Global Smart Cities Pty Ltd v City of Wanneroo [No 2] - [2023] WASC 366

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   GLOBAL SMART CITIES PTY LTD -v- CITY OF WANNEROO [No 2] [2023] WASC 366
CORAM:   HOWARD J
HEARD:   18 SEPTEMBER 2023
DELIVERED          :   27 SEPTEMBER 2023
PUBLISHED           :   27 SEPTEMBER 2023
FILE NO/S:   CIV 1493 of 2022
BETWEEN:   GLOBAL SMART CITIES PTY LTD
Plaintiff
AND
CITY OF WANNEROO
Defendant

Catchwords:

Practice and procedure - Pre-action discovery - Inspection - Confidentiality - Interested non-Parties seeking confidentiality regime - Trade rivals - Whether documents should be provided to plaintiff - Whether inspection of documents should be restricted to legal advisors and nominated experts - Confidentiality order imposed

Legislation:

Nil

Result:

Application allowed

Category: B

Representation:

Counsel:

Plaintiff	:	Mr D H Solomon
Defendant	:	Mr S D Hubbard
First interested non-party	:	Mr R P Camm
Second interested non-party	:	Mr D J Pratt
Third interested non-party	:	Ms V A Bennett

Solicitors:

Plaintiff	:	Solomon Brothers
Defendant	:	DLA Piper Australia - Perth
First interested non-party	:	Camm & Associates
Second interested non-party	:	McVay Bates & Associates
Third interested non-party	:	Bird & Bird

Case(s) referred to in decision(s):

Alcoa of Australia Ltd v Apache Energy Ltd [2014] WASCA 148
Civic Video Pty Ltd v Paterson [2013] WASCA 107
Harman v Secretary of State for the Home Department [1983] 1 AC 280
Kirman v Austroid Corporation [2023] WASC 350
Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34
Murray Riverside Pty Ltd v Toscana (WA) Ravenswood Estate Pty Ltd [2022] WASCA 67
O'Brien v Komesaroff (1982) 150 CLR 310
Uon Pty Ltd v Hoascar [2020] WASC 271

HOWARD J:

Background

The plaintiff (GSC) obtained pre‑action discovery Orders from Master Sanderson on 2 September 2022 against the defendant (City).[1]
[1] The orders were dated 2 September 2022 and the reasons were given ex tempore on 19 August 2022.
In his ex tempore reasons of 19 August 2022, which led to the discovery Orders, the Master said:
During the course of the hearing, the parties debated the question of whether discovery ought be followed by inspection. The [City], in particular, pointed out that the documents that it would have to discover were commercially sensitive. That may well be the case. And it may be that a regime has to be put in place to allow for inspection, such that the confidential nature of these documents is respected.[2]
[2] Reasons 19 August 2022.
The documents which were ordered to be discovered related to the City's 'Request for Tender Number: 22007 for Supply Installation, Maintenance and Advertising on Seats' dated 10 January 2022.
GSC was unsuccessful in that tender. The tender was awarded by the City to Muscara Holdings Pty Ltd (Streetside).
There were two other tenderers which were also unsuccessful, being Claude Outdoor Pty Ltd (Claude Outdoor) and Natsales Advertising Pty Ltd (Natsales). Streetside, Claude Outdoor and Natsales are together the Interested non-Parties.
Pursuant to the Orders of the Master, the City's CEO gave discovery on affidavit made 10 October 2022 (City's affidavit). In addition, the City has informally discovered a further document, being 'Detailed Financial Assessment of [Streetside]'.[3] From here I will refer to the documents discovered in the City's affidavit and that additional document as the City's discovery.
[3] Being the document described in the Affidavit of Rodney Ronald Hicks made 24 January 2023 [4.3].
The Master heard further argument in February 2023, after the City's discovery had been given, and published reasons which are at [2023] WASC 174.
The Master said in those reasons:
[3]… [GSC's] claim, if any, against the [City], is for breach of a process contract. That is to say, by inviting tenders, the [City] committed to follow a process in the awarding of a contract. That process was not followed - that is to say if there was a breach of contract - then [GSC] may have a claim against the [City]. I was satisfied that [GSC] could not make that decision without access to the documents submitted by other tenderers. A natural consequence of making the order for discovery was that documents from other tenderers which were highly sensitive would pass into the possession of [GSC]. [GSC] is a competitor of the other tenderers.
…
[16]… it remains for a Judge or Master to determine whether or not a confidentiality order ought be made.
The Interested non-Parties seek the imposition of a confidentiality regime before certain documents in the City's discovery are inspected or provided in a non-masked form to GSC.
From the City's discovery, the documents in dispute for present purposes are:
(1)D8: tender submission from Natsales;
(2)D10: tender submission from Streetside;
(3)D11: tender submission from Claude Outdoor;
(4)D16: document entitled '22-39276-22007 - Administrative Compliance Checklist' of the City;
(5)D17: document entitled '22-53843-22007 - Tender Submissions - Price Evaluation';
(6)D18: document entitled '22-56491-22007 - Overall Evaluation Spreadsheet';
(7)D19: document entitled '22-17132-22007 - Confidential Memo - Attachment to Tender Report';
(8)D20: document entitled '22-3925-22007 - Tender Evaluation Spreadsheet';
(9)D64: document entitled '22-14763-22007- City of Wanneroo's Services Supply Contract';
(10)Detailed Financial Assessment of Streetside
(together the Disputed Documents).
The City has not yet provided copies of D8, D10, D11, D64, and the detailed financial assessment of Streetside to GSC.
Further, the City has provided only masked copies of the documents D16, D17, D18, D19 and D20 to GSC; these are all internal to the City and are part of its assessment process.

The Applications

Formally, GSC seeks Orders[4] that the City provide it with complete and unmasked copies of all the Disputed Documents.
[4] GSC Minute of Proposed Orders dated 15 September 2023.
I was told at the hearing that the City has no objection to GSC inspecting any of the Disputed Documents without masking or other restriction. The City will abide the resolution of this dispute between GSC and the Interested non-Parties.
The central issue between GSC and the Interested non-Parties is whether the Disputed Documents should be provided by the City without, or with, a confidentiality regime which would limit who, on GSC's side, might inspect the Disputed Documents.
Principally, the Interested non-Parties seek orders to restrict inspection to a limited number of solicitors for GSC and experts or external advisers to be nominated.
For its part, GSC contends that there should be no additional confidentiality regime other than that delivered by:
(1)the Harman obligation[5] implied as a matter of law;[6] and
(2)the two officers of GSC for whom full access is sought to the Disputed Documents signing an undertaking to the Court 'to not disclose any of the contents of any of the [Disputed] Documents to any other person without leave of' the Court.[7]
[5] Harman v Secretary of State for the Home Department [1983] 1 AC 280.
[6] Murray Riverside Pty Ltd v Toscana (WA) Ravenswood Estate Pty Ltd [2022] WASCA 67 [70].
[7] Proposed Order 3 to GSC's Minute of Proposed Orders dated 15 September 2023.

The Parties

It was common ground between GSC and the Interested non-Parties that the four of them represent, if not the whole market then very much, the vast majority of the market which might be described as the outdoor advertising market for bench seats in Western Australia.
By its orders sought, GSC identified Mr Luxford and Mr Uren as its officers to whom full inspection of the Disputed Documents ought be given. Mr Luxford is the sole director of GSC[8] and Mr Uren is a senior officer of GSC.
[8] Affidavit of Leonard Colin Luxford made 19 May 2022 [1].
Messrs Luxford and Uren are hands‑on executives of GSC. There was no suggestion that an information barrier might be feasible between the two of them on the one hand and the ongoing business of GSC on the other. I have proceeded on the basis that, on GSC's proposed orders, Messrs Luxford and Uren would be able to tender (by GSC) for other local government authority (or similar) contracts in that market after having full access to the Disputed Documents.
Further, it appeared to be common ground that these four (the Interested non-Parties and GSC) are trade rivals and in the sense described in the authorities, and will continue to compete in the Western Australian market.

Consideration

At the conclusion of the hearing I took from the City's counsel a bundle of the Disputed Documents. I have considered the complete, unmasked Disputed Documents.
As maybe seen from GSC's proposed Orders quoted above, GSC accepted to some degree that an additional regime (not just the Harman obligation) is called for.
GSC and the Interested non-Parties were broadly agreed that the question for the Court is what would balance the respective rights and the interests of GSC on one hand and the Interested non‑Parties on the other in the interests of justice.
There was no suggestion by any party that this Court lacked power to effectively order a confidentiality regime.[9]
[9] Alcoa of Australia Ltd v Apache Energy Ltd [2014] WASCA 148 [41] (McLure P).
In Alcoa of Australia Ltd v Apache Energy Ltd,[10] McLure P stated the following propositions as being well established and uncontroversial:
[10] Alcoa of Australia Ltd v Apache Energy Ltd [2014] WASCA 148 [57] (McLure P).
1.a party to an action has a prima facie entitlement to inspect discovered documents, save in cases where the party giving discovery has a positive substantive right to withhold a document from production;
2.the prima facie entitlement to inspect extends to discovered documents containing confidential and/or commercially sensitive information;
3.inspection of discovered documents by or on behalf of a party gives rise to a substantive legal obligation to use the discovered documents solely for the purpose of the action in which they were discovered. The obligation extends to all persons who deal with the discovered documents with knowledge that they were obtained by way of discovery. A breach of this substantive obligation is a contempt of court;
4.ordinarily, the implied undertaking sufficiently protects the party giving discovery;
5.the court has a discretion under O 26 r 9(1) to make an order for production or inspection and a power to impose restrictions and/or conditions on inspection;
6.the court may exercise its power to impose limitations, restrictions or conditions for the purpose of protecting the efficacy of the implied undertaking;
7.the implied undertaking may be insufficient protection in a variety of circumstances, including but not limited to, cases where discovered documents are relevant to a trade rivalry between the parties to the action; and
8.the exercise of the discretion in O 26 r 9(1) will be informed by the nature and scope of the proposed limitations, restrictions or conditions on the inspection of discovered documents.
As the Court of Appeal said in Civic Video Pty Ltd v Paterson [2013] WASCA 107:
[26]… other considerations arise where the documents in question are commercially sensitive and the relevant parties are trade rivals ….
[27]… a rival in the market place who obtains access to [commercially sensitive information] may turn the material to the advantage of that rival and to the disadvantage of the party who seeks to keep it secret.
As observed by Hayne JA (as he then was) in Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34, page 38:
Once the documents are inspected by the principals of the trade rival the information which is revealed is known to the trade rival and cannot be forgotten. Confidentiality is destroyed once and for all (at least so far as the particular trade rival is concerned). To say that the trade rival is bound not to use the documents except for the purposes of the action concerned is, in a case such as this, to impose upon that trade rival an obligation which is impossible of performance by him and impossible enforcement by the party whose secrets have been revealed.
The Court of Appeal in Civic Video further said:
[28]Where the relevant parties are trade rivals, and the documents in question contain confidential and commercially sensitive information, the court must strike a fair balance between the legitimate concerns of the party discovering the documents and the needs of the other party to the litigation.
Further, the Court of Appeal in Civic Video[11] stated the following, in part from the statement of principles by Hayne JA in Mobil Oil Australia Ltd v Guina Developments Pty Ltd (at pages 39 - 40):
(1)in balancing the interests of the parties, it may be necessary to mould orders that distinguish between a party, its officers, its legal advisors and experts: although it is commonplace now for material to be made available only to the legal advisors of the parties and nominated experts, such arrangements should only be adopted where there is a need to do so;
(2)such arrangements should be made when doing so would strike a fair balance between the competing interests of the party seeking inspection in the party claiming confidentiality;
(3)the nature and the content of the disputed documents is a matter that will usually, if not invariably be of great importance in forming a conclusion and, if that is so, it will be appropriate for the judge to inspect the documents concerned;
(4)in assessing whether a document should be subject to such an arrangement/regime it will be relevant to consider the age of the information, the identity of the persons who will inspect the documents and the reasons why the inspection of the particular documents is necessary;
(5)more generally, a relevant factor is the degree of commercial sensitivity involved in the extent of any prejudice to the party giving discovery;
(6)the striking of a fair balance can and may need to be revisited as the matter progresses to trial.
[11] Civic Video Pty Ltd v Paterson [2013] WASCA 107 [29] - [31].
As said, the Interested non-Parties and GSC may properly be described as trade rivals. The Disputed Documents on their face, after my inspection of them, contain commercially sensitive information.
The Interested non‑Parties essentially submit that:
(1)GSC is and was a trade rival;
(2)the information in the Disputed Documents once known by the officers of GSC could not be forgotten and would give GSC a competitive advantage going forward; and
(3)the confidentiality regime would not prevent GSC from making a 'personal' decision as to whether to commence proceedings against the City as it would have the benefit of its solicitors and/or nominated experts having seen the Disputed Documents.
GSC put against the confidentiality regime (aside from the confidentiality of the Disputed Documents) that GSC needed 'personally' to make the decision as to whether to commence proceedings against the City following the review of the documents. The confidentiality regime, it was said, would prevent GSC from obtaining the benefit of the pre‑action discovery Orders it had obtained.
Secondly, GSC contended that its lawyers would not know, in informing and advising GSC, what they could say without an infringing the confidentiality orders.

Are the Disputed Documents confidential

GSC contends that the onus to establish confidentiality (or, I infer, also commercial sensitivity) is on each of the Interested non‑Parties and their affidavit material did not identify with sufficient specificity what is said to be confidential or commercially sensitive.
GSC both in its written submissions and at the hearing rather trenchantly criticised the Interested non-Parties' evidence in support of the sought confidentiality regime. Counsel for GSC placed much emphasis on O'Brien v Komesaroff (1982) 150 CLR 310; a seminal case on the specificity ordinarily required from an applicant seeking to enforce a confidentiality obligation.
Of course, what is sought here is a confidentiality regime and it may be that the strictures set down in O'Brien are not directly translatable to the present situation. In any event, the confidentiality or commercial sensitivity of a document may be inferred from the document itself.[12]
[12] Kirman v Austroid Corporation [2023] WASC 350 [7] (Hill J): Uon Pty Ltd v Hoascar [2020] WASC 271 [23] (Archer J).
At the hearing I explored with counsel for the Interested non‑Parties whether each of them could, and ought to, have designated with more particularity that part of each of their respective tenders in the Disputed Documents which was commercially sensitive or confidential.
The submission made by the Interested non‑Parties essentially was that while not each and every aspect of their tenders could be described as confidential, nonetheless the whole of their respective tenders was commercially sensitive; and it was not effectively possible to identify specific parts which were confidential.
Working through each of the Interested non‑Parties' respective tenders there were clearly many aspects which on their face appeared to be commercially sensitive (as were those parts of the City's assessment documents derived therefrom). It may be possible to make an order that the balance not be subject to a specific confidentiality regime such that they could be used by GSC's officers for the purposes of deciding whether to commence proceedings against the City.
That would leave significant parts of the respective tenders, however, subject to a confidentiality regime which would prevent the two officers of GSC obtaining the significant parts of the disputed documents.
While there was a fleeting attraction to that proposal, it essentially would not meet the complaints of GSC that it would have to make a decision as to whether to commence against the City without its officers viewing all of the Disputed Documents and bringing to bear their (the officers') industry knowledge on that decision.

Disposition

On balance, taking into account:
(1)the content of the Disputed Documents;
(2)the recency of the information they contain;
(3)the clear trade rivalry in what appears to be a small (by number of suppliers) market in Western Australia;
(4) that GSC proposes that its executives directly involved in the competition would inspect the Disputed Documents;
(4)my assessment that between GSC's lawyers and any independent experts to be nominated, GSC will be able to receive sufficient information and advice to make an informed decision as to whether to commence proceedings against the City;
(5)the concerns as to its lawyers' position must, with respect, occur every time a confidentiality regime is imposed; and
(6)the possibility of the confidentiality regime being revisited if proceedings are commenced and as the matter progresses towards trial;
I would impose a confidentiality regime.
Prior to this hearing, I requested GSC and the Interested non‑Parties to provide minutes of the orders they were seeking. The Interested non‑Parties prepared a joint minute. That may provide the basis for conferral with GSC as to the form of the regime which should be imposed.
I direct the parties to confer and, if at all possible, agree on the form of the Orders to be made following these reasons, including as to costs. I will hear from them as to the form of the Orders and costs if they cannot be agreed.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

JC
Associate to the Honourable Justice Howard
27 SEPTEMBER 2023