Murphy v Broken Hill City Council

[2015] NSWCATAD 135

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:	Murphy v Broken Hill City Council [2015] NSWCATAD 135
Hearing dates:	On the papers
Decision date:	29 June 2015
Jurisdiction:	Administrative and Equal Opportunity Division
Before:	J Kinross, Senior Member
Decision:	The decision that access is refused is set aside and a substitute decision is made
Catchwords:	ADMINISTRATIVE REVIEW- access to information- whether overriding public interest against disclosure- competitive neutrality- whether an agency function-competitive commercial value-commercial-in-confidence-supply of confidential information-ability to manage the economy- reveal a deliberation of agency,
Legislation Cited:	Government Information (Public Access) Act 2009 Local Government Act 1993 (NSW) Air Transport Act 1964 (NSW)
Texts Cited:	Competition Principles Agreement NSW Legislative Council Inquiry Report No 38 “NSW Regional Aviation Services and Government Response
Category:	Principal judgment
Parties:	Michael Murphy (Applicant) Broken Hill City Council (Respondent)
Representation:	M Murphy (Applicant in person) Broken Hill City Council (Self represented)
File Number(s):	1410669
Publication restriction:	Section 64 of the Civil and Administrative Tribunal Act 2013 applies to those paragraphs of these reasons identified as ‘[not for publication]’. Those paragraphs are not to be released to the Applicant or the public.

REASONS FOR DECISION

Background

1. Access was sought to documents related to an agreement struck between Broken Hill City Council (Council) and Regional Express Airlines (REX), the sole aviation licensee on the Broken Hill intra-NSW air route, concerning use of the Council operated airport.

2. On 9 December 2014 the access applicant filed an application for administrative review seeking review of Council’s 22 September 2014 decision to refuse access to documents on the basis that there is an overriding public interest against disclosure of the information: s58(1)(d) GIPA Act. Attached to his application was an 18 November 2014 IPC review of Council’s decision.

3. After the application was filed with NCAT, Council purported to reconsider its decision and make a new decision pursuant to a further IPC recommendation. This ‘decision’ is dated 19 December 2014. This review takes account of this ‘decision’ along with the documents in dispute, statements of Ms Anne Johansson and annexures, a confidential statement of Ms Therese Manns and annexures, the review application and annexures and the statement of Mr Michael Murphy and the pages being reviewed.

4. One of the annexures to the statement of Ms Johansson is a schedule of documents referring by page number to a bundle of paginated pages. This decision adopts the same reference system.

Pages not in scope

5. A number of the pages were inserted into the bundle as ‘tabs’ to separate documents. These pages are not documents subject of review: 1, 2, 4, 8, 13, 22, 28, 33, 36, 44, 47, 54, 60, 63, 68, 71, 73, 81, 87, 92, 97, 101, 104, 106, 116, 120, 122, 124, 135, 140, 144, 146, 148, 150.

Section 54 consultation

6. Pages 3, 5-7, 9-12 were created after the access application was received by Council on 3 June 2014 as a result of the Council undertaking consultation with a third party about the disclosure of documents under s54 GIPA Act. Under s53 of GIPA Act the obligation of an agency to provide access to government information is limited to information held by the agency when the application is received. The Council decision dated 22 September 2014 now under administrative review was a reconsideration of an earlier decision made pursuant to a recommendation by the Information Commissioner: IPC letter dated 25 August 2014. As a part of its reconsideration, Council located additional documents created after the access application was received and made a fresh decision in relation to those document. The 22 September 2014 decision related to the same access application.

7. I find that Council’s s53 obligation does not extend to the s54 consultation documents. I find that the pages are outside the scope of the access application and are therefore outside the scope of this review.

8. The Tribunal however must take account of any objection to disclosure of information that an agency receives in the course of consultation in the course of determining whether there is an overriding public interest against disclosure of government information: s54(2A)(5) GIPA Act. In the course of this review, I have considered these pages as evidence of the third party objections. The Council has claimed that there is an overriding public interest against disclosure. I find against that claim for following reasons.

1. The documents are comprised by a letter to the third party seeking any s54 objections to the disclosure of the information and the third party response. There are no submissions as to how the disclosure of these documents might prejudice the third party’s business or financial interests. There is no argument as to what if any prejudice might occur to the supply of confidential information, if it is indeed ‘confidential’ or to the effective exercise of an agency’s function or to a deliberative function. In my view the response does not contain any information of the kind that requires consultation under section 54 GIPA Act and therefore cannot be characterized as information to which any of the public interest considerations against disclosure might pertain. Even if they could be characterised in that way, I find that no prejudice could be expected to arise from their disclosure.

2. In the context of the pages being considered evidence, I find there is no reason for pages 3, 5-7, 9-12 remaining confidential to the Tribunal.

Claims of public interest considerations against disclosure

9. Altogether, Council has claimed 8 public interest considerations against disclosure. In the decision under review, Council claimed that the effect of disclosure of any of the documents could be to

1. diminish the competitive commercial value of any information to the company,

2. prejudice the company’s legitimate business, commercial, professional or financial interests and

3. reveal commercial in confidence information,

4. undermine competitive neutrality in connection with any function of an agency in respect to which it competes with any person or otherwise places an agency at a competitive advantage or disadvantage in any market and

5. damage, or prejudice the ability of Council to manage, the economy.

10. In its 19 December 2015 ‘decision’ and in the schedule of documents, Council did not press the consideration (v) above, but it remained as a submission in relation to another public interest consideration. Council made additional claims which I will also determine. These were that the disclosure of documents would -

1. prejudice the supply to an agency of confidential information that facilitates the effective exercise of that agency’s function;

2. reveal a deliberation or consultation conducted, or an opinion, advice or recommendation given, in such a way as to prejudice a deliberative process of government or an agency and/or

3. prejudice the effective exercise by an agency of the agency’s functions.

11. Each of the public interest considerations against disclosure listed in s14 Table 1, 4 and 5 serve a different purpose because of the different language used. Where the adverse effect of different considerations is different, the effect will be cumulative. Where the adverse effect of different considerations is materially the same, the effect will not be cumulative.

12. Section 13 GIPA Act provides:

There is an overriding public interest against disclosure of government information for the purposes of the Act if (and only if) there are public interest considerations against disclosure and, on balance, those considerations outweigh the public interest considerations in favour of disclosure.

13. The burden of justifying that there is an overriding public interest against the disclosure of information lies with the agency: s105(1) GIPA Act.

Public interest considerations against disclosure which do not pertain

14. Council claims that the disclosure of the pre-negotiation, council resolution and negotiating positions, financial information, specific terms of the agreement documents will:

1. Prejudice the supply to an agency of confidential information that facilitate the effective exercise of that agency’s functions;

2. Prejudice an effective exercise by an agency of the agency’s functions. (Statement of Ms Johannson, Annexure1)

15. In respect of these considerations, Council argued that disclosure of the pre-negotiation documents would impact the organisation’s ability to enter into negotiations with other parties if there is a clear breach of commercial-in-confidence arrangements. Presumably Council was arguing that contractual negotiations would amount to a supply of confidential information. The applicant disagreed with this argument on the basis that parties doing business with government need to do so under the law which provides for the disclosure of government information. GIPA Act recognises Council’s concern by identifying commercial-in-confidence information as a public interest consideration against disclosure and it recognizes the applicant’s concern to the extent that he asserts that information concerning public-private business transactions is not automatically exempt from disclosure – the consideration must be weighted against other public interest considerations.

16. While these submissions may be relevant to other public interest considerations against disclosure, I do not consider this public interest to be relevant to documents related to the agreement in question, they being commercial negotiations.

17. Both of the above public interest considerations against disclosure are confined to the exercise of an agency’s function. The Local Government Act 1993 sets out the service and regulatory functions of Council. In my view the use of the word ‘function’ in the wording of these public interest considerations against disclosure in the context of s14 Table 1 does not extend to commercial transactions of Council that are unrelated to a service or regulatory function of Council. In its submissions Council has not identified the function it claims might be affected nor detailed how the supply of information might be affected by the disclosure of this information. On these bases I find that these two public interest considerations against disclosure do not apply.

Pages where adverse effects cannot reasonably be expected to occur from disclosure

18. A number of pages can be described as covering emails (exclusive of any attachment), emails arranging meetings or telephone calls or emails concerning press coverage: 14, 19, 20, 27, 29, 30, 31, 45-46, 34, 64-65, 69, 70, 72, 74-80, 82-86, 88-91, 93-96, 98-100, 102-103,105, 107, 121, 123, 125, 126, 141, 145, 147, 149.

19. Council claimed that 8 public interest considerations against disclosure apply to these documents, but there are no submissions as to:

1. what information in these pages has the characteristics necessary to be encompassed by one of the considerations;

2. the nature or extent of the adverse effect claimed or

3. the basis for its claim that the prejudice could reasonably be expected to occur.

20. While it may be possible for an argument to be made that the information may reveal limited information about the fact of contact between the parties, there appears to be no reasonable basis for a conclusion that such information could be reasonably expected to have any of the adverse effects listed in s14 Table 1. If there could be one or more, I find that any effect is so minimal that the considerations could not override the public interest considerations in favour of disclosure that are claimed by Council.

21. A number of pages contain information the parties released to the media or agreed to release to the media: 21, 32, 35, 136, 141. In the absence of specific submissions and on examination of the documents, I can find no reasonable basis for concluding that any prejudice could reasonably be expected to arise from the disclosure under an access application of information the parties themselves were prepared to release to the media.

Relevant public interest considerations against disclosure

22. The remaining pages to be considered can be characterised as:

Pre-negotiation Pages 108-115 and 127-134 might be described as pre-negotiation documents.

Council resolution Pages 151-156 and 3 page attachment

Negotiating positions, financial information, specific terms of the agreement

Pages 15-18, 23-26, 37-43, 48-53, 55-59, 61-62, 66-67, 112-113, 117-119, 131-132, 137-139, 142-143, 151-156 plus 3 page attachment.

23. In the decision under review, Council claimed that the effect of disclosure of any of the documents would be to

1. diminish the competitive commercial value of any information to the company,

2. prejudice the company’s legitimate business, commercial, professional or financial interests and

3. reveal commercial in confidence information,

4. damage, or prejudice the ability of Council to manage, the economy,

5. undermine competitive neutrality in connection with any functions of an agency in respect of which it competes with any person or otherwise place an agency at a competitive advantage or disadvantage in any market.

24. In summary, the applicant’s submissions argue that Council failed to support its claims with evidence or he disputed the weightings Council accorded each public interest consideration in favour of and against disclosure.

Pre-negotiation documents

25. The pre-negotiation documents contain general information about Broken Hill, factors that might impinge on economic development, information about Council financial affairs, REXs current timetable, passenger numbers over a 10 year period and what Council would like to achieve. I consider this to be information in the public domain or of a general nature except for pages 112, 113, 131 and 132 (the four pages). I find that this general kind of information, except for the four pages, cannot be characterised as the type of information to which any of the public interest considerations raised in s14 Table 4, 5(d) might apply. The consequence of this and the lack of Council’s supported claims, is that I find that there are no public interest considerations against disclosure that might weigh against the presumption in favour of disclosure: s5 GIPA Act.

Revealing commercial-in-confidence provisions of a government contract

26. The four pages contain information concerning the terms of the previous agreement: from the paragraph commencing immediately after the graph on page 112 to and including the second paragraph on page 113 and likewise for pages 131 and 132.

27. [Not for publication]

28. I find on the face of the record that this information is information that could reasonably be expected to have the effect of revealing commercial-in-confidence provisions of a government contract.

29. I accord a very significant weighting to this consideration on the basis that disclosure may give an unfair advantage to any successor to REX airlines on the regulated air route in its negotiations with Council by flagging terms any successor might be able to undercut. The weighting to be accorded remains high even if it is established that this information has been disclosed by a party on the basis of prejudice to the other party’s interests.

Prejudice any person’s legitimate business, commercial, professional or financial interests

Diminish the competitive commercial value of any information to any person

30. No specific submissions were made by Council about the four pages. Although the applicant points out that REX faces no competition on the route under its five-year licence to operate, REX is required to compete on the open aviation market every five years for a license to operate the route. Disclosure of the specific terms of commercial-in-confidence agreements could prejudice REXs business, commercial or financial interest in relation to other associated negotiations of future negotiations. The competitive commercial value of the information lies in the fact that no other airline has the terms of the agreement, but may be interested in negotiating a future one.

31. The information reveals terms on which the parties were prepared to agree at a particular time and reveals business strategy and considerations. This information may give an unfair advantage to other entities considering entering the tender for a five-year licence for the air route and subsequent negotiations with the airport owner. The disclosure of the information could reasonably be expected to reduce Council’s ability to negotiate more favourable terms in future.

32. I draw these conclusions on the face of the pages and find that they contain information that could reasonably be expected to prejudice Council’s and REX’s legitimate business, commercial, professional or financial interests and could reasonably be expected to diminish the competitive commercial value of any information to the company. I also find that the nature of impact of these two public interest considerations is essentially the same and therefore not cumulative.

Undermine competitive neutrality in connection with any functions of an agency in respect of which it competes with any person or otherwise place an agency at a competitive advantage or disadvantage in any market.

33. In its access decision, Council claimed that the disclosure of all and any of the documents, including the four pages, could be expected to have the effect of ‘undermining competitive neutrality in connection with any functions of an agency in respect of which it competes with any person or otherwise place an agency at a competitive advantage or disadvantage in any market’. This consideration contains two alternative considerations. Although unstated, it is presumed Council claims both.

34. The first alternative requires the effect of ‘undermining competitive neutrality’ to be in connection with any function of an agency. No submissions were provided about the relevant function. I am unable to ascertain the function for the reasons given at paragraph 17.

35. The term ‘competitive neutrality’ used in the first alternative is used under the section heading ‘business interests of agencies and other persons’. In that context, it is a non-legal term with a technical meaning. The term is to be interpreted with regard to the Competition Principles Agreement which underpins the National Competition Principles. Council is bound by the Agreement: Clause 7.

36. The objective of competitive neutrality policy is set out in Clause 3 of the agreement as “the elimination of resource allocation distortions arising out of the public ownership of entities engaged in significant business activities: Government businesses should not enjoy any net competitive advantage simply as a result of their public sector ownership.”

37. Council has made no submissions as to whether or not Council enjoys any net competitive advantage as a result of its public ownership or as to how any competitive neutrality might be undermined by the disclosure of the documents. It appears from submissions that many if not all regional airports are owned and operated by other Councils and on that basis it might be difficult for Council to establish how competitive neutrality might be undermined. I am unable to satisfy myself that this is a consideration that I need to weigh.

38. In the alternative, Council has claimed that the effect of disclosure would be to ‘place it at a competitive advantage or disadvantage in any market’.

39. [Not for publication]

40. I have accorded these three public interest considerations against disclosure less weight because the relevant agreement is an historical one which REX cancelled. Also pertinent is the fact that competition on airline routes has significantly diminished and demand has increased. REX remains a profitable airline while others have disappeared from the industry. (REX website, ASX website)(Applicant submission [8])

33. I have also accorded less weight to these public interest considerations because of the fact that both Council and REX were prepared to disclose information that could be argued is commercial-in-confidence information to the media and used direct contact with constituents to harness popular support for their respective positions and or pressure the other party. See for e.g. Rex’s entire open letter to council published in Barrier Daily Truth on 14 April 2014 as mentioned in the applicant’s submission at [8.4]. The public interest in accessing the information is increased if it remains partially informed through selective disclosure.

34. I find that the weight to be accorded these considerations is small. In doing so, I have considered REX’s general objections pertaining to “ASX’s disclosure and market/commercial sensitivities”. In my view any information contained in the information that is material to the stock market should already have been disclosed. I consider the commercial sensitivity of the information to be small given the length of the licensing period and other factors canvassed above.

35. These public considerations are to be weighed against the public interest in favour of disclosure. The Council claims the disclosure of the information could reasonably be expected to promote open discussion of public affairs, enhance government accountability and contribute to positive and informed debate on issues of public importance.

36. The pages are related to an agreement concerning the terms of a regional air route and access to a regional airport. Regional air services are considered by the NSW Government and the NSW Legislative Council to be “an essential service”. (NSW Government response to Recommendation 10 of the NSW Legislative Council’s Inquiry Report No 38 “NSW Regional Aviation Services” supports and acknowledges the fact that regular passenger transport services in regional NSW are an essential service: p 4.) The public interest in such a service being available and therefore the content of the information contained in a related agreement carries significant weight.

37. In any circumstance where a negotiation may result in a trade off between imposts on public finances and the degree of profitability or viability of a private business venture, the public interest in knowing where the balance lands is heightened. This is particularly so at this time when the subsidisation of industry by government under the rubric ‘age of entitlement’ is under public debate. Equally where governments have a role in subsidizing critical infrastructure for community well-being reasons or equitable reasons, the public interest in being informed of the trade-offs is heightened.

38. The public interest is elevated in circumstances where:

1. public finances are precarious (App sub [8], Ms Mann’s statement),

2. the private enterprise is profitable,

3. features of the regulatory scheme are designed to protect low volume intrastate air routes from competition, increase stability and encourage market development: Air Transport Act 1964, NSW Transport website transport.nsw.gov.au,

4. regulatory frameworks may disadvantage the negotiating positions of other air route related businesses.

47. In relation to the information contained in the paragraph commencing immediately after the graphs on page 112 to and including the second paragraph on page 113 and likewise in relation to pages 131 and 132, I find that the public interest consideration against disclosure of commercial-in-confidence provisions of a government contract outweighs the considerations in favour of disclosure.

48. In relation to the balance of pages 112, 113, 132, 133, I find that the public interest considerations in favour of disclosure outweigh those considerations against disclosure.

Council resolution

49. These pages reveal a deliberation or consultation conducted, or an opinion, advice or recommendation given. The question is whether that could reasonably be expected to have occurred ‘in such a way as to prejudice a deliberative process of government or an agency.’

50. Council has made no submissions as to how the disclosure of the pages might prejudice a deliberative process of Council. The applicant submitted at [9] of his submissions that Council has already struck an agreement. (App sub [9]) I agree with the applicant that as Council deliberations concerning the agreement have concluded, it is not possible for the post-resolution disclosure of documents concerning that resolution to prejudice that historical deliberative process of Council. However s14 Table 1 makes it clear that the effect concerns not only a particular Council resolution but concerns the effect generally on Council deliberations.

51. I find that disclosure of the documents would prejudice future deliberations of Council concerning access to the airport on the basis that disclosure would provide an unfair advantage to future air route licence holders in their negotiations with Council about the terms of airport use. REX is a publicly listed company. No person could reasonably expect parties in future negotiations with REX, a publicly listed company to be able to gain advantage by accessing confidential board deliberations about its negotiating framework, position and strategy. Council however is a government entity and there is a qualified presumption in favour of disclosure of government information: s5 GIPA Act.

52. Council submitted that disclosure of these pages could reasonably be expected to damage, or prejudice the ability of the Government or an agency to manage, the economy. Council has made no submissions in relation to this claim. Given that the NSW Government and a Parliamentary Inquiry have established the importance of airport infrastructure and air routes to the sustainability of regional locations and for regional development, I find that this public interest also needs to be taken into account.

53. With respect to the other public interest considerations claimed by Council in relation to these documents (see Annexure 1 to Statement of Ms Johansson), I can find no basis in the documents, or other material provided by the parties for those considerations to be justified.

54. The weighing of the two identified public interest considerations against disclosure and the public interest considerations in favour of disclosure is essentially an exercise in weighing the giving of an unfair advantage to private interests in a future commercial transaction of this sort that risks Council’s ability to extract the best deal for ratepayers, prospects for regional economic development and community well-being against the public being informed of Council’s negotiating framework, strategy and position so as to promote open discussions, enhance government accountability, inform the public about the operations of Council. I find that there is an overriding public interest against disclosure of this information.

Negotiation positions, financial information, specific terms of the agreement

55. These pages concern the negotiations between the parties, contain financial information or refer to specific terms of the agreement.

56. In the decision under review, Council claimed that the effect of disclosure of any of the documents would be to (i) diminish the competitive commercial value of any information to the company, (ii) prejudice the company’s legitimate business, commercial, professional or financial interests and (iii) reveal commercial in confidence information, (iv) damage, or prejudice the ability of Council to manage, the economy.

57. One objective of the licensing regime operated by the NSW Government is to protect a licensed operator from competition on low volume route to support air access to regional NSW. A second competing objective is to encourage competition on air routes in New South Wales. In relation to the information contained in these pages, I find that it could reasonably be expected to diminish the competitive commercial value of any information to the company. The desirability for increased competition lessens the weight to be given to this consideration because of the competing interest in there being competition between prospective aviation service providers on regional air routes every five years when the licence is subject to open competitive tender. Theoretically, the release of the information may attract more competition for REX at that time.

58. However in its confidential submissions, Council has made submissions in relation to the process of securing certain routes. Some of Council’s submissions are reflected in their notes in Annexure 1 to Ms Johannson’s statement. For example the difficulties of attracting airlines to service Broken Hill- Sydney, and calls for expressions of interest to supply other regional routes. On the basis of those submissions and inferences that can be drawn it can be concluded that there is a confluence of factors that have had ramifications for all Councils’ operating regional airports and their respective abilities to attract air services.

59. I therefore accept Council’s position that disclosure of this information would diminish the competitive commercial value of the information to both Council and REX, prejudice Council’s and REX’s legitimate business, commercial, and financial interests, reveal commercial-in-confidence information and prejudice Council’s ability to manage the local economy, to the extent of Council’s ability to do that.

60. I accord significant weight on these factors, particularly bearing in mind the social and economic well-being of the Broken Hill community.

61. The weighing of the four identified public interest considerations against disclosure and the public interest considerations in favour of disclosure outlined earlier is essentially an exercise in weighing the giving of an unfair advantage to other Councils wanting to bid in future opportunities for air route changes and to private interests in a future commercial transaction of this sort that risks Council’s ability to extract the best deal for ratepayers, prospects for regional economic development and community well-being against the public being informed of Council’s negotiating framework, strategy and position so as to promote open discussions, enhance government accountability, inform the public about the operations of Council. I find there is an overriding public interest against disclosure of this information.

Order

1. For the reasons set out above, I make the following orders:

1. the decision of the Council to refuse access to all documents is set aside.

2. The Council’s decision is substituted by the following decision:

1. Pages 3, 5-7, 9-12 do not fall within the scope of the access application.

2. Access in full is granted to pages 14, 19-21, 27, 29, 30-32, 34, 35, 45-46, 64-65, 69, 70, 72, 74-80, 82-86, 88-91, 93-96, 98-100, 102-103, 105, 107, 121, 123, 125, 126, 136, 141, 145, 147, 149 be released in full.

3. Access is granted to pages 108-115 and 127-134 except for the paragraph commencing immediately after the graph on page 112 up to and including the second paragraph on page 113 and likewise for pages 131 and 132. Access is refused to these paragraphs.

4. Access is refused to pages 15-18, 23-26, 37-43, 48-53, 55-59, 61-62, 66-67, 112-113, 117-119, 131-132, 137-139, 142-143, 151-156 plus 3 page attachment.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 30 June 2015