respondent “is fully responsible for the performance of the Services…”
Secondly, the contract provides by clause 1.3.1 that “This Agreement records the entire agreement between the parties in relation to its subject matter.”
Thirdly, the Agreement as originally entered into was varied on three occasions. The last occasion was effected by a Deed of Variation No 3 entered into on or about 22 May 2015. Clause 2.1 of the Deed of Variation No 3, provides:
The Contract is varied, with effect from the Deed Commencement Date.[9] The Contract is consolidated to include variations effected by Deed of Variation No. 1, Deed of Variation No 2 and this Deed is set out at Attachment 1 (in marked up and clean form.
Attachment 1 is the Contract which is the subject of this litigation. Clause1.2 (vii) of the Deed provides that “this Deed includes all schedules and annexures to it.” Clause 1.2 (i) provides that “a reference to this Deed includes the agreement recorded by this Deed.” Presumably this includes Attachment 1. Clause 1.2(e) provides “if an example is given of anything (including a right, obligation or concept), such as by saying it includes something else, the example does not limit the scope of that thing.” This has some significance when I come to consider the interpretation to be given to the definition of “Contract Material.”
Neither party sought to refer to the provisions of the Deed during argument. I note that there appear to be some contradictory provisions between the Deed and the attached Agreement. For example, clause 6 of the Deed provides that “This Deed is governed by the Law in force in the Australian Capital Territory”, whereas clause 1.3.5 provides that “the laws of the Northern Territory apply to this Agreement.” I am not aware of any relevant difference between the laws of the two Territories, so this difference does not matter.
Under the provisions of the Agreement, the respondent is required to keep and preserve certain records and data, including:
·insurance policies as required by Schedule 1 Item O : clause 11.2;
·“maintain regular back up copies of all software and databases used in provision of the Services”: clause 15.1.1.c.
·“protect against the introduction of any computer virus and against effects of any such virus”: clause 15.1.1.d.
·“maintain and upgrade business continuity and disaster recovery procedures and plans”: clause 15.1.1.e.
·“maintain an appropriate risk register and risk treatment schedule”: clause 15.1.1.f.
·complete “a substantive report in relation to any repair or fault services identifying” [certain information] : Item J of Schedule 2.
·“maintain a log of all repairs or fault reports and submit a copy of each repair or fault reports to the Department or its Personnel (promptly upon date of rectification or repair or fault”: Item J Schedule 2.
Clause 9.1.1 also required the respondent to comply with all relevant legislation of the Commonwealth or State or Territory or local authority in force from time to time, and in particular, but not limited to a long list of specified Commonwealth Acts which includes inter alia the Auditor-General Act 1997 (Cth) and the Public Governance, Performance and Accountability Act 2013 (Cth). We were not taken to any provisions of any of these Acts which cast a burden upon the respondent in relation to record-keeping. Nevertheless, in the normal course, it is expected that the respondent would keep and maintain normal business records relating to its income and expenditure for the purposes of enabling it to comply with its obligations under the Income Tax Assessment Act 1936 (Cth). This would include records of income and expenditure, its employees’ salaries and benefits, and records relating to the deduction of income tax and entitlements to superannuation, holiday pay, long service leave and sick leave benefits.
In relation to the interpretation to be given to an agreement, the Court is entitled to take into account the surrounding circumstances with reference to which the words of the agreement were used and the object, appearing from those circumstances, which the person using them had in view.[10] It can be inferred, given the nature of this contract, the period of time it was expected to run for, the large amounts of Commonwealth money involved, and the general practice of most, if not all, law-abiding business entities, that the respondent would keep in one form or another, appropriate records relating to its performance of the contract. On the other hand, so far as the services to be provided by the respondent are concerned, the effect of the contract was that the Commonwealth, although it had leased the premises which included an immigration detention facility and a processing centre, had effectively sub-contracted out that which needed to be done in relation to the services to be done by the respondent to the respondent, so that it did not have to do these things itself[11]. It is therefore not surprising that it might wish the respondent to keep on its behalf all the records in relation to the performance of that work which it would have been required to keep, if it had undertaken the same work personally through its own servants.
In my opinion, contrary to the submission of counsel for the respondent, the word “information”, which appears in the definition of “Material” as including “information and the subject matter of any category of Intellectual Property Right”, is a word of wide import intended to include any kind of information, whether it is recorded in paper form or electronically in a computer data base, for example. I do not read the words “and the subject matter of any category of Intellectual Property right” as qualifying the word “information”. The word “and”, in my opinion means “as well as”. This is consistent with clause 1.2(e) of the Deed referred to in paragraph [26] above, and is in any event consistent with a definition in which the word to be defined is stated as “including” some other subject matter. The qualifier of the word “information” and for that matter. the word “material”, comes from the definition of “Contract Material”, which by clause 1.1.1 (a) of the Agreement, is defined as meaning “all Material created for the purposes of this Agreement, including the Contract Material specified in item C (Required Contract Material).”
The expression “for the purposes of this Agreement” at first blush might be taken to refer to information or material which was created for the purposes of entering into the Agreement. Elsewhere, the draftsperson uses the expression “as a result of the performance of the Services” (see the definition of “Existing Material”) and “Material used in the course of providing Services under this Agreement”: see clause 5.3.5. However, I conclude that the expression “all material created for the purposes of this Agreement” is very wide, and includes all material created or used for the purposes of the performance of the Agreement. No argument was submitted to the contrary.
It may be that the draftsperson of the contract might have expressed himself more elegantly if he or she had chosen to provide a specific clause requiring in simple straightforward language, that the respondent was to keep all records relating to the performance of the contract, whether those records were in paper form or in electronic form, and to provide them to the Commonwealth whenever requested by the Commonwealth. However, it seems to me that the draftsperson had in mind that a large proportion of the records which the respondent would keep or was required to keep, would be in electronic form. Hence, the definition of “Copies” is given an unusual definition as meaning “any document, device, article or medium in which the Commonwealth Material, Contract Material or the Commonwealth’s Confidential Information is embodied.” Electronically stored records, it may be thought, do not have a tangible existence, (although I expect that electronic materials can still be the subject of property),[12] except as having been stored electronically, hence “embodied”, on a hard drive of a device. Consequently, it was necessary to secure “the device, article or medium in which” the relevant Material is “embodied”, and to provide, as it did in clause 5.3.2 that the “Property in each Copy vests or will vest in the Department and must be delivered to the Department on demand within a time frame designated by the Department.”
The problem with the Respondent’s contention is that if, as the learned trial Judge found, that the scope of “Copies” was limited to documents etc which embodied confidential information or intellectual property, the words “includes information” in the definition of “Material” which form part of the definition of “Contract Material” in clause 5.3.1 are otiose and would limit the meaning to be given to Contract Material as it is used in clause 5.3.1 to material …”which is the subject matter of any category of Intellectual Property right.” The definition of “Intellectual Property” includes “confidential information” (see clause 1.1.1).
I agree with the contention of the appellant’s counsel that the ordinary natural meaning of the words in the contract does not give rise to any ambiguity. Even if, as the learned primary Judge held, that it was appropriate to approach the task of construction on the basis that the parties intended to produce a commercial result which made commercial sense[13], I consider that it makes commercial sense that the Commonwealth would not wish to keep all of these documents etc itself, but would want them kept by the Respondent and to have access to all of the records kept by the respondent, regardless of the form in which they were embodied, rather than have them disappear into some ephemeral void. I do not agree with the contention of the respondent that this would mean the delivery up of truck-loads of documents at the whim of the Commonwealth. Many, if not most of the documents are likely to be in electronic form and easily downloaded onto external hard drives, although I expect that this may take some time to achieve[14].
In the present case, the documents which the Commonwealth has sought, as set out in the Summons on Originating Motion, are documents of the kind the Respondent was either required to keep or maintain, or which in the ordinary course of things, the Respondent might be expected to have kept. In some cases, the documents sought are copies of documents which have previously been provided, such as invoices which have previously been rendered by the Respondent. There may be some dispute about individual categories of documents which if necessary, can be dealt with at a later time. There may also be some argument about whether the Respondent is required under the terms of the Agreement to keep the “Copies” for ever and a day or only for some limited period of time, once the contract has expired, and I say no more about that at this time. The appellant’s counsel has accepted that the agreement does not require the Respondent to identify for each copy to which item or items it relates, as requested in the Attachment A to the Summons on Originating Motion. Otherwise I agree with Barr J and Riley AJ and with the conclusions set out in paragraphs [21] and [22] of their Honours’ reasons.
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[1] A reference to the Department of Immigration and Border Protection.
[2] Commonwealth of Australia v Trepang Services Pty Ltd [2018] NTSC 90 at [20].
[3]Referring to Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 343 ALR 58 at [16], per Kiefel, Bell and Gageler JJ and Electricity Generation Corporation v Woodside Energy Limited (2014) 251 CLR 640 at [35], per French CJ, Hayne, Crennan and Keifel JJ.
[4] Commonwealth of Australia v Trepang Services Pty Ltd [2018] NTSC 90 at [25].
[5] Commonwealth of Australia v Trepang Services Pty Ltd [2018] NTSC 90 at [26].
[6] In this context it may be noted that litigation lawyers and judges frequently use the term “affidavit material” to refer to the body of documentary evidence in affidavit form relied on in support of an application before a court.
[7]The “Effective Date” was the commencement date of the Commonwealth’s sublease of the Facility and the Centre.
[8] Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 343 ALR 58 at [16], per Kiefel, Bell and Gordon JJ.
[9] Defined by clause 1.1 (b) of the Deed as meaning 8 April 2015.
[10] Prenn v Simmonds [1971] 1 WLR 1381; Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596; Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337.
[11] See the recitals to the Agreement.
[12] No submission was made that it could not be the subject of property.
[13] It is an open question as to whether or not this is the proper approach where the language used is not ambiguous: Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 at [111]-[112].
[14] It may not be so easy with portable devices like mobile phones.
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