Metallurg Inc v Global Advanced Metals Pty Ltd - [2017] WASC 212

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: METALLURG INC -v- GLOBAL ADVANCED METALS PTY LTD [2017] WASC 212

CORAM: CHANEY J

HEARD: 21, 26 & 28 JULY 2017

DELIVERED : 2 AUGUST 2017

FILE NO/S: CIV 1994 of 2017

MATTER :An application pursuant to O 58 r 10 of the Rules of the Supreme Court 1971 (WA)

BETWEEN: METALLURG INC
Plaintiff
AND
GLOBAL ADVANCED METALS PTY LTD
Defendant

Catchwords:

Contract - Proper construction - Contractual right to access and inspect documents - Right countered by reason of shareholding - Shareholder a trade competitor - Obligation to keep information confidential - Obligation not to use information to damage company providing information - Whether accessing information by trade competitor immediately breaches obligation not to use information to damage company

Remedies - Declaration as to contractual rights - Injunction to enforce rights - Discretion to refuse

Legislation:

Nil

Result:

Declaration made
Injunction granted

Category: B

Representation:

Counsel:

Plaintiff: Mr L A Warnick
Defendant: Mr R J Price

Solicitors:

Plaintiff: Ashurst Australia
Defendant: Allen & Overy

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

Black Box Control Pty Ltd v Terravision Pty Ltd [2016] WASCA 219
Burns Philp Trust Co Pty Ltd v Kwikasair Freightlines Ltd [1963] SR (NSW) 492, 497; [1964] NSWR 63
Centaur Mining and Exploration Ltd v Anaconda Nickel Ltd [2001] VSC 224; (2001) 19 ACLC 1375
Edman v Ross (1922) 22 SR (NSW) 351
Hi-Tech Telecom v RSL Com Australia [2011] NSWSC 1120; (2012) 28 BCL 432
Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34
Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76

CHANEY J: The plaintiff (Metallurg) is a wholly owned subsidiary of AMG Advanced Metallurgical Group NV (AMG) which is a company incorporated in the Netherlands and listed on the Euronext Amsterdam Stock Exchange. AMG is the ultimate holding company for a global group of metallurgical and engineering companies (AMG Group).
The defendant (GAM) is an unlisted Perth based tantalum company, and is the ultimate holding company for a global group of tantalum and other companies (Tantalum Group).
In August 2015 as part of the renegotiation of the terms of a long term supply contract under which AMG Mineracao, a Brazilian subsidiary of AMG, sold tantalum to Global Advanced Metals USA Inc which is a related entity of GAM, Metallurg acquired a shareholding in GAM. In conjunction with its acquisition of shares in GAM, Metallurg executed an Assumption Deed Poll dated 31 July 2015 and thereby became party to an agreement entitled Third Amended and Restated Shareholders Deed dated 23 April 2015 that has been amended from time to time (Shareholders Deed). The original parties to the Shareholders Deed were a number of entities none of which were in competition with GAM.
In these proceedings, Metallurg seeks declarations as to the proper construction of certain provisions of the Shareholders Deed. In particular, it seeks declarations that:
(i)properly construed, clause 7.1 of the Shareholders Deed entitles the plaintiff through its accountants, advisers, agents and employees to inspect and take copies of, and requires the defendant to allow the plaintiff, through such persons to inspect and take copies of, all books, accounts, records and other documents relating to:
(a)the affairs of the defendant;
(b)the affairs of subsidiary companies of the defendant; and
(c)the tantalum mining business owned by the defendant,
for the purpose of auditing and valuing the defendant and its subsidiaries or for any other reasonable purpose after giving notice of at least three Business Days (as defined in the Shareholders Deed) (the notice period) and subject to clause 7.2 of the Shareholders Deed.
(ii)properly construed, clause 7.2 of the Shareholders Deed requires that:
(a)accountants, advisers, agents or employees appointed by the plaintiff to conduct an inspection under clause 7.1 of the Shareholders Deed must sign a confidentiality agreement if so required by the defendant, in a form approved by the board of the defendant;
(b)the defendant must, if it wishes to exercise the right to require such persons to sign a confidentiality agreement, tender a form of confidentiality agreement to the plaintiff and to such persons before the expiry of the notice period; and
(c)the terms of any confidentiality agreement under clause 7.2 must be reasonable, must not inhibit the delivery to the plaintiff of information which the plaintiff is entitled to inspect or copy under clause 7.1 and must be consistent with the confidentiality regime applicable to the plaintiff under clause 16 of the Shareholders Deed.
The plaintiff also seeks an injunction compelling the defendant within two days after the date of the order to permit the plaintiff by its accountants, advisers, agents or employees who are nominated by the plaintiff by notice in writing to the defendant and have signed and given to the defendant at or prior to the time of inspection a confidentiality deed poll in the form annexed to an affidavit of Michael Gerard Connor sworn 16 July 2017, to inspect and take copies of the documents, books, accounts and records of the defendant falling within certain specified categories of documents in respect of which access has been sought.

Background to the application

Mr Connor is the senior vice president of AMG and is responsible for the overall preparation of internal and external financial reporting, corporate accounting and bookkeeping, reviewing unit accounting, reporting and management reports for the purpose of preparing consolidated accounts, preparation of quarterly and annual bank reporting, review of quarterly financial press releases, preparation of annual and interim consolidated financial statements, and research and preparation of memoranda relating to specific technical accounting topics. In his affidavit of 22 June 2017, he deposed to the history of applications by Metallurg for access to GAM's books and records. It is not necessary to outline the detail of those circumstances, but it is suffice to say that the requests followed questions from, and expressions of concern by, Metallurg, through Mr Connor, concerning particular aspects of GAM's accounts. Mr Connor said that if his concerns in relation to the specified accounting matters proved correct, Metallurg would be required in its upcoming quarterly report to revalue its interest in GAM for the purposes of its reporting.
After initial requests for access were made by Metallurg, external solicitors were appointed by each party in early May 2017 in an attempt to reach agreement as to the terms upon which access would be provided. In the course of those negotiations, GAM expressed concern in relation to two principal issues. The first was competition, with GAM asserting that certain entities in the AMG Group carry on similar businesses to those carried on by certain entities in the Tantalum Group so that there is a potential for the requested information to be misused by the AMG Group to gain competitive advantage. The second was that there is currently litigation in the United States between AMG and GAM subsidiaries in relation to a supply agreement and GAM expressed concern that the information may potentially be misused by AMG to gain a forensic advantage in that litigation.
GAM advised that it was only willing to provide the requested information subject to Metallurg executing a confidentiality agreement that imposed significant further confidentiality obligations on Metallurg in addition to those already appearing in the Shareholders Deed, and provided for a regime whereby Metallurg would not be given some of the requested information but would only be allowed to appoint an independent accountant who would receive and review that information and then prepare a report, subject to a number of restrictions as to content, which was to be provided to both GAM and Metallurg.
Extensive attempts between the parties through their solicitors to agree a workable confidentiality deed were unsuccessful, and were finally terminated in mid‑June 2017.
These proceedings were then commenced and they have been dealt with on an expedited basis in order to accommodate Metallurg's desire to have the questions of access to documents resolved if possible in time to enable it, if successful, to update its valuation of its shareholding in GAM in its quarterly report due to be published in early August 2017.

The Shareholders Deed

The provision under which Metallurg seeks access to GAM's documents and records is cl 7 of the Shareholders Deed. There is no dispute that Metallurg is a Relevant Shareholder for the purposes of cl 7. Clauses 7.1 and 7.2 of the Shareholders Deed provide:
7.1Right of access and information
After giving at least 3 Business Days' notice to the Company, each Relevant Shareholder (itself or through its accountants, advisers, agents or employee and at its own cost) will be entitled to reasonable access during the Company's normal business hours to:
(a)visit and inspect any premises occupied by any company in the Tantalum Group, the Registered Office and any property of any company in the Tantalum Group;
(b)inspect and take copies of documents relating to the Business and the Tantalum Group's affairs including its books, accounts and records; and
(c)discuss the Tantalum Group's affairs, finances and accounts with the Company's officers, employees and auditors,
for the purpose of auditing and valuing of the Tantalum Group or for any other reasonable purpose.
In addition, Relevant Shareholders shall be provided, on request, with such information regarding the Company and its Subsidiaries and Affiliates as they require in order to comply with their tax, accounting and regulatory filing and compliance requirements, including such information as is necessary to make any elections that they deem advisable under relevant tax laws and regulations.
7.2Confidentiality
Before an inspection occurs or access is permitted under clause 7.1, any person appointed by a Relevant Shareholder to conduct the inspection or to be given the access, if requested, must sign a confidentiality agreement in the form approved by the Board.
Clause 16.3 of the Shareholders Deed deals with the use of confidential information. It provides:
16.3Use of Confidential Information
Each Relevant Shareholder (for this clause Recipient) agrees in relation to Confidential Information of another Relevant Shareholder or of the Company or any company in the Tantalum Group (Owner):
(a)to use the Confidential Information only for the purposes of monitoring and assessing its investment in the Tantalum Group and its Business; and
(b)to keep that Confidential Information confidential and not disclose it or allow it to be disclosed to any third party except:
(i)with the consent of the Owner;
(ii)with the consent of the Company and the Relevant Shareholders with respect to Confidential Information of the Company; or
(iii)to officers, employees and consultants or advisers of the Recipient and the Recipient's Related Bodies Corporate and Affiliates who have a need to know (and only to the extent that each has a need to know) and are aware that the Confidential Information must be kept confidential,
and the Relevant Shareholders must take or cause to be taken reasonable precautions necessary to maintain the secrecy and confidentiality of the Confidential Information.
That obligation of confidentiality is a continuing obligation where a Relevant Shareholder ceases to be a shareholder (cl 16.5) and survives termination of the Shareholders Deed (cl 16.6).
Central to the defendant's opposition to these proceedings is its reliance on cl 4.1(a) and (b) of the Shareholders Deed. Clause 4.1 provides:
4.1Commitments
Each Relevant Shareholder agrees:
(a)to co‑operate and use its best endeavours to ensure that the Tantalum Group successfully carries on the Business;
(b)not to use Confidential Information in a way which damages or is reasonably likely to damage the Tantalum Group or any of the other Relevant Shareholders; and
(c)not to delay unreasonably any action, approval, direction, determination or decision required of the Relevant Shareholder.
Confidential Information is defined by cl 1.1 of the Shareholders Deed in the following terms:
Confidential Information means all information, forms, specifications, processes, statements, formulae, trade secrets, drawings and data (and copies and extracts made of or from that information and data) concerning:
(a)the operations and dealings of the Company, the Business or a Relevant Shareholder;
(b)the organisation, finance, customers, markets, suppliers, intellectual property and know‑how of the Company, a Relevant Shareholder, a Related Body Corporate of the Company or a Related Body Corporate of a Relevant Shareholder; or
(c)the operations and transactions of a Relevant Shareholder concerning the Business and the Relevant Shareholder's shareholding in the Company,
which is not in the public domain (except by failure of a Relevant Shareholder to perform and observe its covenants and obligations under this deed) and which has been obtained through or by being a member of the Company.
GAM also relies on cl 20(a) which provides that each party must:
exercise all its rights, powers and remedies in relation to the Company and each other company in the Tantalum Group in a way that gives effect to the terms of this deed.

Principles of contractual construction

The general principles in relation to the construction of contracts are well settled, and were not in dispute in these proceedings. Both parties referred to the summary of contractual provisions set out by the court in Black Box Control Pty Ltd v Terravision Pty Ltd,[1] which I adopt. Of particular relevance to this case are the following principles summarised in Black Box Control:
(1)The process of construction is objective. The meaning of the terms of an instrument is to be determined by what a reasonable person would have understood the terms to mean.
(2)The construction of a contract involves determination of the meaning of the words of the contract by reference to its text, context and purpose.
(3)The commercial purpose or objects sought to be secured by the contract will often be apparent from a consideration of the provisions of the contract read as a whole. Extrinsic evidence may nevertheless assist in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding of the genesis of the transaction, its background, the context and the market in which the parties are operating.
…
(9)An instrument should be construed so as to avoid it making commercial nonsense or giving rise to commercial inconvenience. However, it must be borne in mind that business common sense may be a topic on which minds may differ.
(10)An instrument should be construed as a whole. A construction that makes the various parts of an instrument harmonious is preferable. If possible, each part of an instrument should be construed so as to have some operation [42]. (footnotes omitted)
[1] Black Box Control Pty Ltd v Terravision Pty Ltd [2016] WASCA 219 [42].

Matters not in issue

It is not in issue that the notice given by Metallurg of its intention to inspect and take copies of documents was a proper notice for the purposes of cl 7.1. Nor is it in issue that the entitlement to access is only 'during the Company's normal business hours'. Further, GAM accepts that the purpose for which access to the documents was sought was a purpose within the permissible purposes for which documents may be inspected under cl 7.1.

GAM's objections to access on the terms proposed by Metallurg

Mr Glenn Williams is the chief financial officer of GAM. In an affidavit of 10 July 2017, Mr Williams outlined the nature of Tantalum Group's vertically integrated tantalum operations and areas of operation in which the AMG Group are effectively in competition. The parties were not in agreement as to the extent to which they were in competition in relation to each area of GAM's operations. Mr Williams' affidavit clearly identifies that both the Tantalum Group and the AMG Group are both engaged in processing tantalum into tantalum pentoxide, and it does not appear to be in dispute that they are competitors at least in that field, although it is apparent that GAM's sales of the finished product, tantalum pentoxide, are, for the most part, internal. I am satisfied, however, that, to some degree at least, AMG Group and Tantalum Group are trade competitors.
GAM's primary position is that if the plaintiff's requests for access and inspection were fully met, that would have the consequence that commercially sensitive confidential information of the Tantalum Group would be accessed by a trade rival of the Tantalum Group, namely the AMG Group, thereby destroying the confidence in that information. It submits that, regardless of any obligations not to use the information in a way detrimental to GAM, that information, or parts of it, would remain with officers of the AMG Group and could not be forgotten, with the consequence that it would inevitably be deployed to the commercial disadvantage of the Tantalum Group. Furthermore, as an affidavit of Mr Steven Millsap discloses, AMG is also a litigation adversary of the Tantalum Group in legal proceedings taking place in the United States to which some of the requested information and documents may have relevance.
The defendant placed considerable reliance on the observations of Hayne JA (with whom Winneke P and Phillips JA agreed) in Mobil Oil Australia Ltd v Guina Developments Pty Ltd (Mobil Oil Australia),[2] where, in the context of discovery and inspection, his Honour said:
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 that is impossible of performance by him and impossible of enforcement by the party whose secrets have been revealed. How is the trade rival to forget what internal rate of return the competitor seeks to achieve on a new investment of the kind in question? How is the party whose hurdle rate has been revealed to know whether the rival has used the information in framing a tender? Thus, if the trade rival may inspect the documents concerned, the confidentiality of the information in them is at once destroyed.
[2] Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34, 38.
GAM submits that that principle is not confined to disclosure of confidential information in the context of the involuntary process of discovery of documents. It notes that the principle was applied in Centaur Mining and Exploration Ltd v Anaconda Nickel Ltd (Centaur Mining)[3] where a receiver of a joint venture party, Centaur, sought to make available confidential joint venture documents to prospective purchasers of Centaur's interest. Anaconda, the other joint venturer, opposed the proposal because the prospective purchasers included competitors of Anaconda who would be able to derive aspects of the information for their own purposes.
[3] Centaur Mining and Exploration Ltd v Anaconda Nickel Ltd [2001] VSC 224; (2001) 19 ACLC 1375.
GAM refers to cl 4.1(a) and cl 4.1(b) of the Shareholders Deed and submits that those contractual obligations would, in the event that the confidential information is disclosed to Metallurg, be 'an obligation that is impossible of performance … and impossible of enforcement by' AMG Group. GAM submits that the obligation under cl 4.1 necessarily regulates the right of access to confidential information under cl 7.1, and it is entitled to impose conditions and limitations on access necessary to prevent any officer of Metallurg or AMG from reading any of the information to which they would otherwise be entitled under cl 7.1. GAM submitted that the mere reading of confidential information amounts to use of confidential information 'in a way which damages or is reasonably likely to damage' the Tantalum Group for the reasons explained by Hayne JA in Mobil Oil Australia.

Accordingly, it submits that the board of GAM is entitled to impose whatever restrictions on access might be necessary through strict requirements contained in a confidentiality agreement under cl 7.2.
GAM also relies on cl 20(a) in support of its arguments. As I understand its submission, it is that cl 20(a) requires Metallurg to exercise its rights under cl 7.1 in a way which gives effect to cl 4.1. It argues that if Metallurg were to gain access to its confidential information, that would amount to a failure to cooperate and use Metallurg's best endeavours to ensure the Tantalum Group successfully carries on its business. It submits that, because an officer or employee of the AMG Group reading the confidential information would be in immediate breach of cl 4.1(b), inspecting documents pursuant to cl 7.1 would be contrary to the obligation to give effect to the terms of the Shareholders Deed.
GAM also argues that the obligation to provide access is qualified by the adjective 'reasonable', and any access to sensitive commercial information by a trade competitor is outside the rights conferred by cl 7.1 since such access to information would be unreasonable.

Metallurg's contentions

Metallurg contends that cl 7.1 confers two separate and independent rights. The first is the right, on notice, to access GAM's premises or properties, to inspect and copy any of GAM's books and records, and to discuss GAM's affairs, finances and accounts with GAM's officers, employees and auditors for the purpose of auditing and valuing the Tantalum Group or any other reasonable purpose. Metallurg refers to that as the 'access/inspection right'. The second right is said to emerge from the paragraph commencing with the words 'in addition' which confers an entitlement to such information regarding GAM and its subsidiaries and affiliates as is required in order to comply with Metallurg's tax, accounting or regulatory filing of compliance requirements, which it refers to as the 'information right'.
Metallurg contends that the information right is not qualified by cl 7.2, but rather, where a shareholder makes use of the information right, GAM's confidential information is solely protected by the confidentiality provisions of the Shareholders Deed contained in cl 16.3. It contends that the objective intention of the parties to the Shareholders Deed was that cl 16.3 would provide sufficient protection for disclosing parties as against the other parties to the Shareholders Deed, to whom their confidential information was disclosed, including by disclosure under cl 7.1. It submits, however, that there is a 'privity gap' which arises because the access/inspection right under cl 7.1 can only be exercised by individual persons who are not parties to the Shareholders Deed, and therefore are not personally bound by cl 16.3. It submits that the evident purpose of cl 7.2 is to permit GAM, when making disclosure pursuant to the exercise of the access/inspection right, to require that privity gap to be closed by imposing reasonable confidentiality restrictions on the individual persons nominated to carry out the inspection. It submits that the confidentiality agreement can only be made with the inspecting individual, and that cl 7.2 cannot be used to impose additional confidentiality restrictions on the shareholder receiving the information.
Metallurg further submits that cl 7.2 cannot be used to impose a barrier between the inspecting individual and the appointing shareholder so that information obtained through the exercise of the access/information right cannot be freely passed on to the appointing shareholder. It submits that the sensible commercial operation of cl 7.2 is that it operates as an ancillary provision to cl 7.1, allowing GAM to close the privity gap by subjecting the inspecting individuals to appropriate confidentiality restrictions.

The preferred construction

The construction of cl 7.1 and cl 7.2, read with cl 16.3, for which the plaintiff contends is to be preferred.
The fundamental flaw in GAM's contentions is that they equate access and inspection to use of information in a way which damages, or is reasonably likely to damage, the Tantalum Group. That proposition is based on the notion that the loss of confidentiality vis‑à‑vis a Relevant Shareholder necessarily creates a reasonable likelihood of damage to the Tantalum Group. I do not accept that proposition.
As GAM points out in its submissions, there are numerous provisions throughout the Shareholders Deed by which GAM is obliged to disclose, or Relevant Shareholders have a right to receive, confidential information.[4] To the extent that those provisions require the disclosure to a Relevant Shareholder of the company's confidential information, the effect of the Shareholders Deed is that GAM has contractually bound itself to disclose confidential information to the Relevant Shareholder. The Relevant Shareholder is entitled to receive and to apprise itself of the confidential information, subject to its duty under cl 16.3 to use the confidential information only for the purpose of monitoring or assessing its investment in the Tantalum Group and its obligation under cl 4.1 not to use the confidential information in a way which damages or is reasonably likely to damage the Tantalum Group. The objective purpose of cl 7.1 of the Shareholders Deed is to enable each Relevant Shareholder to have access to documents and information which it requires for the stated purposes. Its need for, and entitlement to, that information arises because of its status as a shareholder. The inevitable consequence of entry into the Shareholders Deed with Metallurg (by way of the Assumption Deed Poll) was that GAM bound itself to provide information, including commercially sensitive information, to Metallurg which was at that time, and is still, in competition with at least some aspects of GAM's operations. The rights to information were obtained, for valuable consideration, by Metallurg in its capacity as a Relevant Shareholder. The fact that it is also a competitor is immaterial. That contractual obligation of disclosure distinguishes this case from cases like Mobil Oil Australia which deal with coercive disclosure pursuant to court processes.
[4] GAM refers to cl 5.2(c), (d) and (g), cl 6.2, cl 6.3, cl 6.5(a) and (b), cl 8(b)(ii), cl 10.4, cl 11.1, cl 11.5, cl 11.6 and cl 12.1.
The circumstances of this case can also be distinguished from the circumstances of Centaur Mining. As noted above, that case concerned an application by receivers of Centaur for directions pursuant to s 424 of the Corporations Law as to whether they could disclose all or parts of certain confidential documents. Centaur and Anaconda were parties to a preliminary agreement relating to the commissioning and management of a pre‑feasibility study and a feasibility study. Clause 4.1 of the preliminary agreement provided that property in both feasibility studies would be equally owned by Anaconda and Centaur. The parties proposed to enter a joint venture agreement in identified terms in the event that they wished to conduct mining operations at the conclusion of the feasibility study. Clause 13.3 of the proposed joint venture agreement provided that, absent written consent from all participants, the relevant documents are 'confidential as between the parties and no party may disclose' the documents to any person other than with certain exceptions. The receivers sought to disclose the information to potential purchasers of Centaur's interest on a confidential basis. The potential purchasers were competitors of Anaconda. The proposed disclosure was sought to be made pursuant to one of the exceptions to the confidentiality requirement of cl 13.3 which permitted disclosure 'to a proposed assignee of a participating interest, or to a proposed lender to a participant on the security of its participating interest, but only if the proposed assignee or lender has first undertaken to maintain the data and interpretations confidential'. The receivers proposed that they would effect disclosure on a confidential basis thereby preserving the confidentiality of the material.
The case turned essentially on the proper construction of the preliminary agreement. In relation to cl 13.3 of the proposed joint venture agreement, the court concluded that the matters for which the parties had provided in the joint venture agreement, namely the disclosure of confidential information to a proposed assignee of a participating interest, was not relevant since the project had not progressed to the point where the joint venture agreement came into effect. Thus, it was the provisions of the preliminary agreement which governed the question of whether or not disclosure on conditions of confidence was permissible for the proposed purposes of the receivers. The court found that on the proper construction of the preliminary agreement, the obligations of confidentiality were imposed by the parties to the preliminary agreement on each other to prevent the very type of disclosure that the receiver proposed to make. In the context of considering that issue, reference was made to Mobil Oil Australia. The passage cited above from that case was relied upon.
It can be seen from Centaur Mining that the starting point is, as it is in this case, the proper construction of the relevant contract. In this case, there is an express obligation to permit access to, and inspection of, information, some of which is undoubtedly confidential information. That right is conferred on Metallurg provided the access and inspection is undertaken for a permitted purpose. That permitted purpose arises by dint of Metallurg's status as a Relevant Shareholder. GAM's contentions have the effect that the operation of cl 7.2 would be different in relation to Metallurg than in respect of any other Relevant Shareholder who is not a competitor. Whilst it may be accepted that the original parties to the Shareholders Deed other than GAM were not trade competitors of GAM, the Assumption Deed by which Metallurg became a party to the Shareholders Deed made no provision to reflect any different operation of cl 7.2 in relation to Metallurg as distinct from the other Relevant Shareholders.
GAM also argues that there is a qualification to the rights under cl 7.2 by reason of the use of the words 'reasonable access'. GAM submits that there is no warrant to read 'reasonable access' as limited to notions of date, time or place, but can extend to matters of context, purpose and harm or likely harm to the defendant company. It submits that if the purported access is to take sensitive commercial documents where the taking (irrespective of its purpose) would, or would be likely to, damage the defendant, then the access being sought by the Relevant Shareholder to inspect and take such documents would not, to that extent, be 'reasonable access'.
In my view, although it can be accepted that 'reasonable access' may involve considerations as to the means of access, the use of the word 'reasonable' does not limit the nature or content of the information to which a Relevant Shareholder enjoys a right of access under cl 7.1. GAM seeks to support its argument by observations made by McDougall J in Hi-Tech Telecom v RSL Com Australia.[5] That case concerned a question of whether or not there was a breach of an agreement which required one party to provide an expert with reasonable access to 'documentation, information, hardware, software or data which it uses or maintains which is requested by the expert for the purpose of making' a specified determination. McDougall J made reference to the Macquarie Dictionary definition of 'access' as including 'way, means or opportunity of approach' and (specifically of computers) 'to locate and provide means of getting information out of or into a computer storage'. He observed that both the general definition and the more specific definition relating to computers suggested that 'access' involved making something available or accessible. He found that the adjective 'reasonable' 'qualifies or limits what is to be done, but does not otherwise bear on the connotation of the word "access" in the context' of the clause in question. Nothing in that case supports the proposition that the word 'reasonable' qualifies the nature, type or extent of documents to which access is permitted under cl 7.1.
[5] Hi-Tech Telecom v RSL Com Australia [2011] NSWSC 1120; (2012) 28 BCL 432 [57].
If it were intended to limit the type of information to which access was to be permitted under cl 7.1, it might be expected that appropriate words of limitation would have been applied to the description of the information. On the plain reading of the clause, the adjective 'reasonable' applies to the mode and means of access and inspection.

Declaration as to cl 7.1

It follows from the foregoing that I am of the view that Metallurg is entitled to the declaration which it seeks as to the proper construction of cl 7.1. In substance, the declaration is in the terms expressed in cl 7.1 as they apply to the circumstances of the request which Metallurg has made. GAM's position was that the declaration sought in relation to cl 7.1 should be expressed as being subject to cl 4.1. I do not accept that contention. The obligation under cl 4.1 is an independent contractual duty imposed upon Relevant Shareholders not to misuse confidential information however that confidential information may be obtained. It contemplates that confidential information will be obtained by a Relevant Shareholder. Confidential information may be obtained by a Relevant Shareholder pursuant to various provisions of the Shareholders Deed, including cl 7.1. Clause 4.1 operates on that assumption. I do not accept that the mere receipt of information by Metallurg amounts to the use of the information in a way which damages, or is reasonably likely to damage, the Tantalum Group.

Declaration in relation to cl 7.2

There is no issue as to the requirement specified in par (a) of the proposed declaration in relation to cl 7.2.
In relation to par (b) of the proposed declaration, the parties do not agree that the confidentiality agreement must be tendered to the relevant persons before the expiry of the notice period, being the period of three business days specified in cl 7.1. Clause 7.2 makes no mention of the time within which a proposed confidentiality agreement is to be tendered to the Relevant Shareholder. On the other hand, cl 7.1 creates an entitlement on the Relevant Shareholder to inspection after giving at least three business days' notice to GAM. I accept Metallurg's submission that the efficacy of cl 7.1 would be thwarted if inspection could be delayed or frustrated by GAM delaying approval of the form of confidentiality agreement by the board.
I do not, however, accept the submission that 'if GAM's right under clause 7.2 is not exercised within the period of notice given by the inspecting shareholder under clause 7.1, GAM's right under clause 7.2 will lapse'. In circumstances where the minimum period of notice is given, namely three business days, it can be expected that the process of drafting and then obtaining the approval of the board to the form of a confidentiality agreement may be practically impossible. To construe cl 7.2 as providing that the right to the protection of a confidentiality agreement would be lost automatically on the expiry of the notice period would, in my view, be to construe the provision in a way which is inconsistent with the purpose of the provision and would give rise to commercial inconvenience.
The preferable construction, which I adopt, is that GAM is obliged to tender the form of confidentiality agreement for signature within a reasonable time having regard to the period of notice stipulated under cl 7.1. What will be a reasonable time will vary in the circumstances.
In the circumstances of this case, I am satisfied that a reasonable time for tender of the form of confidentiality agreement had passed before the commencement of these proceedings.
The principal issue between the parties in respect to the declaration concerning cl 7.2 related to par (c) of the proposed declaration.
Metallurg submits that cl 7.2 operates in relation to the access/inspection right conferred under cl 7.1, but not in relation to the information right conveyed by that clause. It submits that the information right is conferred upon relevant shareholders who are already bound by the confidentiality obligation found in cl 16.3 and cl 4.1(b) of the Shareholders Deed. Because the access/inspection right is exercised by individuals, some of whom may not be employees of the relevant shareholder, the confidentiality provisions of the Shareholders Agreement would not operate to bind those individuals. Thus, it is submitted, cl 7.2 is designed to fill the 'privity gap'.
That construction is supported by the opening words of cl 7.2 which provide 'before an inspection occurs or access is permitted under cl 7.1 ...'. The words 'inspection' and 'access' are used in cl 7.1 only in relation to the access/inspection right, and not in relation to the information right.
In my view, Metallurg's construction of cl 7.2 is consistent with the overall purpose and context of the Shareholders Agreement insofar as matters of confidentiality are dealt with. There is no reason to suggest that any different regime in relation to confidentiality should exist in relation to confidential information obtained through cl 7.1, and that obtained through other provisions of the agreement. On the other hand, there is a lacuna in the agreement if no provision is made to require confidentiality on the part of individuals who are not bound by the terms of the Shareholders Deed but who may, by dint of rights exercised under it, come into possession of confidential information.
It follows, that in my view, a declaration in the terms of par (c) of the proposed declaration in relation to cl 7.2 should be made.

The injunction

Metallurg seeks an injunction to give effect to its rights as declared. It accepts that it is only entitled to an injunction in the event that it is successful in obtaining declarations substantially in the terms proposed by it. Although the declaration which I would propose to make in relation to cl 7.2 will differ in relation to par (b) of the proposed declaration, that is not a substantial departure from the declaration proposed by Metallurg because the time for tender of the confidentiality agreement has passed.
There is no issue between the parties as to the court's jurisdiction to give injunctive relief which is analogous to specific performance.[6]
[6] Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76 [132] ‑ [134]; Burns Philp Trust Co Pty Ltd v Kwikasair Freightlines Ltd [1963] SR (NSW) 492, 497; [1964] NSWR 63, 69 (Burns Philp Trust Co).
Metallurg seeks access to the identified information in order to enable it adequately to assess the value of its shareholding in GAM for the purposes of its published regulatory reports. Its failure to provide access to those documents is a breach of the Shareholders Deed. Damages are not an appropriate remedy. The position is analogous to that dealt with in Burns Philp Trust Co.
Metallurg filed several affidavits in order to demonstrate its own preparedness to perform its own obligations, in particular the obligation under cl 16.3(b) to maintain confidentiality of the information received. In an affidavit by Mr Connor dated 16 July 2017, he identified the following precautions which he proposed to take to maintain the secrecy and confidentiality of information obtained from GAM. He said that he would procure any person appointed by Metallurg to conduct any inspection and take copies of relevant documents to execute a confidentiality agreement in a form attached to his affidavit and he would send those signed confidentiality undertakings to Mr Williams at GAM. He said that he would execute a confidentiality undertaking and send that to GAM before receiving the information to be obtained from Metallurg. He said that he had authority to direct Mr Christopher Eames, the director of information technology for AMG, to establish a secured file path within the AMG data storage system and ensure that the file be accessible only by certain individuals. He said that he had directed Mr Eames to establish a secured file within the AMG electronic data storage system for the purpose of storing the information to be obtained by Metallurg from GAM. He said that he had directed Mr Eames to give access to the file to Mr Connor and Mr Michael Wahl, AMG's assistant controller, as they were the two individuals who would need to review the information in the first instance in order to assess the value of Metallurg's shareholding in GAM. He would ensure that both Mr Eames and Mr Wahl signed confidentiality undertakings that would be emailed to GAM before access was given. Mr Connor said that he directed Mr Eames that no other user is to be given access to the secured file unless he receives notification from Mr Connor that they have signed a confidentiality undertaking and that undertaking had been provided to GAM.

Mr Connor said that he was authorised on behalf of both AMG and Metallurg to state that the request had been made by Metallurg for the sole purpose of auditing and valuing its shareholding in GAM, preparing accounts of Metallurg and AMG in complying with the regulatory reporting obligations of AMG and that neither Metallurg or AMG has any intention of using the information requested from GAM and referred to in these proceedings for any other purpose, and specifically the information would not be used for the purpose of advancing the position of the AMG group in relation to litigation with GAM.
Metallurg also relied on an affidavit of Mr Eames which confirmed that he had received and implemented a direction from Mr Connor to create a secured file or folder accessible only by specified users. He explained the security of the secured file and the protections afforded against unauthorised access to the file, and confirmed his willingness to comply with the confidentiality requirements outlined by Mr Connor.
GAM expressed concern about what it asserted had been a breach of confidentiality obligations by AMG in relation to a confidential memorandum obtained by AMG from GAM in March 2017. On 3 April 2017, Dr Heinz Schimmelbusch, the chairman of the management board and chief executive officer of AMG, sent an email to Mr James McClements the managing partner of Resource Capital Funds, one of the parties to the Shareholders Deed. In that email, Dr Schimmelbusch sought certain information and said that he was 'sensitive to the fact that litigation is currently pending between AMG Vanadium LLC (an AMG Group company) and Global Advanced Metals U.S.A., Inc'. The email continued 'please be assured that we will treat any confidential information that you provide in response to my letter consistent with our obligations under the Deed and that we will not share any of that information with our litigation team'. That email was copied to a number of recipients, including Mr Richard Rosen and Mr Cameron Friedman, both of the legal firm Paul, Weiss, Rifkind, Wharton & Garrison Ltd (Paul Weiss) who are the lawyers acting for the AMG Group company in the US litigation. Dr Schimmelbusch explained that his reference in his email of 3 April 2017 to 'our litigation team', was a reference to those external solicitors acting in the US litigation.
Mr McClements replied by email attaching an encrypted confidential memorandum which Mr McClements said included a reminder that the document was provided to Metallurg on the basis described in an email dated 4 April 2017. Mr McClements' reference to an email dated 4 April 2017 is explicable by the time difference between Australia and the United States, the reference to 4 April being when Mr McClements would have received Dr Schimmelbusch's email of 3 April 2017.
Dr Schimmelbusch then forwarded Mr McClements' email including the attached encrypted confidential memorandum to a number of recipients, including Mr Rosen of Paul Weiss.
Dr Schimmelbusch said that he copied his email of 3 April 2017 to Mr Rosen and Mr Friedman, and all the other recipients of that email, to make sure that they were aware of Metallurg's position. At 9.44 pm (Eastern US time) on 16 April 2017, he forwarded Mr McClements' reply, which had been directed only to Dr Schimmelbusch, to a number of Metallurg officers and executives, including Mr Connor, a Mr Jackson Dunckel, a Mr Shea and three others, and copied that email to Mr Rosen of Paul Weiss for information only. Dr Schimmelbusch said that he did not intend for Mr Rosen to read the confidential memorandum and believed that he would have understood that he was not to read that document given what had been said in the email of 3 April 2017. He said that he understood that Mr Rosen had deleted the email of 16 April and the attached confidential memorandum without opening or reading the confidential memorandum.
Mr Rosen also provided an affidavit used in these proceedings. In that affidavit, he expressed his understanding that of the confidentiality restrictions applicable to confidential information obtained from GAM by Metallurg and that it was not to be viewed by him or any of the Paul Weiss lawyers involved in the US litigation. He also confirmed that when he received the email from Dr Schimmelbusch in mid‑April 2017, he immediately recognised from the text of that email that the document was sent to him in error and he deleted the document without reading it and confirmed that fact to Mr Dennis Shea, vice president legal of the AMG group.
GAM required Dr Schimmelbusch and Mr Rosen for cross‑examination on their affidavits. Because the request for cross‑examination had not been made prior to the hearing of the application, and because Dr Schimmelbusch and Mr Rosen were both in the United States, the hearing was adjourned to dates when each was available for cross‑examination. Dr Schimmelbusch was cross‑examined by telephone, and Mr Rosen by video link.
During the period between the initial hearing and Dr Schimmelbusch being cross‑examined, Metallurg caused enquiries to be made as to whether there were any additional relevant emails which should be produced. Those searches revealed several emails which became the focus of the cross‑examination. There were four emails tendered and marked as exhibits A to D respectively. The first was an email sent approximately 12 minutes after Dr Schimmelbusch had forwarded the confidential memorandum on 16 April 2017. It was an email from Mr Jackson Dunckel, the chief financial officer of the AMG Group, to Dr Schimmelbusch. It was copied to the five other persons within the AMG Group who had been sent Dr Schimmelbusch's email of 16 April, including Mr Connor and Mr Shea. It was also copied to Mr Rosen. The body of the email simply identified the password to the encrypted confidential memorandum.
Exhibit B is an email sent at 9.29 am (Eastern US time) on Monday, 17 April 2017 by Mr Connor to those people, including Mr Rosen, who had received both a copy of the confidential memorandum from Dr Schimmelbusch, and the password to the memorandum from Mr Dunckel. In that email, Mr Connor set out what appears to be a quote from the second page of the confidential memorandum concerning the book value of GAM's inventory. It is clear that the matter dealt with in that quotation is the source of one of Metallurg's concerns that has led to it seeking access to the documents the subject of this application. It is also apparent that Mr Connor's disclosure of part of the content of the confidential memorandum amounted to a breach of Dr Schimmelbusch's undertaking that information provided by GAM would be treated as confidential and would not be shared with the litigation team.
Dr Schimmelbusch acknowledged that Mr Connor's email sent to Mr Rosen was a mistake, as was Mr Dunckel's email disclosing to a number of people, including Mr Rosen, the password to access the confidential memorandum. He denied, however, that he had breached his undertaking to Mr McClements, on the basis that they were mistakes outside of his control.
Exhibit C was a further email from Mr Dunckel to Mr Rosen sent on 18 April 2017 at 9.39 am. The email read, 'Email sent to you in error. Please do not open and confirm deletion'. The email referred to was Dr Schimmelbusch's email of 16 April 2017 forwarding Mr McClements' email and the attached confidential memorandum.
Exhibit D is Mr Rosen's response to Mr Dunckel's email, sent approximately 13 minutes after Mr Dunckel's email, simply saying 'confirmed'.
Mr Rosen was cross‑examined about the emails in which he is shown as a recipient. He said that when he received Dr Schimmelbusch's email of 16 April 2017 attaching the encrypted confidential memorandum, he immediately recognised that the memorandum was confidential, and he deleted it shortly after receiving it. He said that he did so before he received Mr Dunckel's email of 18 April advising him that the confidential memorandum had been sent to him in error and requesting him to delete it. Mr Rosen said that he had no present recollection of receiving either Mr Dunckel's email containing the password nor Mr Connor's email of 17 April containing a reference to what now appears to him to have been taken from the confidential memorandum. He said he believed that he deleted the email from Mr Dunckel containing the password, but said that, as a result of an oversight, he had not deleted Mr Connor's email of 17 April. He said, however, that he had not looked at that email since the day it was received. He confirmed that, apart from what was in Mr Connor's email of 17 April 2017, he did not open or read the confidential memorandum, nor did he receive any other information as to the contents of the confidential memorandum. I accept Mr Rosen's evidence.
GAM submits that the evidence discloses that there have been breaches of the confidentiality requirements of the Shareholders Deed, of Dr Schimmelbusch's undertaking contained within his email of 3 April 2017, and of a reminder contained within the body of the confidential memorandum as to its confidentiality. It contends that each of Dr Schimmelbusch, Mr Connor and Mr Dunckel were responsible for those breaches. It submits that, by reason of those breaches, the court should conclude that a requirement by way of injunction for further disclosure of confidential information would lead to a probable breach of cl 4.1 or cl 16.3 of the Shareholders Deed, and relief should not be granted on that basis. Alternatively, GAM argues that the breaches identified constitute unclean hands which should disentitle Metallurg to equitable relief.
Metallurg argue that, whilst the forwarding by Dr Schimmelbusch of the encrypted confidential email to Mr Rosen and Mr Friedman was careless, as was Mr Dunckel's provision of the password to Mr Rosen, there is no evidence of any actual misuse of the confidential memorandum, and there is evidence of the AMG Group's intention not to misuse confidential information. It invites the court to adopt the principle applied by Street CJ in Edman v Ross[7] where, in relation to a director's right to inspect documents, the Chief Justice said:
The right to inspect documents, and if necessary, to take copies of them is essential to the proper performance of a director's duties … though I am not prepared to say that the court might not restrain him in the exercise of this right if satisfied affirmatively that his intention was to abuse the confidence reposed in him and materially injure the company …, in the absence of clear proof to the contrary the court must assume that he will exercise it for the benefit of the company.
[7] Edman v Ross (1922) 22 SR (NSW) 351, 361.
Although the source of the entitlement to inspect is different from that considered in Edman v Ross, Metallurg contend that the approach should be the same.
The conduct of Dr Schimmelbusch in forwarding the encrypted confidential memorandum to Mr Rosen and Mr Friedman, the conduct of Mr Dunckel in forwarding the password to Mr Rosen, and the conduct of Mr Connor in revealing a short passage from the confidential memorandum to Mr Rosen, amounted to serious acts of carelessness. I am satisfied, however, that Mr Rosen immediately recognised that he should not access the confidential memorandum and deleted Dr Schimmelbusch's email before being asked to do so. It is also apparent that, when either Mr Dunckel or Mr Shea or both recognised that Mr Rosen should not have received the confidential memornadum, they took steps immediately to ensure that he did not open the document and that he deleted the email to which it was attached. That was done within approximately 36 hours of the time that Dr Schimmelbusch sent the document, that being 9.44 pm on Easter Sunday. The error was thus sought to be corrected in a reasonably timely manner, and I am satisfied that nothing in the confidential memorandum was in fact used for any purpose detrimental to GAM. Those events tend to confirm that the conduct complained of was careless rather than an attempt to intentionally breach any obligations of confidentiality.
In the circumstances, I have concluded that the conduct of the officers of the AMG Group in dealing with the encrypted confidential memorandum is not such as to disentitle Metallurg to the benefit of its contractual entitlements. I am satisfied that the arrangements put in place by Mr Connor to maintain the confidentiality of materials obtained under cl 7.1 of the Shareholders Agreement are such as to conclude that Metallurg will perform its obligations under the Shareholders Deed. I am therefore prepared to grant an injunction in the terms sought.