Patrick and Secretary, Department of Defence (Freedom of information)
[2024] AATA 336
•13 February 2024
Patrick and Secretary, Department of Defence (Freedom of information) [2024] AATA 336 (13 February 2024)
ReviewNumber: 2022/0301, 2023/0359
Division:FREEDOM OF INFORMATION DIVISION
File Numbers: 2022/0301 & 2023/0359
Re:Rex Patrick
APPLICANT
AndSecretary, Department of Defence
RESPONDENT
AndNaval Group SA
OTHER PARTY
Appeal from: Rex Patrick and Department of Defence (No 2) [2021] AICmr 97
DECISION
Tribunal:Deputy President Britten-Jones
Date:13 February 2024
Place:Adelaide
The decision of the Tribunal is to affirm the decisions under review
......................[sgd]..................................................
Deputy President Britten-Jones
CATCHWORDS
FREEDOM OF INFORMATION - review of decisions to refuse access to documents related to deliverables from the Future Submarine Program - documents exempt under section 45 of the Freedom of Information Act 1982 - an action for breach of confidence may arise from a contractual breach of confidence - whether disclosure of documents in issue would found an action for breach of confidence - criteria in FOI Guidelines applied – decisions under review affirmed
LEGISLATION
Freedom of Information Act 1982 (Cth)
CASES
Patrick; Secretary, Department of Defence and [2021] AATA 4627
Batchelor and Commissioner of Taxation [2014] FCAFC 41
SECONDARY MATERIALS
Office of the Australian Information Commissioner, Freedom of Information Guidelines – Guidelines issued by the Australian Information Commissioner under s 93A of the Freedom of Information Act 1982 (Cth) (November 2023)
REASONS FOR DECISION
Deputy President Britten-Jones
13 February 2024
Introduction
In 2015, the Commonwealth of Australia, through the Department of Defence, embarked on an acquisition strategy for submarines which involved, as a first stage, a competitive evaluation process to choose an international partner. The project came to be known as the Future Submarine Project. The other party to these proceedings, Naval Group SA (Naval Group), was chosen as the partner of the Commonwealth and entered into a Design and Mobilisation Contract signed on 30 September 2016 (Naval Group Contract). The Commonwealth also entered into a Design, Build and Integration Contract with Lockheed Martin Australia Pty Ltd (LMA) dated 12 January 2018 (LMA Contract). I will refer to the Naval Group Contract and the LMA Contract together as the Contracts. On 16 September 2021, the Commonwealth cancelled the Future Submarine Project and the Contracts.
Pursuant to the Freedom of Information Act 1982, (FOI Act)[1] Rex Patrick (the applicant) requested access to documents which were supplied under the Contracts. Access was refused by the Department of Defence (Defence) and the decision was affirmed by the Information Commissioner on 23 December 2021: see Rex Patrick and Department of Defence (No 2) (Freedom of Information) [2021] AICmr 97. This decision is the subject of the application for review made to the Tribunal in 2022/0301. A further request under the FOI Act for documents including the IMS Summary (defined below) was refused by a delegate of Defence on 18 November 2022. This later decision is the subject of the application for review made to the Tribunal in 2023/0359.
[1] All references to legislation are to the Freedom of Information Act1982 unless otherwise stated.
The documents that are now in issue in these proceedings are:
(a)six Earned Value Performance Reports provided by the Naval Group for the period 1 April 2018 to 30 September 2018 (the EVPR documents);
(b)six Integrated Program Management Reports (the IPMR documents) provided by LMA for the period 1 April 2018 to 30 September 2018;
(c)an Integrated Master Schedule Summary document (IMS Summary) delivered on 19 September 2017 by Naval Group to Defence.
The respondent contends that:
(a)The EVPR documents and the IPMR documents are exempt from disclosure under ss 45 and 47(1)(b) of the FOI Act;
(b)The IMS Summary is exempt from disclosure under ss 33(a)(ii), 45 and 47(1)(b) of the FOI Act.
The primary submission of the respondent and Naval Group is that the documents in issue were provided in confidence under the Contracts and are exempt under s 45 of the FOI Act. The Tribunal has made non-disclosure directions over the specific contract terms dealing with confidentiality, but the Applicant has agreed on the contract terms in exhibit 12 as follows:
(a)The documents in issue were supplied under contracts between the Commonwealth (as represented by the respondent), Naval Group and/or LMA entities.
(b)The Contracts contain confidentiality obligations which apply to the documents in issue and obligate the Commonwealth to ensure the documents in issue are kept confidential and not disclosed, except to the extent that (among other exceptions) disclosure is required by law.
(c)Those confidentiality obligations survive termination of the Contracts and continue to apply.
The applicant contends that:
(a)The FOI Act overrides the contractual obligations of confidentiality;
(b)There is a public interest defence to an action for breach of confidence which would apply were the documents in issue to be disclosed; and
(c)Some or all of the information in the documents in issue has been disclosed publicly or is generally known in the industry.
The Issue
The issue for determination is whether the requested information is exempt from disclosure under the FOI Act. The respondent contends that the information contained in the documents is fully exempt from disclosure under any of ss 45 and 47(1)(b). The respondent further contends that the IMS Summary is fully exempt under s 33(a)(ii). The respondent gave particular attention to s 45 at the hearing.
This case raises the tension that exists between Naval Group’s contractual right to have its confidential information protected from being disclosed and the right of the public to have access to government processes and activities as provided for by the FOI Act. Naval Group contends that, having been invited by the Commonwealth of Australia to tender for the provision of services and “deliverables”, it disclosed certain confidential information to the Commonwealth on the basis of a contractual obligation that such information would not be further disclosed. Mr Patrick contends that Naval Group’s contractual right to confidentiality was subject to the FOI Act which entitles a person, upon request, to access the information.
The Evidence
The respondent called evidence from Gavin Boyd, Paul Caputo and Vice Admiral Mark Hammond.
Mr Boyd is the Assistant Secretary Sovereign Submarine Program Delivery at Defence. From 2018 to 2021 he was the Commercial and Business Director within the Future Submarine Project. He is familiar with the engagement of Naval Group and LMA and the Contracts with them.
With respect to the EVPR documents and the IPMR documents, Mr Boyd deposed that they contain:
(a)a costed Work Breakdown Structure that provides insight into both the process and product definition;
(b)detail on actual costs incurred or to be incurred in each area of work; and
(c)cost, profit rates and overhead rates.
Mr Boyd deposed that the IMS Summary provides insights into the build strategies of both Naval Group and LMA. He said that all of the documents in issue were marked confidential or contained security markings and were understood as being confidential. They were treated as confidential within the Future Submarine Project team. The information in the documents is commercially sensitive and not generally known or ascertainable.
Mr Boyd is concerned about the reputational impact on the Commonwealth if the documents were disclosed. He deposed:
44. I am concerned that any disclosure of confidential information would have a detrimental reputational impact on the Commonwealth’s defence relationships with other states and overseas entities, including the contractors on which Defence relies to deliver its defence capability requirements. The Commonwealth and Defence rely on the Commonwealth’s reputation as a state that respects obligations of confidentiality. This is important in ensuring that the Commonwealth’s partners overseas are prepared to share with us confidential and sensitive information that will assist Defence and the Commonwealth to secure Australia’s interests. It is a practical reality of the present global order that the Commonwealth relies on exchanges of information with its international partners as part of the successful defence of the Commonwealth.
45. Defence is very mindful of preserving effective relationships with other states, and also the contractors of those states on which Defence relies to deliver its defence capability requirements. The release of information which is, or is perceived to be in breach of an obligation of confidentiality would negatively affect the Commonwealth’s reputation with these states and contractors. I consider this to be especially true in the very secretive context of submarine design, building and implementation, but also in the national security context globally.
46. The Commonwealth currently has defence security arrangements and treaties with a number of states, which are reviewed and updated on an ongoing basis. If the Commonwealth is seen to be releasing confidential information relating to defence security capabilities, there is a real likelihood that states will be more cautious about the defence capabilities they are willing to share with the Commonwealth.
47. Similarly, the effective prosecution of Defence contracts with commercial providers of defence capabilities requires the protection of sensitive commercial information provided in the course of performing those contracts. If prospective contractors considered that Defence would disclose sensitive commercial information provided to the Commonwealth under a contract, those contractors may be reluctant to share such sensitive information in the future, which would detrimentally affect Defence’s ability to deliver its defence capabilities effectively, efficiently and economically.
Mr Caputo is a Program Manager at LMA. In his affidavit he deposed to the LMA Contract being entered into as part of the Future Submarine Project on 12 January 2018. He said it contained provisions for the exchange of confidential information between the Commonwealth and LMA.
Vice Admiral Hammond gave evidence that went primarily to the issue of damage to the defence of the Commonwealth if the documents were released. He explained in his affidavit how:
(a)The IMS Summary contains specific and detailed information about the Future Submarine Project which is strategically significant information.
(b)The information in the documents would allow a potential adversary to use multiple vectors to identify those systems, suppliers and processes that could be used to exploit vulnerabilities and reduce effectiveness of Defence’s current and future submarine capabilities.
(c)The disclosure of the IMS Summary could foreseeably result in damage to Australia’s international relations with France.
(d)If Australia were to demonstrate to international allies and partners that it is not capable of maintaining the confidentiality of military/defence capability and defence industry information shared with it, allies and partners may well be reluctant to share information with Australia to the current extent.
Naval Group called evidence from Guillaume Jampy, Vice President for Systems, Equipment and Propulsion Bids at Naval Group. He was the Program Management Director for the Future Submarine Project.
M Jampy described the EVPR documents in his affidavit as follows:
32. The EVPRs are “Earned Value Performance Reports”, which are a type of report that Naval Group delivered to Defence monthly during the DMC and the SDC. They enabled Defence to assess scheduling and budgetary performance in the Program, including by reference to each activity to be performed.
33. The EVPRs delivered by Naval Group included information key to the FSP, including detailed breakdowns of cost and construction phases and activities. EVPRs are important for tracking program progress, efficiencies and inefficiencies.
M Jampy deposed to the likely harm to Naval Group if the documents in issue were released:
51. The EVPRs provide insights into Naval Group’s scheduling processes, financial performance and margins associated with the construction of a submarine. Naval Group was completely cost transparent with the Commonwealth under the FSP, and so Naval Group’s profits, internal costs and margins are easily identified from the EVPRs. This is commercially sensitive information which competitors could use when competing with Naval Group in future tenders for other submarine programs.
…
53. The IMS contains highly sensitive know-how of Naval Group as a designer and builder of submarines. Both the IMS Summary and the Final IMS contain a detailed breakdown of each phase of the FSP. Importantly, this includes the logical links and transition steps in-between each phase. In effect, the IMS can serve as a step-by-step guide of how Naval Group approaches the design and build of a submarine. A significant amount of information can be derived from it, including to better understand design and build capacities and constraints of Naval Group’s business.
54. I know from my experience in the naval defence industry that only a select number of individuals have the experience, technical, and commercial ability to formulate an IMS or equivalent document for the design or construction of a submarine. Disclosure of the information contained in the IMS could be analysed by competitors to gain significant insights into Naval Group’s highly specialised institutional knowledge. A competitor could draw on the IMS to adopt features or approaches to improve their own submarine offers and programs.
Mr Patrick provided a witness statement setting out his personal experience as a submariner and attaching information in the public domain. Mr Patrick also tendered a template document for an earned value performance report in relation to a design and mobilisation contract.[2]
[2] Exhibit 11.
Further with respect to what is in the public domain about the Future Submarine Project, there is a statement of facts admitted by Defence[3] which was tendered as exhibit 8. The effect of the statement of admitted facts was to record that certain information relied upon by the applicant has been officially published, namely:
(a)Project schedule information;
(b)Work completed or being carried out as at January 2020;
(c)Project cost information as at January 2020;
(d)Schedule performance published in February 2023; and
(e)Details of major project contracts published in February 2023.
[3] Naval Group expressed reservation about some of the statements relating to it but did not object to the Tribunal relying on the document for the purpose of recording what was in the public domain.
Section 45 – documents containing material obtained in confidence
Section 45(1) provides:
A document is an exempt document if its disclosure under this Act would found an action, by a person (other than an agency or the Commonwealth), for breach of confidence.
The Office of the Australian Information Commissioner has issued Guidelines under s 93A which requires the Tribunal to have regard to the Guidelines in making its decision. With respect to a breach of confidence, the Guidelines say:
5.158. A breach of confidence is the failure of a recipient to keep confidential, information which has been communicated in circumstances giving rise to an obligation of confidence. The FOI Act expressly preserves confidentiality where that confidentiality would be actionable at common law or in equity.
5.159. To found an action for breach of confidence (which means s 45 would apply), the following five criteria must be satisfied in relation to the information:
• it must be specifically identified
• it must have the necessary quality of confidentiality
• it must have been communicated and received on the basis of a mutual understanding of confidence
• it must have been disclosed or threatened to be disclosed, without authority
• unauthorised disclosure of the information has or will cause detriment.
The respondent and Naval Group rely upon the obligation of confidence expressed in the terms of the Contracts with Naval Group and LMA.
What is the meaning of an action for breach of confidence?
An obligation of confidence may arise in contract by way of an express or implied term or it may arise in equity. Section 45 refers to an action for breach of confidence without further articulating whether the confidence which may have been breached arose in contract or in equity. There is no doubt that an action for breach of confidence includes an action in equity. However, some authorities have expressed doubt as to whether an action for breach of confidence includes an action for breach of contract.
I considered this same issue in Patrick; Secretary, Department of Defence and [2021] AATA 4627 (14 December 2021) at [29] to [45] which I adopt as part of these reasons. It follows that I will approach the question as to whether disclosure of the documents in question would found an action for breach of confidence by reference to the five criteria in [5.159] of the FOI Guidelines.
I turn now to the five criteria.
Can the information be identified with specificity?
The information in question is contained in the documents in issue. It follows that the information can be identified by reference to what is set out in the documents themselves.
Does the information have the necessary quality of confidence?
The applicant admits that the Contracts contain confidentiality obligations which apply to the documents in issue but contends that the information in the documents does not have the necessary quality of confidence because the information is publicly known. The applicant relies on the facts that are admitted by the respondent in exhibit 8 together with other material which evidences what is publicly known about the Future Submarine Project.
The applicant submits that the information in the documents in issue will not have the necessary quality of confidence if the information has already been publicly disclosed or it is information that is generally known.
The effect of the applicant’s submission is as follows. It is a well known management tool for contractors to be required to submit earned value project reports in a standard format as represented by the template document in exhibit 11. There is no secret with respect to the form of the EVPR documents and the IPMR documents. Further, there is no secret in how the building of a submarine is sequenced. The content and information contained in the documents in issue is either generally known and/or has been disclosed by the publishing of the information in the statement of admitted facts.[4] The applicant says that the information in the EVPR documents and the IPMR documents would be the type of information contained in the statement of admitted facts relating to the project schedule, the work completed, the project cost and the schedule performance. He says that the statement of admitted facts discloses work details and milestones; the actual contract expenditure for Naval Group and LMA; and with respect to schedule performance, details of the variance between the original planned dates and the achieved dates.
[4] Exhibit 8.
The evidence from Naval Group and LMA addresses the applicant’s submission. Mr Caputo from LMA says that the documents in issue are highly sensitive to LMA because they contain pricing strategy, program planning and execution details, financial methodologies and cost estimate build-ups. He says that if that information is disclosed it would give competitors access to how LMA price their services as well as its business operations and how it conducts complex program work. M Jampy from Naval Group gave similar evidence that disclosure of the EVPR documents would provide insights to competitors of its scheduling processes, financial performance and margins associated with the construction of a submarine. He explains that the EVPR documents provide a detailed breakdown of work activities and planned value and actual costs for each work component. He refers to ‘Naval Group’s highly specialised institutional knowledge’ which would be disclosed and how that would be used by competitors.
Mr Boyd, Mr Caputo and M Jampy were cross examined on the topic of whether certain information was commercially sensitive and whether the information in the documents in issue was in the public domain. Mr Boyd said that what has been released is high level and not necessarily specific.[5] Mr Caputo accepted that some elements of schedule variance may be in the public domain but said that a ‘detailed schedule variance’ could be commercially sensitive or used against LMA in some way[6] and that six consecutive months of information would make it more commercially sensitive.[7]
[5] Transcript p 65 line 3.
[6] Transcript p 139 lines 37 to 40.
[7] Transcript p 142 lines 1 to 2.
As to whether the information in the documents in issue has been revealed by the publishing of information set out in the statement of admitted facts, it is necessary to carry out a comparison. The respondent contends that the information in the EVPR documents and the IPMR documents is simply not in the statement of admitted facts. The respondent says that the information in the statement of admitted facts, and more generally in the public domain, is at a much higher level as opposed to the much more granular examination of variations as to costs and schedules in the documents in issue. Having looked at the documents in issue and compared the information contained therein with the information set out in the statement of admitted facts, and more generally in the public domain, I accept the respondent’s submission as to the granularity of the information in the documents in issue which gives much greater details than the very high level information set out in the statement of admitted facts and in the public domain. Further, the release of six consecutive monthly reports provides information about the progress of the Contracts and the strategic approach taken by Naval Group and LMA over part of the life of the Contracts.
I find that the information has the necessary quality of confidence because it is detailed and commercially sensitive information imparted by Naval Group and LMA on the express contractual basis of confidentiality and because it has not been disclosed and is not otherwise in the public domain.
Has the information been communicated and received on a mutual understanding of confidence?
The applicant admits that the information in the documents in issue was communicated in confidence and received on a mutual understanding of confidence.[8] The evidence in support of the satisfaction of this criteria are the Contracts themselves which contain obligations of confidence. The evidence from the respondent and Naval Group was that the information in the documents was treated as confidential and was not disclosed outside the terms of the Contracts. I find that this criterion is satisfied.
[8] Transcript of applicant’s closing at p 225 lines 10 to 12. See also exhibit 12.
Is disclosure threatened without authority?
Naval Group has not authorised the disclosure of the information and expressly opposes it. The terms of the Contracts do not provide authority for disclosure. This criterion is satisfied.
Will disclosure cause detriment?
M Jampy deposed in his affidavit to the adverse impacts on Naval Group were the information to be disclosed. M Jampy explained that Naval Group was completely cost transparent with the Commonwealth so that its profits, internal costs and margins are identifiable from the EVPR documents. He said this is commercially sensitive information which competitors could use when competing with Naval Group in future tenders for other submarine programs. With respect to the IMS Summary, M Jampy said that disclosure could serve as a step-by-step guide as to how Naval Group approaches the design and build of a submarine. He said that a significant amount of information can be derived from it, including to better understand design and build capacities and constraints of Naval group’s business. Competitors would gain significant insight into Naval Group’s institutional knowledge.
Mr Caputo gave similar evidence about the adverse impacts on LMA if the information in the documents were disclosed. He said that LMA’s competitors would have access to strategic and financial insights as to its business operations and how it conducts complex program work and would therefore gain a competitive advantage from the disclosure.
I accept the evidence of M Jampy and Mr Caputo and conclude that this advantage to Naval Group’s and LMA’s competitors is a detriment which would satisfy the fifth element.
Conclusion as to s 45
I conclude that the information in question is exempt from disclosure under s 45 because its disclosure would found an action for breach of confidence. Section 45 does not require a consideration of the public interest. The only issue is whether disclosure would found an action for breach of confidence by reference to the five criteria referred to earlier in these reasons.
Other claims under s 33(a)(ii) and s 47(1)(b)
The respondent claims that the information in question is also exempt from disclosure under other provisions in the FOI Act. Given that the information is exempt from disclosure under s 45 there is no need for the Tribunal to consider these further claims.
DECISION
The decisions under review were to the effect that the documents in issue are exempt documents under the FOI Act and I have come to the same decision albeit by reference to a different provision of the FOI Act, namely s 45. In this circumstance I consider it appropriate to affirm the decisions under review.[9] The Tribunal finds that the documents in issue are fully exempt from disclosure pursuant to s 45 of the FOI Act. The decisions under review are affirmed.
[9] Batchelor and Commissioner of Taxation [2014] FCAFC 41 at [22] and [123].
I certify that the preceding 42 (forty-two) paragraphs are a true copy of the reasons for the decision herein of Deputy President Britten-Jones
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Associate
Dated: 13 February 2024
Dates of hearing: 17-19 July 2023 Applicant: Self-represented Advocate for the Respondent: Justin Davidson Solicitors for the Respondent: Australian Government Solicitor Counsel for the Other Party: Brent Michael Solicitors for the Other Party: Allens
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