Neary v State Rail Authority

[1999] NSWADT 107

CITATION:	Vincent Neary v State Rail Authority [1999] NSWADT 107
DIVISION:	General
APPLICANT:	Vincent Neary
RESPONDENT:	Chief Executive, State Rail Authority
FILE NUMBER:	993048
HEARING DATES:	08/03/1999
SUBMISSIONS CLOSED:	08/03/1999
DATE OF DECISION:	9 November 1999
BEFORE:	Judge K P O'Connor - President
PRIMARY LEGISLATION:	Freedom of Information Act 1989
APPLICATION:	Review of decision to refuse access to documents (or part thereof) -
MATTER FOR DECISION:	Principal matter
REPRESENTATION:	Applicant: In person Respondent: E Collins of counsel, instructed by D Hawke of Minter Ellison Lawyers
ORDERS:	1. That the agency's decision to refuse access to the documents in dispute (being ten invoices relating to legal fees payable to the Crown Solicitor's Office and in relation to other disbursements such as counsel's fees) be set aside. 2. That the documents in dispute be disclosed to the applicant, with the deletion of the hand-written references to hours worked and the hourly rate found in the invoices numbered 57809 and 64423.

1 Vincent Neary (the applicant) worked for many years with the State Rail Authority (the agency).

2 While an employee in 1989 he reported concerns to the Chief Executive about, what he has described in an affidavit prepared for these proceedings, as ‘serious maladministration and suspected large-scale corruption in the signalling area’.

3 He says in his affidavit that an investigation ensued and found no serious improprieties or corruption in any of the matters raised. He says that he was then subject to a campaign of victimisation and harassment at work, his performance was assessed as poor and his employment was terminated in March 1993. He appealed unsuccessfully against his dismissal to the Transport Appeals Board.

4 Since that time the applicant has sought to obtain access to records compiled by the agency relating to its investigations and relating to him personally, through the medium of requests under the Freedom of Information Act 1989 (the FOI Act). He has made numerous requests - in his affidavit he says these total 25.

5 The request giving rise to this application was first made to the agency on 3 August 1998 and was marked as received by the agency on 5 August 1998. The request had two elements:

(1) It sought access to the documents setting out the full details of the legal fees incurred by the agency in responding to an appeal by him to the District Court in relation to refusals of access to other documents sought under the Act.

(2) It also sought copies of documents which he said had been ‘supplied to Mr Michael Egan [the Treasurer] and/or the Minister for Transport to support the statements made concerning the Authority’s use of infrastructure funds to prop up loss making passenger services’. In relation to the second matter the applicant referred in his request to a story in the Sydney Morning Herald on 1 May 1997 that appeared under the headline ‘$1bn rail losses concealed, says Egan’ and contained the following statement:


“Mr Egan said that at least $1 billion has been borrowed over perhaps 20 years, nominally to buy rail infrastructure for freight services but, in reality, to prop up loss-making passenger services”.

The applicant saw the story as vindicating the concerns of maladministration that he had been raising since 1989.

6 Agency Response: The agency says that it responded to the applicant’s request by letter dated 26 August 1998 in which the executive officer of the FOI unit advised:

- as to item (1) of the request, that he had located documentation that satisfied the request but had determined that it was exempt;

- as to item (2) of the request that he had determined pursuant to s 28(1)(b) of the FOI Act that information of the kind referred to in the request, as it related to the statement attributed to the Treasurer, did not exist.

7 The officer stated in the letter that there was no right of appeal in relation to the determination in respect of the second matter. I express no view on whether that interpretation is correct.

8 Nonetheless at a directions hearing held on 15 June 1999 I formally referred the issue of the adequacy of the agency’s search in response to item (2) of the request to the Ombudsman for investigation. The power of referral is conferred by s 39 of the Administrative Decisions Tribunal Act 1997 (‘the Tribunal Act’).

9 This decision concerns itself only with item (1) of the request, relating to documents setting out legal fees incurred by the agency. The exemption relied upon in respect of that request was that contained in cl 7(c) of Schedule 1 of the FOI Act (the business affairs exemption) the text of which is set out at para 32 below.

10 The agency’s letter of 26 August 1998 notifying its determination asserted that release of the information as to legal fees could reasonably be expected to have an unreasonable adverse effect on the business affairs of the agency. No reasons in support of this assertion were given.

11 This is not consistent with s 28(2)(e) of the FOI Act which provides that the agency’s written notice of determination shall contain

“(e) if the determination is to the effect that access to a document is refused:

(i) the reasons for the refusal, and

(ii) the findings on any material questions of fact underlying those reasons, together with a reference to the sources of information on which those findings are based.”

Was there a Deemed Refusal?

12 The FOI Act, s 24(2), provides that an agency shall be taken to have determined an application by refusing access if it fails to determine the application within 21 days “after the application is received by the agency.” The uncontested evidence, which I accept, is that the date of receipt of the applicant’s request was 5 August 1998. Accordingly the final date available to the agency for making a substantive decision unaffected by the deemed refusal provision was 26 August 1998. The agency’s letter bears that date.

13 The other provisions relevant to this matter are s 28 and s 61. Section 28 sets out the required contents of the notice. Section 61 deals with the service of notices, and includes a provision that where a notice is served by letter (as occurred here) it “shall be taken to have been given to the person at the end of the fifth day after the letter was posted to the person.”

14 The FOI Act does not address specifically what time may be permitted to elapse between the date contained on a notice and its posting. Ideally the notice should be posted on the date that it bears and no later than on the next business day.

15 The applicant says that he did not receive a response to his original request within 21 days. As noted, the FOI Act simply requires the making of the determination within 21 days. Given that the notice is dated 26 August 1998 and it was then posted, I accept that he did not receive the notice within 21 days. But the FOI Act does not go so far as to prescribe that it be communicated to and received by the applicant within 21 days.

16 The applicant then proceeded to act on the basis that his request was the subject of a deemed refusal. Accordingly, he sought internal review by letter dated 2 September 1998, which bears a date-stamp recording receipt by the Ministerial Correspondence Unit marked 8 September 1998. In his reply dated 9 September 1998 acknowledging receipt of that request the FOI officer noted that it appears that the agency reply of 26 August 1998 may have crossed with his request for internal review. He asked in these circumstances whether the applicant wished to continue with his request for internal review.

17 Further correspondence then passed between the applicant and the agency. The applicant stated in his affidavit that he only received the agency letter of 9 September 1998 on 17 September 1998, by which time he had again written to the agency (letter dated 14 September 1998) expressing concern over not having received a reply to his letter requesting internal review. His letter of 14 September makes no reference to the agency reply dated 26 August 1998. Eventually in a further letter of 23 September 1998 he acknowledged receipt of the letter dated 9 September. But there was still no reference to whether he had received the letter of 26 August 1998 replying to his original request.

18 Only in the applicant’s reply filed in these proceedings on 28 May 1999 did the applicant address the matter of whether he ever received the letter of 26 August 1998. There he says that he did receive the letter and that the envelope in which it was enclosed was post-marked 8 September 1999.

19 The letter of 23 September 1998 referred to the agency’s request for clarification of the question of whether he wished to have the internal review proceed. He said he regarded the statements in relation to when his request of 2 September was received and the suggestion that the correspondence may have crossed in the mail as ‘blatant falsehoods’ and accordingly as to the question of whether he was proceeding with the request for internal review, he treated that question ‘with the contempt that it deserves’.

20 This prompted a reply from another officer dated 23 October 1998 to the effect that the applicant did not appear to wish to continue with his request for internal review, returned the fee, and asked him ‘[i]f this is incorrect to please return the payment with advice confirming that you are seeking an internal review’.

21 The applicant clearly was less than candid in failing to refer in his letter of 23 September 1998 to the fact that he had by that time received the notice of refusal dated 26 August 1998 albeit in an envelope, he says, post-marked 8 September 1998. If the applicant’s evidence as to the post-mark were to be accepted, then an inference adverse to the agency might be made that its determination was in fact finalised after 26 August 1998 and the notice was not accurately dated, in contravention of s 28(2)(a) of the Act.

22 In the regular conduct of public administration, it is reasonable to expect that correspondence is posted promptly. Consequently if the evidence as to the post-mark is accepted, it would be reasonably open to the Tribunal to draw an inference that the notice of determination was finalised in early September, several days after the expiry of the statutory period. But the lack of candour on this matter by the applicant in his dealings with the agency in September 1998, and his failure to produce the envelope containing the post-mark incline me against drawing such an inference.

23 Accordingly I am satisfied on balance that the date contained in the letter accurately represents the date of determination and that the letter was posted promptly thereafter. Accordingly it should have been received by the applicant around 31 August 1998 or 1 September 1998.

24 As noted, the applicant treated the agency’s subsequent inaction after its letter of 23 October 1998 in declining to continue to deal with the request and returning his fee as amounting to a deemed refusal of his internal review request; while the agency regarded the situation as one where he was no longer proceeding with his request for internal review.

25 The impasse reached was unsatisfactory. This history is an indication of the unconstructive way in which the parties have dealt with each other. The applicant was less than candid as to whether and when he received the reply to the original request. On the other hand, the agency sought to construe the applicant’s demands in a way that advantaged it, by seeking to cast an onus on him as to whether he wished to proceed with the request when it is clear, I consider, that that was his intention.

26 The agency in this case should, I consider, have proceeded on the basis that it remained in receipt of a request for internal review of the decision and proceeded on the basis that it related to the contents of its letter dated 26 August 1998.

27 My conclusions are:

(i) the agency did respond to the initial request, and there was no ‘deemed refusal’ at that point

(ii) the agency did not respond to the request for internal review, and there was a deemed refusal at that point.

District Court proceedings

28 The applicant lodged an appeal (supported by the affidavit previously referred to) in the District Court on 19 November 1998. The jurisdiction in relation to Freedom of Information (FOI) appeals was transferred to this Tribunal on 6 October 1998: Gov. Gaz. 2 October 1998 p 7889 Proclamation - item (d). The District Court Registry appears to have been unaware of the transfer of jurisdiction as it made directions in the matter on 24 November 1998. At a directions hearing on 3 March 1999 it was noted that jurisdiction no longer lay with the District Court. At this point the agency had failed to comply with the directions given on 24 November 1998, in particular that it provide a response to the applicant’s affidavit by 19 January 1999. This again points to an unsatisfactory approach by the agency to the request.

29 On 12 March 1999 the applicant lodged the application for review now under consideration with this Tribunal. In light of the above history the Tribunal gave leave to the applicant to lodge the application outside the time period for appeals (60 days) allowed under s 54 of the FOI Act. On 8 April 1999 directions were made requiring the agency to provide a statement of reasons for its (deemed) refusals of the applicant’s request. These reasons were filed on 29 April 1999 and essentially argued that the applicant had discontinued his application after the initial determination. For the reasons already given, I do not regard that as a reasonable interpretation of the history of the dealings between the agency and the applicant.

30 I shall proceed on the basis that the case is one where the initial determination was made on 26 August 1998 and there was a failure to respond to a request for internal review resulting in a deemed refusal on review: as to which see s 47(6) of the Act.

The Documents in Dispute

31 The documents in dispute comprise 10 invoices for professional fees and disbursements issued by the Crown Solicitor’s Office in respect of services rendered to the agency in dealing with an FOI application by the applicant, covering the period 23 October 1996 to 27 July 1998.

Agency’s Objections

32 In its initial reply of 26 August 1998 the agency relied on the business affairs exemption set out in cl 7(1)(c) of Schedule 1 of the Act. At hearing the agency also relied on cl.7(1)(b) of Schedule 1 of the Act. As relevant, cl 7 provides:

“7 Documents affecting business affairs

(1) A document is an exempt document:

(a) …

(b) if it contains matter the disclosure of which:

(i) would disclose information (other than trade secrets) that has a commercial value to any agency or any other person, and

(ii) could reasonably be expected to destroy or diminish the commercial value of the information, or

(c) if it contains matter the disclosure of which:
(i) would disclose information (other than trade secrets or information referred to in paragraph (b)) concerning the business, professional, commercial or financial affairs of any agency or any other person, and

(ii) could reasonably be expected to have an unreasonable adverse effect on those affairs or to prejudice the future supply of such information to the Government or to an agency.

(2) A document is not an exempt document by virtue of this clause merely because it contains matter concerning the business, professional, commercial or financial affairs of the agency or other person by or on whose behalf an application for access to the document is being made.”

The Clause 7(1)(c) Objection:

33 Sub-paragraphs (i) and (ii) of cl 7(1)(c) need to be satisfied. As to sub-para (i), the agency submits that the fees and disbursements incurred by it in defending the applicant’s earlier application concern its ‘financial affairs’ as well as those of the Crown Solicitor’s Office. I agree that expenditures on external professional services involve the conduct of the financial affairs of an agency. ‘Financial affairs’ in this context would also, I consider, cover the negotiation of fee arrangements with external providers, including such matters as the hourly rates charged, and the actual amounts paid. I am satisfied that the information contained in the invoices relates to ‘the financial affairs’ of the agency.

34 The key question is that which is required to be satisfied by sub-para (ii), i.e. whether the disclosure of the contents of the invoices for professional services ‘could reasonably be expected to have an unreasonable adverse effect on those affairs’.

35 An objective view must be brought to bear on an agency’s claim that release will have an adverse impact on its financial affairs. The Tribunal should approach issue from the viewpoint of a reasonable administrator. The administrator should have reasonable grounds for his or her perception. There must be more than a mere risk. While the key word used in the relevant provision - ‘expect’ - carries a firmer connotation than words such as ‘anticipates’, it is not necessary that the level of risk be such that it be assessed as more probable than not. Nor is it necessary for the administrator to apply a balance of probabilities calculus similar to that used to set the burden of proof in litigation. All relevant factors, including public interest considerations, should be taken into account. The extent and nature of the effect will be relevant, and often decisive. It is necessary to assess what is reasonable in the circumstances.

36 That approach emerges from a consideration of the Federal Court cases which examined this issue in the context of the early Commonwealth FOI cases concerned with the interpretation of the similar Commonwealth exemption (Freedom of Information Act 1982 (Cth) s 43). See News Corporation v National Companies and Securities Commission (1984) 5 FCR 88 and Attorney-General’s Dept v Cockcroft (1986) 64 ALR 97; Colakovski v Australian Telecommunications Corporation (1991) 100 ALR 111 at 120-1, 123-4; Searle Australia v PIAC (1992) 108 ALR 163, 178 and generally, Cossins, Annotated Freedom of Information Act New South Wales (1997) [107.15]-[107.18].

37 The agency submitted that it wished to maintain confidentiality in relation to its legal fees’ expenditure, so as not to convey to other firms that it engages or to other firms that are competing for its work any knowledge of what it is prepared to pay to rivals. It also noted that the Crown Solicitor’s Office has a similar interest to protect.

38 The Tribunal has inspected the documents in dispute. They contain references to the total amount of fees charged including disbursements such as counsel’s fees. As to the issue of counsel’s fees, there were no submissions to the effect that the relationship with counsel would in any way be adversely affected by disclosure of their fees.

39 Accordingly in so far as the documents in dispute relate to counsel’s fees they should be released.

40 As to the information in relation to expenditure on services provided by the Crown Solicitor’s Office, release of information as the total amounts paid does not, I consider, place at risk in any meaningful way the nature of the arrangements that might exist between the agency and that Office. The only information shown in the invoices which might, arguably, fall within the protection of the exemption is the reference (found in hand-writing on two of the invoices) showing a multiple of a number (the hours of service rendered) and an hourly rate.

41 That information does, I consider, bear on the contractual relationship between the agency and the Office. It gives an insight into what rate the Office charges for a certain class of work. That information, if known to others with whom the agency deals in relation to the provision of legal services, might give an advantage to those third parties in negotiation of rates. Consequently, applying the tests referred to, I consider that the hand-written references to the hours and hourly rates should be exempted from disclosure.

The Clause 7(1)(b) Objection:

42 The information in issue could not reasonably be regarded as information with “commercial value”, within the meaning of the case-law under the Commonwealth FOI Act: See Re Hopper and Australian Meat and Livestock Research and Development Corp (1989) 16 ALD 658; Public Interest Advocacy Centre and Searle Pty Ltd (AAT, Cth, unreported, 19 September 1991; in Federal Court (1992) 108 ALR 163). These cases involved product or similar information that resulted from the investment of significant research and time and effort by a business organisation. See also the Queensland case, Re Cannon and Australian Quality Egg Farms Ltd (1994) 1 QAR 491.

43 Moreover, in applying the exemptions contained in cl 7 to business information, the hierarchy of interests sought to be addressed by paragraphs (a), (b) and (c) of cl 7(1) must be acknowledged. Paragraph (a), not in issue in this case, protects “trade secrets”. There is no additional requirement of satisfaction of a public interest test. Paragraph (b) concerns “information (other than trade secrets) which has a commercial value”. A public interest test applies but it is less stringent than that applicable under (c). Paragraph (c) deals with “information (other than trade secrets or information referred to in paragraph (b)) concerning the business, professional, commercial or financial affairs of any agency or any other person”.

44 While, as previously explained, I do regard the information in issue as “business” information to which the test in cl 7(1)(c)(ii) might be applied, I do not consider it to be information of the higher category reflected in para (b) - information that has an intrinsic commercial value of the kind considered in the Commonwealth and Queensland cases.

Determination

45 Pursuant to s 63 of the Tribunal Act -

(1) That the agency’s decision to refuse access to the documents in dispute (being ten invoices relating to legal fees payable to the Crown Solicitor’s Office and in relation to other disbursements such as counsel fees) be set aside.

(2) That the documents in dispute be disclosed to the applicant, with the deletion of the hand-written references to hours worked and the hourly rate found in the invoices numbered 57809 and 64423.