Esso Australia Resources Ltd & Ors v The Honourable Sidney James Plowman (The Minister for Energy and Minerals)

[1993] HCATrans 243

5,

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• "I

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Melbourne No M84 of 1993

B e t w e e n -

ESSO AUSTRALIA RESOURCES LTD

BHP PETROLEUM (NORTH WEST

SHELF} PTY LTD and BHP
PETROLEUM (BASS STRAIT}

PTY LTD

Applicants

and

THE HONOURABLE SIDNEY JAMES
PLOWMAN (THE MINISTER FOR
ENERGY AND MINERALS),

GAS AND FUEL CORPORATION OF

VICTORIA and STATE ELECTRICITY

COMMISSION OF VICTORIA

Respondents

Application for special leave

to appeal

Esso 25/8/93

BRENNAN J
DAWSON J

TOOHEY J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 25 AUGUST 1993, AT 10.30 AM

Copyright in the High Court of Australia

MR A.J. MYERS, QC:  May it please the Court, I appear with

my learned friend, MR S.G. O'BRYAN, on behalf of the applicants.	(instructed by Middletons Moore
and Bevins)

MR R.A. FINKELSTEIN, QC:  May it please the Court, I appear

with my learned friend, MR D.M. McLEAN, for the first respondent. (instructed by the Victorian

Government Solicitor)

MR J. McL. EMMERSON, QC: If the Court pleases, I appear

with my learned friend, MR P.J. KENNON, for the Gas and Fuel Corporation of Victoria.

(instructed by C.D. Devlin)

MR P. BUCHANAN, QC: If the Court pleases, I appear with my

learned friend, MR P.J. JOPLING, for the third
respondent, the State Electricity Commission of

Victoria. (instructed by Freehill Hollingdale and

Page)

BRENNAN J: Yes, Mr Myers.

MR MYERS:  Thank you, Your Honour. An outline of argument

was filed with the Registry and provided to my

learned friends.

BRENNAN J: Yes, we have a copy of that.

MR MYERS:	Your Honours, the only remaining issue in this litigation concerns the privacy of the arbitration
which is pending between the applicants and the Gas and Fuel Corporation, and a separate arbitration between the applicants and the State Electricity Commission of Victoria. There were other issues
before the Full Court.
private, in the sense that strangers were to be

The Full Court said that the arbitration was

excluded from it, but that a party to the

arbitration could use any documents or information

obtained in the course of the arbitration for any

purpose whatsoever.

The issue in the case does not depend upon any

special facts, and that can be seen by the way in

which the Full Court dealt with the matter.

Indeed, the arbitration clause itself is not set

out in the judgments in the Full Court; it is

simply referred to as a general arbitration

agreement. If the Court wished to see the

arbitration agreement in each case, it is available
but it is, in broad terms, simply a reference of

disputes, differences, et cetera, to arbitration in

more or less those terms.

Esso 25/8/93

The issue of the extent to which an

arbitration is private has not been considered

before by an Australian court. It is important in the administration of the law and for many persons

who refer matters to arbitration.

The matter has also been the subject of recent consideration in the courts in England. In England

it has been determined that there is a mutual

obligation upon the parties to use information and
documents, received from the opposite party, only
for the purposes of the arbitration, and that
appears, in particular, from the recent decision of

the Court of Appeal in Dolling-Baker v Merrett,

which was considered below by the Full Court, and

the Full Court, in effect, decided not to follow
that; well, not completely. The Full Court

decided that the arbitration was private, in the

sense that strangers were to be excluded, but did

not take the matter further and say, "But you are

limited in the use to which you can put information

and documents obtained in the course of the

arbitration".

BRENNAN J:  We need to identify these issues with some

precision. There is one question as to who can be
present during the arbitration. Is that a subject

of present contention?

MR MYERS:  No, it is not.

BRENNAN J: Well then, the next question is: the extent to

which it is open to a party to divulge information

acquired in the course of the arbitration from the

other party?

MR MYERS: That is so, Your Honour; that is the remaining

issue.

BRENNAN J: Yes. There is, I would have thought, a third

question, and that is the use which a party might

make of documents or information acquired from the

other party in the course of an arbitration.	Is
that an issue?

MR MYERS:  Not in terms, Your Honour. Some of the language,

and it is language that I have used this morning,

that has been used in the appeal, is in terms of

the use to which information and documents can be

put, but it is used in the sense of "use by

disclosing or divulging to a stranger."

BRENNAN J:  So we are speaking about disclosure only?

MR MYERS:  Yes, we are. That was the terms in which the

matter was argued and dealt with below.

Esso 3 25/8/93

TOOHEY J:  You said in answer to Justice Brennan that the

right of anyone not connected with the arbitration

to attend was not in issue, but does not one of the

orders sought in your notice of appeal raise that

question - I am just looking at the foot of

page 175 - or have I misread it?

MR MYERS: That was certainly a matter argued below, because

the respondents said that strangers could attend,

putting it bluntly, and the Full Court said no,

they could not.

TOOHEY J: It is just at the foot of page 175 which I think

is part of your draft notice of appeal to this

Court.

MR MYERS: Although the Full Court in its reasons held that

the arbitration was private in the sense that

strangers are to be excluded, the Full Court

declined to grant a declaration in those terms, and

we seek that declaration. In that sense it is an

issue before this Court. The Full Court declined

to - - -

BRENNAN J:  Is the substance of that in issue or is it a

question - - -

MR MYERS:  The substance is not in issue. The decision of

the Full Court, as Your Honours will appreciate, on

that point is perfectly clear.

BRENNAN J: This is an application for special leave, and

the question of whether a declaration should be

made when there is a consensus at the bar table as

to what the result of the proceedings has thus far

been seems not to be a question which would justify

the grant of special leave.

MR MYERS: If Your Honour pleases, I respectfully agree with

that and I do not put it on that basis. As I

began, the issue for this Court if special leave is

granted is the use, the extent to which,
information and documents acquired in the course of

the arbitration can be disclosed or divulged. That

is the only issue of substance that remains. The

Full Court said that the arbitration was private in
the sense that strangers were to be excluded, but
refused to take the further step which gives some
substance to that right of privacy, the exclusion
of strangers, by saying, "Well, you can't divulge
or disclose information or documents to strangers."

Just to go back one moment: as I said, the matter has recently been considered by the Court of

Appeal in England, but the Full Court declined to

follow the Court of Appeal in England beyond the point of saying strangers are excluded. That is

Esso 25/8/93

the decision in Dolling-Baker. There has also been

an unreported decision of His Lordship

Mr Justice Coleman in Hassneh Insurance Co of

Israel v Mew to the same effect as the Court of

Appeal, not surprisingly, following the Court of

Appeal and applying that in a discovery contest.

BRENNAN J:	Mr Myers, I do not want to interrupt the presentation of your argument, but I would like to
identify precisely the points that are in issue.
If I can take you back to your answer to me, what
is in issue is the extent to which a party may
disclose information acquired from the other party
in the course of an arbitration. Could I draw your attention to page 187 of the application book. In
paragraph 8 of the affidavit of Mr Devlin, is it
right to say that there is not a matter of dispute that confidential information acquired by one party
from another in the course of an arbitration may
itself be the subject of equitable protection?
MR MYERS:	I believe that is not in dispute.
BRENNAN J:	So that we are discussing the question of the

use which can be made of information or of

documents which is acquired in the course of an

arbitration, not being information or documents

which are protected under general equitable

principles.

MR MYERS:	And which are not public.
BRENNAN J:	And which are not public.

MR MYERS:  Yes. They are private documents but, for

example, they are not protected as containing trade

secrets or, as Your Honour has more generally put

it, under equitable principles.

BRENNAN J: Yes, very well.

DAWSON J: Where do you say the duty not to disclose arises

from?

MR MYERS:  From the fact that the arbitration is private.

These are documents which are not public and which

the party who receives them in the course of the

arbitration would not have received except for the

existence of the arbitration, and that party

receives them for the purposes of the arbitration.

DAWSON J: If the privacy of the arbitration proceedings

that imparts the confidentiality to the documents,

why do not the equitable principles apply?

MR MYERS: In our submission, they do.

Esso	25/8/93
DAWSON J:	You do not rely on that?
MR MYERS:	Yes, we do, but we are not relying upon, as I

understood Mr Justice Brennan, those equitable

principles as attaching because of the character of

the documents. We say that -

DAWSON J: That does not make sense to me. If one has

documents which one supplies to another upon a

confidential basis, it is not the character of the

documents which give rise to the confidentiality,

it is the nature of the imparting of the

information.

MR MYERS: With the utmost respect, Your Honour, that is our

contention.

DAWSON J: Well then, you do rely on the equitable

principles?

MR MYERS:  Yes, we do rely upon the equitable principles

but, with respect, Your Honour, I understood

His Honour Justice Brennan to be putting the matter

to me on a slightly different basis.

DAWSON J: I think His Honour can say what he has

MR MYERS:	I do not wish to provoke controversy but - - -
BRENNAN J:	The question is the element of confidentiality

of the information. You are saying that it does

not matter whether the information in its nature is

confidential or not, it depends upon the fact that

it was acquired in the course of the arbitration.

MR MYERS: Quite so, Your Honour, I - - -

DAWSON J: Yes, and I am saying to you their information is

in its nature confidential because - this is what

MR MYERS: Well, if Your Honour pleases, I believe - and I	you are saying - of the circumstances in which it is imparted.	do not want to argue against the case that I would be advancing - that a distinction might be drawn between a trade secret, for example, a document
that contains a trade secret.
DAWSON J:	Why?	We have long since passed those days, have

we not?

MR MYERS: With the utmost respect, yes, Your Honour. We

rely primarily upon the circumstance that these are
documents that are provided - or it is information

that is provided, disclosed - in the course of the

arbitration which would not otherwise be available

to the person to whom it is provided, disclosed,

Esso 6 25/8/93

imparted, and it is provided, disclosed, imparted

for the purposes of the arbitration.

Now, before the Full Court, it was said that

no privacy attached to arbitration proceedings and

strangers could be present. That was the burden of

the argument put on behalf of those who are the

respondents here, and were the respondents below.

The court said, "Yes, the arbitration is private" - they are the words the court used below - in the

sense that strangers are to be excluded from the

arbitration but it is not private in the sense that

information documents, et cetera disclosed or

imparted in the course of the arbitration - - -

DAWSON J: But, you have got to analyse it a little more

closely than that. The duty not to disclose, which

you allege, can arise, perhaps, from an implied

undertaking in the arbitration proceedings. It may

arise, perhaps, from implication in the arbitration

clause, or - and this is the third thing - it may

arise from the nature, the circumstances, in which

the information is given. But, in the third

situation, I would have thought you would have to

rely exclusively on equitable principles.

MR MYERS:  We put it on two bases, Your Honour, broadly the

second and third bases that Your Honour has put to

us, that it was an implication in the agreement,
and also we relied upon the line of authorities

dealing with the imparting of information of a

private character for a particular purpose. The

second line of argument, it must be said, is barely

evident in the reasons of the court below.

DAWSON J: But, once again,does not your notice of appeal

pose the matter in terms of an implied term of the

arbitration agreement, within the agreement,

pages 175 to 176?

MR MYERS:	Yes, it does, Your Honour.
TOOHEY J:	Is that more limited than in the way in which you

are now putting the matter?

MR MYERS:  Well, that was the primary way in which we put

it. I mean, if one says there is an implied term,

one has to contend that there is an implied term.

But we also put, and we would propose to put, if

special leave were given, that it is the

circumstances, or the circumstances impose a duty,

an equitable duty, or a duty arising otherwise than

by contract, to keep private the information or the

documents.

DAWSON J: In other words, the circumstances make these

documents confidential?

Esso	25/8/93
MR MYERS:	Yes, Your Honour, and it is the same

consideration - - -

DAWSON J:	And the duty arises on equitable principles?
MR MYERS:	Yes, Your Honour, absolutely.  But the same

considerations can be advanced in support of an

implied term.

DAWSON J: Yes, that is another basis for it.

MR MYERS:  Indeed, once one says the arbitration is private,

as the Full Court did, it is an incident of privacy

that - - -

DAWSON J: All I am disputing in this issue is your

assertion that you are not going to submit that

some of the documents are confidential in their

nature. I do not understand that. They are

confidential in nature, their nature being derived

from the circumstances in which they are disclosed.

MR MYERS: That was our primary submission below, and it

would be if leave were granted.	I have drawn
attention to the English cases.	The matter has not

been considered, as far as we can determine, by an

Australian court. There is a snippet of a
reference in the reasons of Mr Justice Kirby in the

IBM Australia case, which is referred to in

paragraph 3.

BRENNAN J:	What are the English cases on which you rely?
MR MYERS:	They are set out in paragraph 2.3, Your Honour.
BRENNAN J:	I confess that reading the cases for myself, perhaps uninstructed, I do not derive the
proposition from them for which you contend. In
particular, the Shearson Lehman case seems to put
the proposition on the basis that there is no
special quality of confidence arising simply by
reason of the documents being acquired in the course of an arbitration.
MR MYERS:	But it refers to the arbitration being private.

BRENNAN J: Yes.

MR MYERS:	And Dolling-Baker v Merrett - - -
BRENNAN J:	The question in Shearson Lehman was then the question of whether discovery should be ordered in
an action, and the claim of privilege from
discovery was overridden, privilege being based
upon the argument that the documents were obtained
in-an arbitration.
Esso	25/8/93
MR MYERS:	Yes, Your Honour.

BRENNAN J: Well, that does not seem to take you very far,

does it?

MR MYERS:  The fact that the privilege was overridden does

not show that it does not exist, or - - -

BRENNAN J:  No, it just fails to show your positive

proposition.

MR MYERS:  Yes, it could be put that way but, none the less,

the court speaks in terms of the arbitration being
private and considers the matter in terms of
whether the private character of the arbitration is
overridden having regard to the need for justice to
be administered in a particular way in the courts.
The same sort of issue arose in Dolling Baker v

Merrett, and the same sort of issue arose in Mew.

BRENNAN J: Dolling-Baker v Merrett seem to me to adopt the

approach of Shearson Lehman, subject to the

qualification to be derived from Nasse's case, that

it is necessary to look at particular documents and

to discover whether it is necessary to dispose

fairly of the proceedings that an order for

discovery be made.

MR MYERS:  Yes, and that is a recognition of the privacy of

the arbitration because one would not have to look

at particular documents in that way to make that

decision unless one had got to the threshold.

DAWSON J:  I do not know that that is so. It is just the

opposite, is it not? You are looking at particular

documents because otherwise they would be

disclosed?

MR MYERS:  Yes, but the particular documents are protected, or not, because they have been disclosed or

obtained in the course of an arbitration. Unless
there is a rule that documents disclosed or
obtained in the course of the arbitration are
protected from disclosure or divulgence to other
persons, you would not have the issue about

discovery.

BRENNAN J: But the fact of the matter is that if it is

necessary for the fair disposal of proceedings such

documents be discovered, an order for discovery

will be made.

MR MYERS: Yes, Your Honour.

BRENNAN J:  So that there is no absolute rule of

confidentiality that protects them.

Esso 9 25/8/93

MR MYERS:  No, it is like any such rule of confidentiality,

it is subject to the provisions of the general law.

If there is an Act of Parliament that says that

documents of a particular character are to be put on a register, well, these documents will have to be put on a register, notwithstanding that they

have been obtained in the course of an arbitration.

So, too, the general law concerning the conduct of

proceedings in courts will apply, but that arises

whenever there is a rule concerning

confidentiality.

BRENNAN J:  Your proposition is the exceptions, if any, to

be found to the confidentiality rule are to be

found in statute?

MR MYERS:  No. Subject to the general law, Your Honour. I

could not, I think, necessarily maintain that they

are to be only found in the statute. I suppose

discovery is, in a sense - the rules are to be

found in a statute, but not really, it is part of

the inherent power of the court.

BRENNAN J: Well, in exercise of the power of the State, if

you do not wish to put it in terms of statute.

That is seeming to be - - -

MR MYERS: Probably that is so, Your Honour. It is hard to

imagine in advance every conceivable situation in
which an exception might be contended for but, as a

workable proposition, I would accede to that.

TOOHEY J: But that is part of the difficulty, is it not, in

giving effect to the sort of implied term that you

seek to have attached to an arbitration proceeding.

It must necessarily be qualified, but the

qualification remain unknown until the particular

situations arise.

MR MYERS:	Your Honour, the application of any general rule that is adopted by a court may need to be modified by circumstances that arise, that are special, and
not within the scope and purpose of the rule. The difficulty of framing exceptions, in advance, to a general rule, is not an argument for not having the
general rule, otherwise there would be very few
general rules.  But the exceptions here are not so
difficult; they are exceptions which arise by
operation of law or something of that kind.
Your Honour Justice Brennan has framed it in
slightly different words and I accepted that as a
workable proposition, with respect.
BRENNAN J:	You see, you are putting it in terms of a

general rule subject to exceptions, and that is an

understandable way of putting it, but if it is a

question of the scope of the protection, that may

Esso 10 25/8/93

not be entirely accurate; it may be a question of

saying, "What is the limit of the obligation to

observe confidentiality?" And then one starts to

think in terms of the interests of the person to

whom the information has been confided.

MR MYERS: Well, I do not accept an exception framed in

terms of the interests of that person. It must be

remembered that in the end the person has got

private information in the course of an arbitration

and for the purposes of that arbitration. Any

other interests that arise, prima facie, without

judging any possible imaginable facts, but prima

facie, should be subject to the principle of

confidentiality, because of the circumstances in

which it was obtained; it was obtained in a private

arbitration for the purpose of the arbitration.

BRENNAN J:  To say the purposes of the arbitration is to

say, for the purposes of a proceeding which, in its

character, is apt to affect the interests of the

person who acquires the information.

MR MYERS:  For the purposes of determining the dispute which

has arisen between the parties, it can be put as

narrowly as that, Your Honour.

BRENNAN J: Well take, in practical terms - I mean, we do

not need to debate the whole of this, but we do

need to identify with some precision the issue for which special leave may be granted. In this case,

let it be assumed that the applicants seek an

increase in their rates for the supply of gas and

the purchasers of that gas may need to pass on any

increase in rates to their consumers. Is the

proposition that information which indicates to

consumers why they have to pay increased rates

should not be divulged?

MR MYERS:  The reason why they would have to pay increased

rates would be becaus·e of the determination of the

arbitrators. It would be possible to provide a

rational explanation of why one is obliged to

increase rates without divulging private

information acquired in the course of the

arbitration. If it is not, then that information

cannot be made public except with the consent of

the other party to the arbitration.

BRENNAN J:  Does your answer indicate that consideration of

specific questions or specific information should

await the practical arising of the problem rather

than a blanket answer being given in advance?

MR MYERS:  No, it does not, Your Honour. We say there is

such a general rule as I have outlined to the Court

and that can be relied upon afterwards in the sort

Esso 11 25/8/93

of case that Your Honour has put to me. After all,

the information was provided for the purposes of

determining the dispute, not for the purposes of

offering an explanation of a public character to

ultimate consumers. The general issue that we seek

special leave for does not, we say, involve the

consideration of particular facts.

TOOHEY J: Since we are in the process of interrupting you,

Mr Myers, can I just continue it for a moment.	Are
we concerned or can we put right out of our minds

the idea that somehow there is a common law right

of privacy which intrudes into these questions? It

is hovering around in some of the material but

certainly does not emerge through the draft notice

of appeal.

MR MYERS:  I am not arguing for a general common law right

of privacy, no. The case is put on two bases:

implied term and an equitable right arising out of

the circumstances in which the disclosure was made.

In fact, the same facts support both the implied

term argument and the equitable right of

confidentiality argument.

If Your Honours please, I believe, really, I

put the application, I do not wish to add to the

written submissions. Perhaps one observation, that

if the Full Court is right, the irony is that in

arbitration one's documents have less protection

from publication than they would if one preferred

the public processes of the court. At least there, of course, documents that are obtained on discovery

can only be used for the purposes of the judicial

process.

BRENNAN J:	Can only be used, but they can be divulged for other purposes.	They are of public record.
MR MYERS:	No, the discovered documents are not,

Your Honour, with the utmost respect.

BRENNAN J:	No. If the documents are used - - -
MR MYERS:	I am speaking of discovered documents, and one must remember that in this arbitration, and I do
not want to descend in the particular facts, will
be enormous body of information discovered of a
private character.
DAWSON J:	What has happened to the arbitration proceedings,

Mr Myers?

MR MYERS:	They are still in interlocutory processes. think it is fair to say in part, because of this	I
pending issue. In part.
Esso	12	25/8/93

BRENNAN J: Thank you, Mr Myers. Mr Finkelstein.

MR FINKELSTEIN:  May it please the Court. Our principal

submission is that there is no sufficient doubt

about the correctness of the decision of the

Full Court to warrant leave to appeal. The

argument for confidentiality is, as the Court

knows, based on two different legal sources, the

implied term and a claim in equity. Can I deal first with the implied term and make this point

before I do it. What was contended for at trial,

and before the Court of Appeal, was the implication

of a term as an incident of a particular class of

contract, namely all arbitration contracts. That

is a term implied by law, not a term implied by

fact.

In order to justify the implication of a term

to be implied by law, a court has to do two things:

it has to take into account general considerations

to determine whether the implied term argued for

should be implied into the particular class of

contract under consideration, but more importantly,

it must determine that the term sought to be

implied is necessary. What is meant by necessary,

according to the cases, is that unless the term is

implied, the contract will be inefficacious, or

absurd, or futile.

BRENNAN J: That is the BP basis of it, is it not?

MR FINKELSTEIN: No, it is not, Your Honour. With respect,

the BP process is concerned, as we understand that

decision, with the implication of a term, in fact,

that is in relation to a particular contract, not
to a class of contract, but implication in relation

to a particular contract where it is necessary,

just, goes without saying, and so on.	I put that
to one side because at no stage has it been argued

that the BP type implication of a term is to be

adopted here. Here the argument is of general

application, that is to say into every arbitral

agreement there must be implied, as a matter of

legal necessity, a term imposing an obligation not

to disclose any information generated during the

course of the arbitration. That is not the BP

Refinery type implication of term. It is rather

the Liverpool City Council v Irwin implication of a

term, or Lister v Romford Ice implication of a

term. That is, it goes to all arbitration,

contracts, not just because of the particular facts

of these arbitral agreements, only into these

arbitral agreements.

DAWSON J:  Why is it not arguable? I mean, the privacy of

the proceeding is illusory if there is not some

such implication.

Esso 13 MR FINKELSTEIN, QC 25/8/93

MR FINKELSTEIN: That is a principal contention that was put

below and what we contend is that there is a

substantive distinction between on the one hand, privacy, and on the other hand, confidentiality,

that is, non-disclosure. It is a distinction which

is recognized in many cases, a good example but not

directly relevant because it arises out of statue

rather than a contract, but the Police Tribunal

cases in New South Wales - Fairfax v Police

Tribunal (NSW) decision where Justice McHugh, when

he was in the New South Wales Court of Appeal,

delivered the lead judgment, drew a very clear

distinction between privacy of proceedings -

tribunal proceedings not curial proceedings - on

the one hand, and publication of what occurred
during the course of those curial proceedings on

the other, and said, and with respect we say quite

correctly, there is a significant difference

between the two. The issue arose in that case

because the Police Tribunal has the statutory power

to hold a hearing in private. As an adjunct to

that power the Police Tribunal said that we have
the authority, or power, to order people within the

tribunal, that is people present within the
tribunal, not to divulge what occurs during the tribunal hearings, and the Court of Appeal said

that the power to hold a hearing in private, that

is to exclude the public, did not have as an

incident of that power the right in the tribunal to direct that there be non-publication of what occurs during the course of the tribunal by people who are either present and hear it, or who are outside the

tribunal and hear of it. Justice McHugh said that

there is no assimilation between the two concepts.

We, with respect, say they are different, and

the reasons why a particular rule may not exist -

should not exist - may be different for the other

rule because in our contention - just dealing with

it on the contractual question - in order to

justify the implication of the contractual term

what will result. That is to say, the contractual	called for you have to look at the consequences of	term contended for is that the material cannot be
disclosed otherwise than for the purposes of the
arbitral process itself.

Now, take the case of these particular

arbitrations. Each involves a statutory

corporation, one is likely to be an emanation of the

Crown, and one is likely not to be an emanation of

the Crown on the proper construction of each corporation. The result of the implication of the

statutory, but in each case there is a minister
responsible to the Parliament and more directly, to
the Cabinet, but in a political sense to the

Esso 14 MR FINKELSTEIN, QC 25/8/93

term contended for would prevent the minister
responsible for these utilities, statutory
corporations, one of whom is likely to be the Crown
in any event, from being told about the affairs of

those corporations in connection with the

arbitration.

That is to say, the minister cannot be told that it is likely that the arbitrations will be

successful, or unsuccessful, so far as the

utilities are concerned, cannot be told that the

price of energy to consumers, including domestic

consumers and commercial - - -

DAWSON J:  What is so terrible about that, what would the

position be if it were an action, not an

arbitration?

MR FINKELSTEIN:  He would know about it.

DAWSON J: Yes, but he could not use the information for

other purposes?

MR FINKELSTEIN:	He could, and would, because although
DAWSON J:	He could not use the documents for other

purposes, I should say, more accurately.

MR FINKELSTEIN:  He could make use of the information. The

evidence at the trial, which was not dealt with by

the trial judge in the course of his reasons for

judgment, nor by the Court of Appeal in the course

of their reasons for judgment, was to this effect,

that the tariff for gas and electricity is set, not

by the instrumentality, but by Cabinet decision.

That is, it is the Cabinet that makes the decision about what prices are going to be charged to

consumers of the gas and electricity that are put

into the State by these utilities.

Now, forward planning, just simple economic

decisions that affect the annual budget, as the

evidence below showed, requires the responsible

minister to be appraised of what is happening, and

what is likely to happen as a consequence of the

arbitrations, in order for the State to make

decisions of a budgetary type.	Now, it is
true - - -

BRENNAN J: If that is required under statute, it would fall

within one of Mr Myers' exceptions, would it not?

MR FINKELSTEIN:  The position is that the minister, who is

the same minister in respect of each statutory

corporation, has different powers to compel the

provision of information from the utilities, and

has different powers to direct how they are to

conduct their affairs.

Esso 15 MR FINKELSTEIN, QC 25/8/93

Without going through the legislation, the

position is that the minister has far greater power

so far as the Electricity Commission is concerned,

on the one hand, and less powers with the Gas and

Fuel Corporation on the other. The Gas and Fuel

Corporation is treated by the legislation as more proximate to corporations and governed by

corporations law and so on, whereas the State

Electricity Commission is not that sort of

creature, and the minister has lesser powers.

All I am citing it as an example of is: could

it ever be said that, bearing in mind that a court

must determine the consequences of the implication

of a term, a statutory corporation could be prohibited as a matter of contract law from providing information to the responsible minister?

One of the points that was made by Justice Brooking

and one of the key submissions that was put which

the court seems to have accepted is that there are

so many circumstances where it would be never

accepted or understood that disclosure could not be

made, circumstances which do not create a class

capable of definition which tend to show that no

such term could ever be implied.

The obvious case that we put below and was

dealt with by the Court of Appeal was because most

arbitrations conducted in Australia - perhaps round

the world - do not involve the sorts of issues that
are involved in these particular arbitrations,
involving potentially massive sums of money, but

the bulk of arbitrations are the building disputes

and so on - and the implied term that is sought to

be implied here will cover every arbitration,

whether it is between large consumers or large

corporations and statutory corporations on the one

hand, or simple domestic disputes, building

disputes and the like, that go off to arbitration -

the clause contended for covers all of them.

The Full Court said - and we respectfully

adopt what the Full Court said - that it is absurd

to think that disclosure by parties involved in the

arbitration to certain other people would ever be

accepted as being a sensible restriction. The

examples go from the silly but commonplace to the

more serious, depending on who the arbitrating

party is. In a building dispute, the party to a

building dispute, home-owner and builder, have a

dispute about whether the kitchen was constructed
properly. If the implied term goes, then the home-

owner would not be permitted as a matter of

contract law to tell his or her spouse, depending

on who the arbitrating party was, how the

arbitration was going or how the arbitration went; must remain silent because there would be a breach

Esso 16 MR FINKELSTEIN, QC 25/8/93

of contract to divulge what was going on during the

course of the day in an arbitration to which the

spouse was not a party. That is a problem which

would occur with the bulk of arbitrations that take

place but - - -

DAWSON J:  I do not see anything terrible about that. After

all, the wife would be presumably, if it was

private proceedings, excluded from the proceedings.

MR FINKELSTEIN: But that the wife is not entitled to know

how the arbitral proceedings are going?

DAWSON J: If they are private and she is excluded, why

should she be entitled to know?

MR FINKELSTEIN:  The question is really not so much why

should she, but does it make common -

DAWSON J:  You raise that as being something which we should

react with horror to, but I do not.

MR FINKELSTEIN:  The implication of a term, amongst other

things, has to conform to common sense and the

cases say that; that is, the implication of a term

that is a legal incident of every class of

contract.

DAWSON J: There is a great deal of common sense in saying,

"These proceedings are private and therefore you cannot undermine that privacy by disclosing what goes on there".

MR FINKELSTEIN: Well, what we respectfully suggest is that

there are so many circumstances - - -

DAWSON J: Well, you have just suggested one.

MR FINKELSTEIN: Well, I will give others; we gave others in

the court below and we will do it here. A

disclosure when you have a corporation as an

arbitrating party making disclosure to a

substantial shareholder about the arbitral
proceeding and the likely financial outcome on the

corporation to the arbitral proceedings; disclosure

by a person to his banker, whether it is

corporation or an individual, about how the

arbitration is going - will he be liable for

$40,000 or will he collect $40,000. His banker may

be interested, not in a legal sense; the banker may

have no legal right to obtain that information, but

the banker and his customer may be vitally

interested as between whatever conduct passes

between them - borrowing facilities or future loans

and so on - that would make the restriction lack

common sense. An insurer is another example.

Esso 17 MR FINKELSTEIN, QC 25/8/93

BRENNAN J:  What you are saying, in effect, is that where

there is a legitimate interest on the part of the
arbitrating parties to divulge the information,

then no term should be implied contrary to that.

But is not the question of whether there is an

interest in the arbitrating parties, either as an

exception to a general rule or as spelling the

outer limits of any obligation of privacy, itself

an important question.

MR FINKELSTEIN: Unless I can satisfy the Court of this,

that the exception that has been contended for, as

part and parcel of the implied term, is non-

disclosure except as permitted by law; that is,

that there might be some statutory obligation to

disclose the information as in the case of

utilities, where the minister may be able to

compel, by reason of act of Parliament, the giving

up of information which might otherwise be

confidential or said to be confidential; that is

one. But, once it is accepted, and we say, as a matter of common sense it must be accepted, that

the exception must go beyond disclosure required or

permitted by law - and even they are different

concepts - but accept that there must be something

broader which is legitimate interest or something

like that, then you have a class which is incapable

of definition. If you venture into a class which

is incapable of definition, then it tells against

the existence of the implied term, because you

cannot imply a term and create the contractual

rights and duties, as a consequence of the

implication, and not have a basis for defining when

the accepted circumstances exist.

If the only accepted circumstance was as

required by law, that is easy, because you look to

see whether there is a legal requirement to

disclose the information, like, there might be, if

a company is listed on the stock exchange and there

are reporting requirements and make it compulsory

to disclose information.	You can accommodate that.
I do not have any difficulty with that.	But once

you move away from disclosure required by law into

disclosure where it suits the interests of a party, or is in the commercial interests of a party, or is in the domestic interests of a party, then once you recognize that you automatically point to a group

of circumstances which is incapable of definition

into a class. You will not have a genus to say

that these are examples of the species because the

common-sense circumstances will differ from case to

case. If you cannot define the exception then you

cannot have the implied term.

BRENNAN J: That seems to me to be a very interesting

proposition.

Esso 18 MR FINKELSTEIN, QC 25/8/93

MR FINKELSTEIN:  I wanted to make it as uninteresting as

possible, Your Honour.

BRENNAN J: If, for example, one had put it - and I am

arguing against you here - if one were to put it on

the basis that this is an equitable protection that

is given, is given because of the circumstances in

which the information is obtained and the extent to

which equity will protect one party is absolute,

except to the extent that the other party's

interests are to be also respected, so that there

is a balancing consideration. Why can equity not

do that?

MR FINKELSTEIN: Equity commonly does because equity

commonly balances competing interests without

defining those interests. I accept that. Contract

does not.

DAWSON J:  You are going to go to equity?

MR FINKELSTEIN: Yes. That issue was dealt with, but

shortly, by the Full Court. The contention that we

made, and that we make here, is that there is no

issue that information which is in the possession of one of the arbitral parties which, in ordinary

circumstances according to ordinary equitable

principles, would be protected by equity if

disclosed to another. I am not dealing with the

circumstances of the disclosure but the nature of

the information itself.

DAWSON J:	I do not understand that.
MR FINKELSTEIN:	I know Your Honour was going to say that.
DAWSON J:	Are we not at the stage now where virtually a

person who has information which is private, in the sense that it is not in the public domain, can make

that information confidential by the basis, by

MR FINKELSTEIN: That is true, but arbitral proceedings are	reference to the basis on which he imparts it?
voluntary proceedings.

DAWSON J: They are not, they are proceedings in private,

and therefore the circumstances in which the information is imparted are circumstances of

privacy, at least, and it would be said,

confidentiality.

MR FINKELSTEIN: But, in a sense, with respect, it begs the

question. It is giving to the notion of privacy

something that the notion does not deserve.

Privacy tells you how arbitral proceedings, as a

matter of procedure, will be conducted.

Esso 19 MR FINKELSTEIN, QC 25/8/93

DAWSON J: There is a purpose in the privacy, is there not?

MR FINKELSTEIN: Yes.

DAWSON J:	What is the purpose?
MR FINKELSTEIN:	The obvious purpose is it keeps strangers

out.

DAWSON J: Yes, keep the information within a closed circle.

MR FINKELSTEIN: That is a purpose for privacy.

DAWSON J: That is what confidentiality is.

MR FINKELSTEIN: Yes, but the principles that give rise to

one, and the principles that give rise to the

other, are not necessarily the same. What

Your Honour is doing is saying that, because something is private, because a proceeding is conducted in private, it must necessarily produce

the consequence that everything that happens in the

course of the proceedings is confidential. That is

not necessarily so and what we would say, with

respect, is it does not logically follow. You may

say in a private hearing something which is

thoroughly innocuous, something which does not have

any advantageous or disadvantageous effect on

anybody if disclosed.

DAWSON J: Is that your test for a document, to take a

document, a document which is confidential is that

disclosure may have a disadvantageous effect?

MR FINKELSTEIN:  No, but it is one of the matters that you

take into account. That is - - -

DAWSON J:  What is the criterion for deciding whether a

document is confidential?

MR FINKELSTEIN: This Court has dealt with it in Moorgate.

BRENNAN J: This is in the judgment of Justice Deane, is it?

MR FINKELSTEIN: Yes, 156 CLR - - -

DAWSON J: But you can tell me what it is.

MR FINKELSTEIN: His Honour Justice Deane said, at 438 of

the report:

It lies in the notion of an obligation of

conscience arising from the circumstances in

or through which the information was

communicated or obtained. Relief under the

jurisdiction is not available, however, unless

it appears that the information in question

Esso 20 MR FINKELSTEIN, QC 25/8/93

has "the necessary quality of confidence about

it" (and that it is significant, not

necessarily in the sense of commercially
valuable but in the sense that the

preservation of its confidentiality or secrecy

is of substantial concern to the plaintiff.

DAWSON J: That, to me, says that it must not be in the

public domain.

MR FINKELSTEIN: Well, that is one requirement.

DAWSON J: Yes, but otherwise, if the information is

imparted in circumstances where the person

imparting it imposes a duty of confidentiality on

the other person, it will be confidential

information, and circumstances of privacy would

seem to me to be the sort of circumstances which

would impart a confidential quality.

MR FINKELSTEIN: There are two answers, if I might with

respect say so, Your Honour. First, if you impart
information, imposing an obligation of confidence
in the process of imparting the information, then

you are creating a contract and your rights are in

contract. In any event though, what - - -

DAWSON J: No, they are not. There may be no contract. If

I hand you my diary saying, "Look, do not tell

anyone about this" - - -

MR FINKELSTEIN:  I accept that. It may be that in a

particular relationship the imparting of
information from one party to the relation to
another party of the relationship, by reason of the

nature of the relationship, could impose an

obligation of confidence.

DAWSON J:  And here you have a relationship with the two

parties who are engaged in proceedings which are

held in private.

MR FINKELSTEIN: There is one issue that Your Honour's

questions do not address, but what Justice Deane

said was important; that is, there is something

about the information itself which has been given

over. That is, there is something in the quality

of the information which is handed over, which is a

necessary element to the notion of confidence.

DAWSON J:  I know that is said there, and I am not sure what

it means. Perhaps you can tell me what it means?

MR FINKELSTEIN: It means that if the information which is

handed over - take Your Honour's diary example: if

I hand over a blank diary during the course of arbitral proceedings, that is, it has got the typed

Esso 21 MR FINKELSTEIN, QC 25/8/93

version of it but nothing filled in in any of the

entries, I have handed it over in a private

hearing, a Court of Equity would never treat -

DAWSON J: There is no information there, so that does

not - - -

MR FINKELSTEIN: But it is a document produced in the course

of the arbitration. It is handed over in the

course of the arbitration.

DAWSON J: Well, the equitable obligation would not just go

to the document, it is to the information, and

there is no information there. What you get is an

answer, "You know, trade secrets", that sort of

thing. But we have gone beyond that and I want to

know what is the test for saying that a document is

intrinsically of a confidential nature.

MR FINKELSTEIN:  It may be that there is not a test that

covers every piece of information which a court of

equity will truly regard as confidential, except in

the general sense in the way that Justice Deane

expressed it, that is, something in the nature of

the information makes it of substantial concern to

the owner of the information, or the possessor of

the information, that it should not be divulged.

It may be that because economic harm will follow.

It may be because embarrassment will follow. But,

unless there is some - - -

DAWSON J: Well, it comes very close to saying that the

person imparting the information can make it

confidential if he wishes to do so.

MR FINKELSTEIN:	By contract he can do that.
DAWSON J:	No, not by contracts.
MR FINKELSTEIN: In equity, no.
DAWSON J:	By saying, "I regard as important this

information should be kept confidential."

MR FINKELSTEIN:  No, because the equitable obligation

attaches because of something inherent in the

information itself. That is, it has got to be the

type of information which a person can reasonably

say, "I want this kept private."

DAWSON J:	You see, I do not understand it when you talk in those general terms. If you said it has to be the
type of information, the disclosure of which would
do damage to the person who is imparting it, well,
I can understand that.  But you cannot say that,
really.

Essa 22 MR FINKELSTEIN, QC 25/8/93

MR FINKELSTEIN:  I cannot because the cases do not allow me

to say that in any event, but - - -

DAWSON J:	Anyway, obviously it is an arguable point.
MR FINKELSTEIN:	They are the two points that are addressed

by the leave application.	They are our submissions
on the application.

BRENNAN J:  Mr Finkelstein, the draft notice of appeal does

refer to private information and documents of the

appellants. There was some controversy in the
affidavits as to the use of the word "private''. I
take it that whatever its connotation may be, that

there is no argument but that a declaration in

terms which uses that word was sought in the course

of the proceediTugs before the Full Court.

MR FINKELSTEIN: That included the word "private"?

BRENNAN J: Yes.

MR FINKELSTEIN:  My recollection is that the declaration

that was sought did not include the word "private".

BRENNAN J: This is in relation to the suggested

declarations handed up by counsel, I think, during

the course of the argument.

MR FINKELSTEIN:  The document that my learned friend,

Mr Myers, has shown me is a copy of the document

that he tendered to the Full Court where he finally

sought the final version of his orders, and that

does use the word "private" in the orders sought.

BRENNAN J:  Thank you.

TOOHEY J: Could I just ask you this, Mr Finkelstein:

having regard to the orders made in the first

instance and their variation on appeal, there are
two orders of Justice Marks that still stand.	They

SEC on the other, is not restricted from

appear on page 56, they are declarations C and F. hand, and

disclosing information to the minister by reason
only that the information was obtained in the
course of the arbitration. Is a declaration in
those terms one that you would maintain if the

matter were the subject of a grant of special

leave?

MR FINKELSTEIN: Most definitely.

TOOHEY J: That really points up a radical difference

between the two approaches, because you would

assert that the fact that documents were disclosed

and information given in the course of arbitration

Esso 23 MR FINKELSTEIN, QC 25/8/93

proceedings of itself carries no restriction by way

of confidentiality or otherwise.

MR FINKELSTEIN: Correct. What we would do, if the case

came up, is we would argue the issue on two levels.
One as has always been argued in the courts below,

that is, that there is no contractual or equitable

obligation but, secondly, if there was, whatever

might exist in a contract between subject and

subject, the same principles cannot and should not

apply in a contract between subject and Crown.

TOOHEY J: Well, except the declaration speaks of the

minister and third persons.

MR FINKELSTEIN: That is true but we - - -

TOOHEY J: There seems to be a grey area between the

parties, but at the outer edges there is a real

point of difference between them.

MR FINKELSTEIN:  Yes. We would still press that a minister,

in respect of information acquired by statutory

authority, stands in a different position.

BRENNAN J:	And you would rely on statute, if need be, to support it?
MR FINKELSTEIN:	No, because there will not be a contest, as

I understand the position taken by my learned

friend, Mr Myers, that if the statue permits the

disclosure - I am not sure whether the contest

might be whether the statute requires the

disclosure. Mr Myers has never suggested that if

there is a statutory obligation to disclose

information his civil rights override a statutory

obligation. I do not know what the position is if

it is merely permissive, because I do not know how

wide his exceptions save - is permitted by law.

BRENNAN J:  It would be hard put to say that if the statue

says you can do it but you cannot but, however,

that is something that you will have to give some

attention to.

MR FINKELSTEIN: Yes.

BRENNAN J: Thank you, Mr Finkelstein.

MR FINKELSTEIN:	May it please the Court.
BRENNAN J:	Dr Emmerson.
MR EMMERSON:	If the Court pleases, I hand up copies of our

outline of argument.

BRENNAN J: Yes, Dr Emmerson.

Esso	25/8/93
MR EMMERSON:	If the Court pleases, it is our submission

that neither the contractual basis, namely the

implied term, nor the basis depending on the

decision of the Court of Appeal in Dolling-Baker

provide a proper foundation for the contentions

that the applicants are making in the present case.

So far as implied terms are concerned, we would

emphasis that there is no issue in these

proceedings about whether in specific arbitration

contracts there might be implied terms about
confidentiality, and those terms might vary

according to the specific circumstances of the

contract.

In this case the applicants, however,

expressly disavowed before the learned trial judge

any argument depending on the established

circumstances in which one can import implied terms

into specific contracts. They accepted before

His Honour that they simply could not make out that

contention on the circumstances of the present
case. It follows from that that the specific

contractual basis on which the applicants seek to

rely is a narrow one. They have to say, and do

say, that the terms that they allege must be an

incident of all commercial arbitration agreements.

BRENNAN J: All commercial agreements for private

arbitration?

MR EMMERSON:  So far as that is concerned, we need to

examine what is meant by the word "privacy",

because in the course of my learned friend's
argument it tended to have, in our respectful
submission, an expanded or contracted definition.

By privacy we understand no more than that persons

who are strangers, in the sense of not being

involved, are excluded from the arbitration. But

we would say that this puts the case on no

different footing from the footing of any other

exchange of information which happens to be on

private property, or happens to take place in the

absence of strangers.

One can say, well, that is a private

communication in that sense. What we contest,

however, is whether one can use the word "private"

in an expanded sense of meaning, in effect, private

and confidential. We say that the use of the word "privacy" by my learned friend Mr Myers, in effect,

begs that question. The crucial distinction is

between something which takes place in private

simply in the sense that it is on private property

and strangers are not there, and something which is

private in the sense of being private and

confidential.

Esso 25 25/8/93

Now, we would accept that many commercial

arbitrations are private in the first sense, but as

to the second sense, we say that the applicants

simply have not been able to establish that

commercial arbitrations are private in that second

sense. There may be a category of them which are,
but then they would have to satisfy the tests for

either express terms or implied terms in accordance

with standard principles which tell you where terms

will be implied in specific contracts. The mere

fact that you know that something is a commercial

arbitration and is taking place on private

property, does not get one to the second step of

saying that it is also confidential.

DAWSON J:  I have not understood the applicants to be

putting it that way. What they were saying, as I

understood it, was because the proceedings are

private, the disclosure of information in those

proceedings does not put the information into the
public domain. But, the circumstances in which the
information is imparted for a limited purpose

brands it as confidential information and imposes an obligation on those to whom the information is imparted.

MR EMMERSON:	Your Honour, might I take those two points?
DAWSON J:	We are getting away from contract, then, I must

confess.

MR EMMERSON:  We are, in fact, but since Your Honour has put

those to me, may I say what our answer is? We do

not dispute that a communication that takes place

privately may not, for relevant purposes, amount to

a publication of the information. I say "may not"

because sometimes in the law of confidentiality,

confidentiality may be lost simply by one

disclosure of the information to another person.

The question, however, is whether the

circumstances of imparting that information impose

an obligation of confidentiality.

As to that, we would say that the mere fact

that the disclosure occurs in private, in the sense

that it is on private property and third parties

are not present, is not sufficient to establish

confidentiality. One can test that easily by

considering the vast number of ordinary

transactions which take place on private premises
in which the parties to the transaction are

perfectly free - - -

DAWSON J:  You are repeating the point you were already

making, Dr Emmerson. The point is, though, that

the circumstances of the imparting, that is the

Esso 26 25/8/93

information is information which you would not give
except for the limited purpose of the arbitration

proceedings, it is that which imparts the

confidentiality, and the fact that the proceedings

are private means that the confidentiality is not

lost.

MR EMMERSON:  We would say that the mere fact that there is

a limited purpose in disclosing that information

does not itself entail an equitable obligation of

confidence. One can think of any number of

examples in which information is disclosed for a

limited purpose: someone says to somebody else,

"I'll be in Melbourne next Friday; can you come and

have dinner with me?" That information may be not

otherwise published, it may be disclosed for a

limited purpose of inviting the person to dinner,

it may be disclosed on private premises.

DAWSON J: It is not a limited purpose involving

confidentiality. Can I put it to you directly.	Is
the law now that a person imparting information
which is not in the public domain can impose an
obligation of confidence on the person to whom information is imparted?

MR EMMERSON:  If that obligation is accepted, then he can.

DAWSON J: It would normally be accepted passively.

MR EMMERSON: Absolutely not, Your Honour. Let us take the

present example.	You have an arbitration that
takes place, two parties to the arbitration.	One
party is putting its case.	The other side may be
only too happy not to have that case put.	He is
not to be taken to be agreeing to accept an
obligation that he will disclose it no further.	He
has no interest in receiving that information, he
may be objecting to it before the arbitrator, he
may be saying, "This is irrelevant", and so on.

That is not such as to impart an obligation of confidence; it has got to be accepted. In our respectful submission, it simply cannot be said

that that obligation of confidentiality is imposed

and accepted in all private commercial arbitration

agreements.

It may be that this is true of some, but it

cannot be true of all. Returning to the question

of contract, one can only say that it is an

incident of all commercial arbitration agreements,

if that term is necessary. But, in our respectful

submission, it is clearly not necessary in all

cases; it may be necessary in some cases, but in

many cases there is no necessity for it at all.

Therefore, one has to look not just to the fact

that there is a commercial arbitration on foot and

Esso 27 25/8/93

not just to the fact that that when it comes to the point one party or the other might claim or wish to claim confidentiality; you have got to go to the

further step and say that the circumstances are

such that if he claims that confidentiality, then

the party receiving the information or having that

information thrust at him, in the case of an

arbitration, is bound to maintain that.

This, in our submission, can only be done if a

term to that effect is necessary, as contended by

one part of my learned friend's argument, or if it

can be somehow spelt out of an equitable

obligation. Now, in our submission, there is no

basis that has been put before this Court or has

been argued below which shows that there is an

obligation binding on the conscience of the

recipient of all information in all commercial
arbitrations which obliges him not to disclose it.

You do not get anywhere, in our submission, by simply saying that the thing is behind closed doors; you have got to see whether he is bound

either by contract or as a matter of conscience.

And that, in our submission, simply is not made

out.

If the Court pleases, reverting to the contractual point, the term, as now formulated in

answer to what Your Honour Justice Dawson was

putting to me, amounts to whether you have a term,

not only that the arbitration will be conducted on

private premises, in the sense that strangers are

excluded, but also that any information produced at

that arbitration, whether or not the recipient

wants to receive it, must be kept confidential.

That is, of course, important in this case because

the applicants seek to put a case against us, they
seek to put a case against the SEC and they wish to

prevent us from telling the SEC what is the case

put against us and SEC telling us what is the case

put against them.

We want to be able to compare these cases to

see whether they are consistent or whether in

effect the same relief is being sought twice in two

arbitrations. The position that has been adopted

by the applicants is that we cannot do this. In

our submission, it cannot be said that it is a
necessary incident for all private arbitrations

that the case put against put against a party

should be kept confidential to him, so that he

cannot disclose it to other persons.

The next aspect of the test which must be

satisfied before there can be a finding that there

is a contractual term as an incident to all

commercial arbitrations is that the terms

Esso 28 25/8/93

themselves must be clear in their application. In

our submission, that is a further point on which

the applicants fail because the nature of the

obligation and the nature of the so-called

exceptions to it are, we would say, impossible to

formulate with precision.

In our submission, the consequence of that is

not that one has a general rule with uncertain

exceptions, but that it is impossible to formulate

with precision a general rule. Even the way in

which the applicants have put their case at

different stages, even before this Court, varies

between talking of use of information and documents

as in paragraph 1.1:

parties may only use information and documents

received -

to:

private ..... information -

in paragraph 5.2. In the courts below there was,

in our respectful submission, no fixed reference to private information and that, in itself, is fraught

with ambiguity because, to the extent that it

suggests that this is information which has, as the

authorities put it, the necessary quality of

confidence about it, it tends to beg the question.

To the extent that it has some other meaning, that

meaning is uncertain.	The various
propositions - - -

BRENNAN J:	Why would it not mean information disclosed for the purposes of the arbitration with which the
respondent would not otherwise have been supplied?
MR EMMERSON:	Well, Your Honour, that, again, with the

greatest respect, has with it two separate strands,
the consequences of which may be different.	If one

looks at Dolling-Baker, that was concerned with

documents obtained on discovery. If one goes

through a process of discovery, the position is as follows: the person receiving those documents has

called for them, has insisted that he sees them, and so on. That may be one case, but what about

the -

BRENNAN J: We do not have to worry about that. There is no

question of discovery here under a statutory power.

MR EMMERSON:	Right. Now, what about the case in which the information is being put forward by a party in the
arbitration where his opponent does not want to
receive that information, does not want the
arbitrator to receive that information, but it is

Esso 29 25/8/93

the giver of the information who is insisting on

putting that into the arbitration? It is voluntary

in the sense that it is part of his case.

In our submission, it cannot be said to be a

necessary term of all commercial arbitrations that
people should be entitled to go to arbitration,
say, "I am going to insist on putting this

information before the arbitrator, but I want to

impose an obligation on the other party to the

arbitration not to disclose it". That is something

which simply cannot be said to be necessary.

Take the simple case of a building dispute.

The house owner says that the house is poorly

constructed, goes to arbitration, tells the

arbitrator why it is poorly constructed. Why

should not the builder be allowed to tell other

people what has been the case put against him?

Equally, the builder puts up a defence. Why should

not the house owner be entitled to tell other

people the case that is made against him?

DAWSON J:  We understand those are the arguments.

TOOHEY J: Could I just ask you this, Dr Emmerson? Is it

part of your submission that a document which would

otherwise attract some protection by reason of

confidentiality, automatically loses that

protection once the document is disclosed - I am

not using the word "discovered" - but is disclosed

in the course of arbitration proceedings?

MR EMMERSON:  No, it is not. We say that the effect of the

privacy of the arbitration proceedings goes only to
the point that the mere production of documents in

the arbitration proceedings does not in itself

amount to a publication. To take my learned

friend's example, where you have a trade secret

where there would be in any event an equitable

obligation on the recipient in many circumstances

to keep the information confidential, we do not say

that is lost.

DAWSON J:  Why would the trade secret be confidential in any

event?

MR EMMERSON:  Because it is information of a character which

has, in the words of the cases, the necessary

quality of confidentiality about it.

DAWSON J: Jene sais quoi.

MR EMMERSON:  The authorities do enable one to know what

that quality is, but the particular expression that

I have used is one which is used repeatedly in

cases on this part of the law.

Esso	25/8/93
DAWSON J:	I know, but it seems to come very close to the

confidentiality arising from the circumstances in which the information is imparted, not the nature of the information itself.

MR EMMERSON:  No, there is traditionally a threefold test

which appears again and again in the cases. There

are three elements in an action for breach of

confidence: first, the information has the

necessary quality of confidence about it; secondly,

it is communicated in circumstances importing an

obligation of confidence; and third, there is an

unauthorized use which causes damage or may cause

damage. That formulation makes it clear, in our

submission, that on the authorities the question of

whether the information itself is intrinsically of

a type which can be confidential is a different

question from the circumstances of the imparting.

DAWSON J:  I am not sure that that is so. I am not sure if

the necessary quality of confidentiality merely

means that it is not in the public domain.

MR EMMERSON:  We would say that it means more than that

because it has got to be information which, in all

the circumstances, a court of equity will intervene

to protect.

DAWSON J: That is merely restating the question.

MR EMMERSON:	Not quite, Your Honour, because
DAWSON J:	Anyway, I have been over this.

MR EMMERSON: If Your Honour pleases. There are, in our

respectful submission, many matters which are not

in the public domain which you could not go into

court and get an injunction to prevent disclosure

unless you had got an actual agreement from the

other party. It is the absence of that actual

agreement from the receiving party which, in our

submission, is a fatal weakness in my learned

friend's case so far as it relies on implied terms

in a contract.

BRENNAN J: 

Dr Emmerson, the Court has had an advantage of

hearing the general framework of the argument thus
far and it is a question of seeing whether there is

an issue which is right for determination.

MR EMMERSON: 

Yes.

BRENNAN J: 

Now, I want to read to you two paragraphs, which

are of more interest, I imagine, to Mr Myers than

they are to anybody else at the bar table, or at

least primarily to him. But this is not for the

purpose of indicating a view that the Court has

Esso 31 25/8/93

formed, but in order to concentrate the minds of

counsel on the issues which, as it seems to us, may

have arisen in the course of litigation, and the

question is, whether or not there should be, on the

appellant's counter claim - and I am taking a

variation of words now from page 176 -

paragraph (ii). First:

it is an implied term of the arbitration

agreement which is clause 23 of the 1975

supply agreement between the Appellants and

the Second Respondent that the Second

Respondent is not entitled to -

disclose otherwise than for the purpose of the -

arbitration pursuant to the 1975 supply
agreement private information and documents of

of the arbitration -

the Appellants disclosed to the Second

with which the second respondent would not

otherwise have been supplied, unless disclosure is

authorized by statute. And then, alternatively,

or, the second respondent is bound not to disclose

otherwise than for the purpose of the arbitration

pursuant to the 1975 supply agreement, information

and documents disclosed to the second respondent by

the appellants for the purposes of the arbitration

with which the second respondent would not

otherwise have been supplied, unless disclosure is
authorized by statute.

Now, those propositions are put forward to concentrate the attention on the bases on which the

argument is said to be mounted, namely the implied

term or a wider basis, to identify the question as

one of disclosure rather than of collateral use, to give some meaning to the word "private" in relation to information and documents, and to put the

qualification as one which is limited to statute -

using that term of course, broadly, to include

regulations by laws and rules of court - and to

invite counsel to address those elements.

MR EMMERSON: In our submission, if those propositions are

put by my learned friend as being propositions

which mutatus mutandis would apply to all

commercial arbitrations, then, in our submission,

they must be much, much too wide, because they do
not cover the ordinary and common case of minor

disputes as in, for example, building cases.

The proposition that my learned friend would

have to establish is that it is a necessary term

for all private arbitrations that disclosure should

Esso 32 25/8/93

be restricted in this sense, and that means that he

would have to show that it was necessary, for

example, in private building arbitrations, that a

husband should not disclose to his wife and family

what went on in arbitration, that he should not

disclose to, perhaps his creditors or backers, or

other people that might be affected by that

arbitration.

The formulation that the Court has put to me

is, with respect, of assistance because it shows

how very broad the proposition is for which my

learned friend contends. We say that that broad

proposition simply will not withstand the test of

necessity for all commercial arbitrations.

We have to put to one side in considering this

whether on the particular facts of the present

case, certain terms might be implied. One has got

to consider the generality of all of them, and to

have a term which would restrict the disclosure of

all information with which a party would not
otherwise be supplied, regardless of the character
of that information, unless there is a specific

authorization by statute would, in our submission,

lead to an absurd result. However, our proposition

does not require me to satisfy the Court that the

result would be absurd. It is sufficient for me to

say that our learned friends have not established

that it is necessary, because that is the test.

The second matter that we would say is that as

to whether this is a proper case for this to be

considered by this Court. This has been a case in which the proposition contended for by our learned friends has been refined again, and again, and

again, most recently, with the greatest of respect,

by the bench of this Court. It is a proposition

which has been advanced in circumstances where it

is not possible to test it against special facts of

a particular case which might allow one to see

whether it is, or is not, too wide.

Now, I know my learned friend says that it

applies to the generality of all cases, but it

would be of assistance, in our respectful

submission, to have before the Court a case in

which there were some underlying facts known which

would enable the proposition to be tested.	As it
is, what I would say is that one can readily

imagine cases which are not fanciful and, indeed,

are much more in the common run of cases than the

present case, in which that term would simply not

satisfy the test of necessity.

So far as the alternative basis on which my

learned friend puts his case, we would wish to say

Esso 33 25/8/93

something about the Dolling-Baker case which, apart

from the implied term, is the basis on which my

learned friends seek to rest their case.

Dolling-Baker, of course, does not depend on an

implied term. It depends on an extension of the

notion of an implied undertaking given to the court

by a person who seeks discovery from an adverse

party in judicial proceedings.

In our submission, the present propositions put forward by our learned friends go way beyond

anything that could be extracted on the basis of an

implied undertaking. One should mention, at least, the following. First, that an implied undertaking given in aid of discovery is something which is
given by the party wishing to receive the

information disclosed, and it is an undertaking

which is of a limited character. My learned friend's proposition covers all information,

whether or not it is information expressly sought

for a limited purpose by the recipient.

Secondly, an undertaking is given to the court

and the court has procedures for enforcing that

undertaking. The court is a continuing body. Once

the arbitration is over, that is the end of it,

the arbitrator has no further function. There is

no analogy, in our submission, to that basis for

enforcing an undertaking.

Thirdly, in our submission, an undertaking given to the court then puts the court in control

of what subsequently happens: the court may decide

to relieve a person of the burden of his

undertaking and so on. It makes no sense, in our

submission, with all respect to the Court of Appeal

in Dolling-Baker, to talk of a court having the

power to relieve persons of an obligation of

confidentiality in arbitration proceedings because,

first, one does not have the surrounding

circumstance of an undertaking so as to be able to

test whether circumstances have so changed that a
person should be relieved of that undertaking and,

secondly, of course, the court is simply not seized

of the matter. It is one which, ex hypothesi,

arises not in the context of whether a court will

relieve a person in particular proceedings of an

undertaking, but in the abstract.

So, in our submission, the basis found in

Dolling-Baker is not one which is sustainable.

Similarly, the alleged implied undertaking is not

one which is sustainable. For those reasons, in

our submission, it cannot be said that there is

sufficient doubt about the correctness of the

Esso 25/8/93

decision of the court below for this to be

appropriate for special leave.

So far as the lack of certainty and

inappropriateness of this case to determine the question, we would, with respect, submit that a proposition which gets formulated and reformulated

and reformulated at various stages as it goes

through the Court so that this Court is being

invited to hear an appeal on it in a form which was

never precisely put to the courts below, is not an

appropriate case for the granting of special leave.

BRENNAN J:  Do you say that the formula which I put to you

before was not within the ambit of the discussion

in the courts below?

MR EMMERSON:  Your Honour, it was within the ambit. The

trouble was, it was a shifting ambit of discussion.

BRENNAN J: 

I appreciate that, but that question, or those

questions, if one divides them up, were each live
issues in the courts below.

MR EMMERSON: 

They were live issues, but the particular

combination that Your Honour put to me, in our

submission, was never considered by the court below

and, in fact, the difficulties that the court below

had with these shifting propositions was the very fact that they did shift and the court considered

them in that context. The courts below were never

asked to consider the proposition as precisely
formulated by this Court a few minutes ago. If the

Court pleases.

BRENNAN J:  Thank you. Dr Buchanan.

MR BUCHANAN:  Your Honours, I do not wish to traverse the

ground that has already been covered. Can I just

say something briefly about the width of the

general obligation for which the applicants contend

and the very extensive ground which it would cover. The range of disputes commonly determined by

arbitration is very wide, extending from domestic

disputes about, for example, the proper workmanship
in the extension to the kitchen, which are of

little or no interest to anyone but the disputants,

to arbitrations of the present type where what is
in dispute is the price, or at least a fact, which

will determine the price of a commodity which is

used by an entire community.

The ground necessarily covered by the

obligation for which the applicants contend,

whether it is regarded as a rule of law in the

Esso 35 25/8/93

sense of a necessary incident of every particular

relation or whether it is an obligation imported by

equity in the circumstances of every arbitration,

in our submission renders either basis for the

obligation inappropriate. Where the courts do

impose obligations as necessary incidents of

particular relationships, the scope of the rule is

limited by a relatively narrow range of activities

to which the rule applies - for example, the

relationship with banker and customer, where

confidentiality is imposed as a matter of law; the

implied term imposed as a matter of law upon the

landlord of furnished premises, a block of flats

where he undertakes no express obligation to

maintain common areas, and the obligation, for

example, of good faith, which applies to an
employee in his dealings with his employer.

In those cases, a general obligation which is

imposed as automatically, and irrespective of the

particular facts, does operate satisfactorily

because of the limited application of the rule.	On
the other hand, in our submission, the obligation
which is contended for here is to apply not only
where it is needed - take the case of people who

are disputing the ownership or right to exploit an

industrial formula that is not generally known -

but it also is to apply where it is not necessary -

my example of the dispute about the workmanship

that went into the extensions to the kitchen - and

it also applies in a case where one would

ordinarily expect the parties to have anticipated

that there would be disclosure. We give the

present case as one which is an example of that,

concerning public authorities with not only express

statutory duties about giving information, but also

general obligations in respect of the minister who

in turn owes further obligations to Parliament,

which are not always neatly and conveniently

brought under some general exception, such as, say,

where statute otherwise provides.

In our submission, the differing needs of

those who arbitrate their disputes are best
accommodated by the terms of the arbitration

contracts which they enter into. That can either

be done expressly - and indeed, one of the

authorities which is set out in the applicants'

outline, the recent Court of Appeal decision in New

South Wales, is an example of an arbitration

agreement that contained a confidentiality term in

express words - or it can be brought into the

contract by, as it were, ad hoc implication where

the subject-matter of the arbitration and the

relationship between the parties is such, and it is

appropriate to do it because it answers the tests

Esso 36 25/8/93

laid down by the courts in cases such as Codelfa

and BP Refinery (Western Port).

In our submission, that is the difficulty with

the case which comes before this Court. It is not

a case about any facts, it is not a case about any

information. It is a case which depends entirely
for its resolution on the existence or

non-existence of a term that applies every time

there is an arbitration, whatever that arbitration

may be, or an equitable obligation that exists

whenever there is an arbitration, whatever it may

be. In our submission, the extreme nature of that

case is the factor that ought to lead with respect

to the refusal of the application. If Your Honours

please.

BRENNAN J:  Thank you, Dr Buchanan. Mr Finkelstein, do you

wish to say anything with regard to the matter that

was raised after you had resumed your seat, before

I call on Mr Myers to reply?

MR FINKELSTEIN: Just one thing, in respect of the second

question formulated by Your Honour, If leave were

to be granted it would be an odd thing, I think, to

have as the only countervailing argument to

confidence statue, because confidence gets
overridden, according to the authorities, in many
circumstances other than statutory obligation. It

would seem to be confining, unnecessarily, the law

of confidence to require it to be overridden by

statue. I address that, Your Honour - it is really

Mr Myers point because if he narrows it that much

it makes it easier for me to argue the point.

BRENNAN J: Well, if he narrows it he has got to state the

extent of the narrowing.

MR FINKELSTEIN: Yes, I accept that. That is the only

comment I wanted to make about the formulation of

questions.

BRENNAN J:  Mr Myers.

MR MYERS: If the Court pleases, I accept the formulation of

the questions, as proposed by the Court. Indeed, the paragraph that Your Honour used as a basis of the formulation is set out at page 70 of the appeal

book. It is the form in which an order was sought

from the Full Court and, not to make any more of it, I accept that. It clarifies the question of

what constitutes private information, what

constitutes use and it puts the exception, as it

was put, below.

If Your Honours please, I do not wish to

trespass upon arguing the merits of the matter. I

Esso 37 25/8/93

do point out, however, that the origins of this
litigation are to be found in the action brought by
the State in which the two instrumentalities
concurred for a declaration which is, in effect, in

opposite terms to the orders that were sought in

the Full Court. Your Honour Justice Toohey pointed

out the terms of that declaration that are still

standing, and that was litigation that was

commenced without reference to particular facts. And it was argued by the moving parties, who are

the respondents here, on that basis. If the Court

pleases, I have nothing further to say in reply.

TOOHEY J:  I must say, I am troubled by the notion that the

qualifications should be confined to statute, but

that is a matter for you, I suppose. I mean, that

is a matter for you in the sense that is the basis

upon which you seek a grant of special leave?

MR MYERS:  Yes, I accept that. The difficulty about

qualifications is that one cannot imagine all the

circumstances that might arise in the universe at some time in the future. But, doing the best one
can, it seems to us that a statutory requirement is

the only exception.

TOOHEY J:  So it is not a matter of anticipation so much as

you nail your flag to the mast of a principle which

operates, save only where a statutory authority

exists. So that if there might be thought to be

some other authorization by law you would exclude

that in the terms of the principle for which you

opt. I am not trying to argue you out of it, I am

just pointing out that that is the principle for

which you seek a grant of special leave to appeal.

MR MYERS:  I understand that. I would urge that the

principle should be dealt with on any appeal

without reference to an attempt to define all the

exceptions.	However, if the Court desires that it
be dealt with otherwise then I accede to that

course. It is true enough that the argument that

has been put below is encapsulated by the way in

which it is formulated. I cannot resile from that

either. I will be contending, if special leave

were granted, for the principle and not for the

exceptions, though.

BRENNAN J:	Have you anything to add?
MR MYERS:	I do not, Your Honour.

BRENNAN J: There will be a grant of special leave in this

case, limited to claims on the appellants' counter-

claim for declarations:

Esso 38 25/8/93

1. That it is an implied term of the

arbitration agreement, which is clause 23 of
the 1975 supply agreement between the

appellants and the second respondent, that the

second respondent is not entitled to disclose

otherwise than for the purpose of the

arbitration pursuant to the 1975

supply agreement, information and documents

disclosed to the second respondent by the

appellants for the purposes of the arbitration

with which the second respondent would not

otherwise have been supplied unless disclosure

is authorized by statute.

2. That the second respondent is bound not to

disclose otherwise than for the purpose of the

arbitration pursuant to the 1975 supply

agreement, information and documents disclosed

to the second respondent by the appellants for the purposes of the arbitration with which the

second respondent would not otherwise have

been supplied unless disclosure is authorized

by statute.

3. That it is an implied term of the

arbitration agreement, which is clause 25 of
the 1981 supply agreement, between the

appellants and the third respondent, that the

third respondent is not entitled to disclose

otherwise than for the purpose of the

arbitration pursuant to the 1981 supply

agreement, information and documents disclosed

to the third respondent by the appellants for

the purposes of the arbitration with which the

third respondent would not otherwise have been

supplied, unless disclosure is authorized by

statute.

4. That the third respondent is bound not to

disclose otherwise and for the purposes of the

arbitration pursuant to the 1981 supply

agreement, information and documents disclosed

to the third respondent by the appellants for
the purposes of the arbitration with which the
third respondent would not otherwise have been

supplied, unless disclosure is authorized by

statute.

MR MYERS:  The way Your Honour began that - I did wish to

make it clear and it may well be clear to the Court

that there are still extant the orders made by

Mr Justice Marks to, in substance, the opposite

effect of those declarations and so the appeal
strictly could not be limited to the counter-claim
but it must also relate to Mr Justice Marks'

orders. Now, they are the orders set out on

Esso 39 25/8/93

page 55 and following and the orders that are still

extant are the declaration under 6C - - -

TOOHEY J:  6C and 6F are the only two that remain.

MR MYERS:  - - - and the declaration under 6F. I am

indebted to Your Honour Justice Toohey.

BRENNAN J: Yes, the grant of special leave will extend to

an appeal against the declarations made by

Mr Justice Marks which presently still stand.

MR MYERS:	Thank you, Your Honour.
BRENNAN J:	The Court will adjourn until 2.00 pm.

AT 12.38 PM THE MATTER WAS ADJOURNED SINE DIE

Esso 40 25/8/93