Patrick; Secretary, Department of Defence and
[2021] AATA 4627
•14 December 2021
Patrick; Secretary, Department of Defence and [2021] AATA 4627 (14 December 2021)
Division:FREEDOM OF INFORMATION DIVISION
File Number: 2020/5485
Re:Secretary, Department of Defence
APPLICANT
AndSenator Rex Patrick
RESPONDENT
AndNaval Group Australia Pty Ltd and Naval Group S.A.
OTHER PARTY
Appeal from: [2020] AICmr 40
DECISION
Tribunal:Deputy President Britten-Jones
Date:14 December 2021
Place:Melbourne
The Tribunal sets aside the decision of the Australian Information Commissioner dated 13 August 2020 and substitutes a decision that the information requested by Senator Patrick on 16 June 2018 is exempt from disclosure under s 45 of the Freedom of Information Act 1982.
........................................................................
Deputy President Britten-Jones
Catchwords
FREEDOM OF INFORMATION – review of decision of Department of Defence that documents are wholly exempt – documents relate to Final Cost Estimate Template submitted for the Future Submarine Competitive Evaluation Process – documents exempt under section 45 of the Freedom of Information Act 1982 – “required by law” clauses do not displace section 45 – an action for breach of confidence may arise from a contractual breach of confidence – consideration of whether an action for breach of confidence requires detriment – the decision granting access to the requested information is set aside and substituted with the decision that the information is exempt from disclosure
Legislation
Freedom of Information Act 1982
Cases
Ammon v Consolidated Minerals Ltd[No 3] [2007] WASC 232
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266
Callejo and Department of Immigration and Citizenship [2010] AATA 244; (2010) 51 AAR 308
Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) [1987] FCA 266; (1987) 14 FCR 434
Fomiatti v University of Western Sydney (No 2) [2006] NSWADT 210
Kamminga and Australian National University (1992) 26 ALD 58
Meagher Gummow & Lehane, Principles of Equity
Moorgate Tobacco Co Ltd v Philip Morris Ltd (No. 2) (1984) 156 CLR 414
Optus Networks Pty Ltd v Telstra Corporation Ltd (2010) 265 ALR 281; [2010] FCAFC 21
Ramsey Health Carev Information Commissioner & Anor [2019] QCATA 66Secondary Materials
Explanatory Memorandum for the Freedom of Information Bill 1981
The FOI Guidelines under s 93A of the Freedom of Information Act 1982
REASONS FOR DECISION
Deputy President Britten-Jones
14 December 2021
Introduction
The Australian Government has embarked on an acquisition strategy for submarines which involved, as a first stage, a competitive evaluation process to choose an international partner. Pursuant to the Freedom of Information Act 1982, (FOI Act)[1] Senator Rex Patrick (the respondent) requested access to information contained within contractual documentation arising from the competitive evaluation process. Access was refused by the Secretary of the Department of Defence (Defence), but on review to the Australian Information Commissioner his request was granted. Defence has applied to the Tribunal for review of that decision. The information the subject of the request has not yet been disclosed to Senator Patrick. The Other Parties (together referred to as Naval Group) object to the disclosure of the information in question.
[1] All references to legislation are to the Freedom of Information Act 1982 unless otherwise stated
Background
The background facts are not in dispute.
In 2015, the Australian government commenced the competitive evaluation process to select an international partner to design and build the next generation of Australian submarines. Naval Group and two other participants were invited to participate in the competitive evaluation process. The selection process for all three participants employed a common evaluation framework that was designed to assist in the selection process. As part of that evaluation framework, the competitive evaluation process required proponents to provide certain “deliverables” to the applicant, such as proposed build specifications and the like. One such deliverable was described as the Final Cost Template. As part of the competitive evaluation process the Commonwealth (through the applicant) undertook via contractual agreement to keep confidential certain information provided by proponents. This included the information in the Final Cost Template. On 26 April 2016, the Australian government announced Naval Group as the preferred international partner for the design of the future submarines.
The competitive evaluation of process contract
The Commonwealth of Australia entered into a contract with Naval Group described as a contract for services to support selection of an international partner for SEA 1000 (CEP Contract). For reasons that will become apparent, I will set out below the key provisions of the CEP Contract in some detail:
RECITALS
A. On Friday 20 February 2015, the Australian Government announced that France, Germany and Japan would be invited to participate in a competitive evaluation process for the selection of an International Partner for the SEA 1000 Future Submarine Program (Competitive Evaluation Process or CEP).
B. This Contract is for the supply of services, data and other information to support the assessment and the Australian Government’s selection of an International Partner, and consideration of the various build options, to deliver the capability and associated program requirements for submarines that may be acquired by the Australian Government under the SEA 1000 Future Submarine Program in its endeavour to establish a sovereign submarine capability. The overarching goal of the Future Submarine Program is for Australia to obtain a regionally superior Future Submarine and the sovereign ability to operate and sustain the submarines within a framework of affordable costs, an achievable schedule and manageable risks.
C. As Part of the Competitive Evaluation Process, the Commonwealth as represented by the Department of Defence (Defence), is seeking to utilise the benefit of the Contractor’s experience and expertise in the design, development, manufacture, operation and support of submarines, and associated systems and facilities, to determine the Contractor’s suitability and potential to be the International Partner for the SEA 1000 Future Submarine Program. The Contractor has agreed to provide the services, data and other information in accordance with the terms of this Contract to Defence to support the Competitive Evaluation Process.
E. In addition to the Contract, Engagement Terms that have been separately notified to the Contractor will apply to the Competitive Evaluation Process which the Contractor has agreed to comply with in participating in the Competitive Evaluation Process.
2. SERVICES
2.1 The Contractor agrees to provide the Services to the Commonwealth and the Commonwealth agrees to purchase the Services in accordance with the terms of the Contract
…
9.3 Access and Release of Contract Information
(a) The Commonwealth will keep Contract Information (as defined in clause 9.3(b)) confidential and will only use and disclose that information for the purposes of exercising its IP rights under clause 9.2 and in accordance with clause 9.3.
(b) The Contractor permits, and will ensure that Approved Participating Third Parties and Other Third Parties permit, the Commonwealth to provide all Deliverables, information and material provided as part of the Services by the Contractor, its officers, employees, agents, subcontractors, Approved Participating Third Parties and Other Third Parties under the Contract, and any related Foreground IP and Background IP (collectively Contract Information) for Competitive Evaluation Process Purposes:
(i) within the Department of Defence and the Australian Government generally, including the Australian National Audit Office, to perform statutory or portfolio duties in relation to those purposes;
(ii) to the Department of Defence's or the Australian Government's legal, financial, business, technical, governance and strategic advisers;
(iii) to a member of the Integrated Project Team for use only within that team for providing advice to the Commonwealth; and
(iv) to any other third party, not covered by clauses 9.3(b)(ii)-9.3(b)(iii), with the consent of the Contractor, which will not be unreasonably withheld or delayed,
and as otherwise required by law.
(c) the Commonwealth may use or disclose any Deliverables, or other information or material provided in connection with the performance of the Services, on a de-identified and non-attributable basis, and which does not reveal sensitive proprietary information of the Contractor, in consultations by the Commonwealth with other Potential International Partners in the Competitive Evaluation Process, or persons with whom the Commonwealth consults in relation to the Future Submarine Project.
10. CONFIDENTIALITY
10.1 The Contractor will ensure that Confidential Information (including the materials identified in Attachment D) is kept confidential and secure, will afford the information the same degree of security protection as advised by the Commonwealth in accordance with its marking, and will handle, transmit and store that information so that it is protected from disclosure to any person not authorised to receive the information.
10.2 The Contractor will only use the Confidential Information for the purposes of this Contract and shall not, without the prior written consent of the Commonwealth, disclose or permit any of its officers, its employees, agents or contractors to disclose any of the Confidential Information to any person, other than personnel of an Approved Participating Third Party (which includes a Related Company), who:
(a) have a need to know the information in order for the Contractor to perform the Services;
(b) are known to be reliable; and
(c) have the requisite knowledge of security protection and the protection of confidential information.
10.3 Prior to providing any Confidential information in accordance with clause 10.2, the contractor shall obtain from the relevant Approved participating Third Party a Confidentiality Deed in the form of Attachment C.
10.4 The Contractor shall not disclose any Confidential Information to any other third party (including a Related Company) without the prior written consent of the Commonwealth.
10.5 The Contractor will not be in breach of this clause 10 in circumstances where it is required by law to disclose any Confidential Information.
…
12. PRICE AND PAYMENT
12.1. The Contract Price is a fixed price of AUD $8 Million (GST Exclusive).
…
18. AUSTRALIAN GOVERNMENT REQUIREMENTS
18.1 The Contractor should be familiar with the following Commonwealth policies:
(a) Contract Publication policy as detailed in the DPPM;
(b) Freedom of Information policy as detailed in the DPPM;
(c) Hazardous Substances policy as detailed in the DPPM;
(d) Work Health and Safety policy as detailed in the DPPM; and
(e) Ozone Depleting Substances and Synthetic Greenhouse Gases policy as detailed in the DPPM.
Attachment A – Statement of Work
2 STATEMENT OF WORK
2.1 Services to be Provided
2.1.1 The Contractor shall provide Services to respond to the key areas of information as identified below in clauses 2.2 to 2.14 of this SOW. The Contractor shall provide the responses in accordance with the Contract Deliverables set out in Table 1 under clause 3 of this SOW.
2.1.2 The Contractor shall develop and maintain a list of all assumptions that have been made in the development of the response against this SOW. A list of initial assumptions shall be presented by the Contractor at the Project Start-up meeting for this contract (Refer to clause 4.4).
2.5 Cost
2.5.1 The Commonwealth seeks an understanding of the full acquisition and life-cycle costs of the Contractor’s proposed Pre-Concept Design for Australia’s Future Submarine capability and as against each of the three build options. The costs are to be presented in a standardised spreadsheet template (provided as part of DID-ASCE-06) that includes the following:
(a) Full acquisition (design and build) costs including description of key assumptions, estimation boundaries and cost drivers and risks.
(b) Labour hours and material and supplier costs for the proposed Outline Usage and Upkeep Cycle (UUC) (refer to clause 2.10.2)
(c) Descriptions of key assumptions, estimation boundaries, cost drivers and risks for sustainment activities.
2.5.2 the Contractor shall deliver the SEA 1000 Acquisition and Sustainment Cost Estimate in accordance with CDRL 06 as defined by DID-ASCE-06 Cost Templates.
3. DELIVERABLES
Table 1: Contract Data Requirement List (CDRL)
….
No. Deliverables Location SOW ref DID Outline
Delivery Date
Draft Delivery Date Final Delivery Date 06 Acquisition and Sustainment Cost Estimate Russell Offices, ACT, Australia 2.5.2 DID-ASCE-06 26 June 2015 02 October 2015 30 November 2015 ATTACHMENT E – Glossary…
Competitive Evaluation Process or CEP means all activities and processes, including the activities and processes contemplated by the Contract and the Conditions of Participation, involved in the evaluation and selection of a potential International Partner for the Future Submarine Program;
Deliverables means items and materials to be provided by the Contractor as set out in Table 1 (Contract deliverables) of the SOW (including the Outline Deliverables, Draft Deliverables and Final Deliverables), and includes any other service, data, information (including Technical Data), documents (including report, manuals, designs, drawings and the like), hardware, software or any other thing which is, or is required by the Contract to be, delivered or provided by the Contractor to the Commonwealth in the course of the performance of the Services;
Future Submarine Program or FSP means the Commonwealth’s SEA 1000 Future Submarine Program.
Evidence
Gregory John Sammut is the General Manager Submarines in the Capability Acquisition and Sustainment Group in the Department of Defence. Until 2020, he was a serving member of the Royal Australian Navy, holding the rank of Rear Admiral. He commenced his service in the Royal Australian Navy in 1984. With respect to the process to select an international partner for the Future Submarines Program, he said in his affidavit:
6. In 2015, the Australian Government commenced the CEP, to select an international partner to design and build the next generation of Australian submarines (SEA 1000 Submarines).
7. The CEP involved Defence determining the specific issues or requirements to be responded to, selecting a small number of potential suppliers (participants) to release the relevant documentation to, receiving the responses (proposals), and then making a recommendation to the Australian government about the preferred participant to deliver the SEA 1000 submarines.
8. The Future Submarine Program Office managed the CEP, including by development of: the structure of the process, the criteria on which proposals would be assessed, the information to be provided to participants for the conduct of the process, and the evaluation plan. The Future Submarines Program Office also implemented the process, including all engagements with participants during the process, the evaluation of proposals, and the formulation of advice to Government based on the outcome of the evaluation process.
9. Naval Group (at the time DCNS S.A. of France) and two other participants were invited to participate in the CEP (CEP participants). The selection process for all three participants employed a common evaluation framework that was designed to help the Australian government balance important considerations including capability, cost, schedule and risks through an assessment of each participant's proposals provided to support the selection of an international partner for the Future Submarines Program.
10. CEP participants were paid AUD $8 million for the submission of their proposals. For Naval Group and Thyssen Krupp Marine Systems, the CEP proposals were providyoued under a Contract for Services to Support Selection of an International Partner for SEA1000 (CEP services contract). For the Government of Japan, the CEP proposals were provided under an arrangement between Australia and Japan on similar terms. A copy of the relevant parts from the CEP services contract is Annexure GS-1 to this affidavit.
11. Under the CEP services contract, the CEP participants were required to present proposals by 30 November 2015 providing pre-concept designs, options for the build of the Attack class submarine (onshore, offshore and hybrid build approaches), rough order of magnitude costs and schedule for each submitted option. On or around February to March 2016, CEP participants submitted their commitments to key commercial principles, such as intellectual property rights, and other requirements.
12. On 26 April 2016, the Australian Government announced Naval Group as the preferred international partner for the design of the 12 Attack class submarines.
13. The commercial relationship between Defence and Naval Group, following its selection as the preferred international partner, commenced with the Future Submarine Program Design and Mobilisation Contract signed on 30 September 2016. A Strategic Partnering Agreement (SPA) was signed by Defence and Naval Group on 11 February 2019 setting out the overarching arrangements with Naval Group in relation to the Future Submarine Program. The SPA also contains the process for the Department and Naval Group to enter into successive Program Contracts for the design and construction of the Future Submarine fleet. The first such contract, the Submarine Design Contract was signed in accordance with the SPA on 1 March 2019.
Frederic Mercier is the International Industrial & Development Director at Naval Group S.A in France with respect to the competitive evaluation process and the cost estimation template, he said in his affidavit:
10. During the CEP (which commenced in mid-2015 and was completed in April 2016), I held the role of Bid and Financial Manager in the “capture team” for the FSP at Naval Group. The capture team had responsibility for preparing the tender.
11. In my role on the capture team, I was responsible for financial and commercial matters related to Naval Group’s offer to Defence in the CEP. In particular, I was involved in the preparation of financial information such as pricing models for the submarines proposed by Naval Group.
12. The purpose of the CEP was to determine the Commonwealth of Australia’s preferred international partner for the design and build of the FSP. The selection of an “international partner” was different to other competitive tenders that Naval Group had participated in because its aim was not to immediately award a contract to design and build the submarines, but rather to determine which participant was the most capable of understanding and responding to the fundamental objectives of the FSP, and proposing a design which met the key requirements of the Royal Australian Navy.
13. The terms governing the CEP were set out in a contract entered into by the Commonwealth of Australia and DCNS in May 2015 called the “Contract for Services to Support Selection of an International Partner for SEA 1000” (CEP Contract).
14. The CEP Contract specified evaluation criteria and the material and information which the participants were required to provide to Defence to demonstrate their ability to meet those criteria. That material and information formed part of what was known as “Deliverables” under the CEP Contract.
15. The documents provided to Defence in the CEP, including each of the Deliverables specified in the CEP Contract, were subject to confidentiality provisions which prevented disclosure by Defence or Naval Group.
16. Each of the participants in the CEP (Naval Group, TKMS and the Japanese Ministry of Defence) provided responses to the criteria outlined in the CEP Contract.
The Cost Estimation Template
17. One of the Deliverables Naval Group was required to provide to Defence under the CEP Contract was an acquisition and sustainment cost estimate, identified in the CEP Contract as “Deliverable 06”. The CEP Contract required this Deliverable to be provided by completing a template document in the form of a multi-tab Excel spreadsheet (Cost Estimation Template).
18. The Cost Estimation Template:
(a) set out instructions for completing the document; and
(b) required Naval Group to:
(i)estimate the design and build costs for a range of possible submarine options (overseas build, Australian build and hybrid build);
(ii)estimate the sustainment costs over the life of a submarine; and
(iii)set out the assumptions, estimation boundaries, cost drivers and costs risks associated with the estimations.
19. I was involved in preparing the financial information contained in the completed copy of the Cost Estimation Template provided to Defence by Naval Group as part of the CEP. This involved:
(a) analysing the key assumptions set by Defence (including confidential and highly sensitive technical, commercial and military requirements); and
(b) developing pricing methodologies to determine the price in relation to each of the potential build options and anticipated sustainment activities having regard to those assumptions.
20. I understand that each of the CEP participants were provided with identical assumptions and requested to respond, in the same form, against common CEP technical, commercial and military requirements.
The Information in Question
Senator Patrick has sought access to:
…the following from the Final Cost Estimate Template that DCNS submitted in response to the Future Submarine Competitive Evaluation Process:
1. The total 'Australian Build Price' on the summary sheet
2. The total sustainment cost from year one to year forty including labour, material and other costs
On 17 November 2020, Senator Patrick confirmed that to fulfil the request, the applicant could produce a single written document from information in the original cost estimate template. Accordingly, the document in issue is a single document with summary price information for each of the total Australian build price and sustainment cost submitted by Naval Group. The document reproduces, in a different form, the information supplied by Naval Group in the Final Cost Template, and is derived exclusively from the Final Cost Template. The sustainment cost is split into a maintenance labour hours component and material and other costs in Euro dollars of one submarine across its life. The total build price was a single number in Euro dollars for a fleet of eight submarines.
The Issue
The issue for determination is whether the requested information is exempt from disclosure under the FOI Act. Defence contends that the information contained in the document is fully exempt from disclosure under any of ss 45, 47E(d) or 47G. Defence 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. Senator Patrick contends that Naval Group’s contractual right to confidentiality was subject to disclosure “as otherwise required by law” and that the FOI Act entitles a person, upon request, to access the information.
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.
Defence relies upon the obligation of confidence expressed in the terms of the CEP Contract with Naval Group undertaking to keep Contract Information confidential.
Senator Patrick contends that the confidentiality provisions in the CEP Contract cannot fetter competing statutory access rights which derive from s 11A. He says that the obligations of confidence arising from clause 9.3 of the CEP Contract are subject to a claim for access under the FOI Act because disclosure is permitted in the circumstances set out in clause 9.3(b) and “as otherwise required by law”. Senator Patrick submits that an exemption founded on breach of confidence in s 45 is therefore displaced by the terms of the CEP Contract which explicitly permits disclosure if required by the FOI Act. If s 45 is not displaced by contract, then he argues that the five elements in the Guidelines at [5.59] are not satisfied.
Naval Group contends that for disclosure to found an action for breach of confidence under s 45, there must be either a claim for breach of a contractual duty of confidence or a claim in equity for breach of confidence.
Naval Group relies upon the Commonwealth’s obligation to keep Contract Information confidential under clause 9.3(a) and that any disclosure of the information in question would found a cause of action in contract for a breach of confidence. Naval Group contends that if the Commonwealth were to disclose the requested information, Naval Group would have an action against the Commonwealth for breach of a contractual obligation and that the exemption in s 45 therefore applies.
In the alternative, Naval Group contends it would have an action for breach of confidence in equity if Defence were to disclose the information in question. Counsel for Naval Group doubts that detriment is required for an equitable breach of confidence but submits that the five elements in the Guidelines are established in any event and that the exemption under s 45 also applies on this basis.
The questions that arise for determination with respect to s 45 are as follows:
(a)Is s 45 displaced by operation of the “required by law” clause in clause 9.3 of the CEP services contract?
(b)What is an action for breach of confidence for the purposes of s 45? Does it include a purely contractual breach? Does it require satisfaction of the five elements in [5.159] of the Guidelines or is the element of detriment not required?
Is s 45 displaced by operation of the “required by law” clause?
Clause 9.3(b) of the CEP Contract provides an exception to the obligation of confidence imposed upon the Commonwealth set out in clause 9.3(a). It permits the Commonwealth to provide what is defined as Contract Information for the purpose of the competitive evaluation process to the Department of Defence and the Australian Government (and their advisers) and to any other third party by consent and “as otherwise required by law”. This has the effect of bringing within the exception as to confidentiality any disclosure required by law. In other words, if disclosure is required by law then that disclosure will not cause the Commonwealth to be in breach of the clause 9.3(a) obligation of confidentiality.
Senator Patrick says that the exemption provided by s 45 (on which Defence and Naval Group rely to support their claim as to confidentiality) does not apply because the parties to the contract agreed that the access and release of Contract Information will be subject to the FOI Act. Defence says that a proper application of the FOI Act means that any entitlement to access under s 11A is still subject to the exemption in s 45 such that if disclosure would found an action for breach of confidence then the document will be exempt from disclosure. Although not expressly articulated by Senator Patrick, his argument is that by expressly dealing with the question of access to confidential information in clause 9.3, the parties must have intended to exclude the operation of s 45 because otherwise it would defeat the apparent intent of the parties to subject themselves to a regime of disclosure otherwise provided for by the FOI Act.
Senator Patrick’s contentions should be rejected for the reasons that follow.
The terms of clause 9.3(b) do not expressly displace the operation of s 45. Clause 9.3(b) permits disclosure by the Commonwealth of Contract Information that would otherwise be prohibited by clause 9.3(a). In other words, it provides for exceptions to the obligation of confidence. One of the exceptions is if disclosure is required by law, which would include disclosure required by the FOI Act. Section 11 gives every person a legally enforceable right to obtain access to a document “other than an exempt document”. If a request is made then access must be given pursuant to s 11A(3) “subject to this section.” The section then provides for exemptions and conditional exemptions. Pursuant to s 11A(4), the relevant agency is not required to give access to the document if it is an exempt document. As set out above, a document is an exempt document by operation of s 45 if its disclosure would found an action for breach of confidence.
It follows that under the CEP Contract there will be an exception to the confidentiality obligation such that disclosure will be required if the document is not an exempt document under s 45. Conversely, if Defence and Naval Group establish that the document is an exempt document then there is nothing in the CEP Contract that requires the document to be disclosed. Indeed, there is an express obligation to the contrary in clause 9.3(a) which requires the Contract Information to be kept confidential. Consequently, Senator Patrick’s argument must fail because disclosure of the requested information is not “required by law”.
I note that a similar argument was raised and rejected in the decision of Fomiatti v University of Western Sydney (No 2) [2006] NSWADT 210 where there was a “required by law” clause. Judicial Member Wilson R said:
14. The Applicant’s submissions … contained an argument that clause 24 will except from the secrecy obligation those situations where disclosure is required by law, which is clearly correct, which was then developed upon the basis that the FOI Act itself imposes a statutory obligation upon an Agency to release documents (s. 16). It is correct to say that this section entitles an Applicant to access to documents, with the corollary that an Agency is required to grant access. However, this entitlement, and this obligation, are both subject to the provisions of the Act which permit an Agency to refuse access where one of the exemptions provided for has application. In order to determine whether the FOI Act requires disclosure it is necessary to determine whether any exemption claims have been made out. Therefore, section 16 will not require disclosure of the document in issue if the Agency may properly rely upon one of the exemptions. As this is the case here the Applicant’s argument does not carry to the extent necessary.
Although not articulated by Senator Patrick, a question may arise on his argument as to whether there is an implied term in the CEP Contract that clause 9.3(b) displaces the operation of s 45. The test for an implied term includes that it is so obvious that it goes without saying and must not contradict any express term of the contract.[2] The express term is that Naval Group permits the Commonwealth to provide the Contract Information as required by law. There is no dispute that the law would include the FOI Act, but an implied term that the CEP Contract excludes a claim of confidentiality under s 45 of the FOI Act is not so obvious that it goes without saying. There is mention of the FOI Act in clause 18.1 of the CEP services contract so it can safely be said that the parties contemplated the application of the FOI Act, which would include s 45 (unless implicitly excluded). Section 45 operates to exempt a document from disclosure which is consistent with the operation of clause 9.3(a) which requires the Commonwealth to keep Contract Information confidential. If the parties have expressly agreed to maintain confidentiality except in certain circumstances set out in clause 9.3(b) then it would be an odd result to imply a term which had the opposite effect, namely to require disclosure of the very information that was agreed by contract to be confidential. It is true that Naval Group would have been aware that their dealings with the Commonwealth were subject to the operation of the FOI Act but there is no basis to imply a qualification that the FOI Act would apply other than the s 45 exemption.
[2] BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283
Senator Patrick relies upon the Explanatory Memorandum for the Freedom of Information Bill 1981 which says that s 45 (as it then was):
… is intended to protect confidential relationships which would not be within the specific protection afforded by such clauses as clause 41 (personal privacy) and clause 43 (business confidences).
Senator Patrick says this supports his contention that s 45 is not intended to operate where there are available protections to disclosure under other provisions dealing with business confidences such as s 47G or any of the other public interest conditional exemptions in Division 3 of Part IV of the FOI Act. I reject this contention because s 45 in Division 2 of Part IV of the FOI Act operates as a stand-alone provision unaffected by the conditional exemptions other than s 47C(1) as expressly stated in s 45(2). If it was intended by the legislature that s 45(1) was not to apply to a document to which any of the other conditional exemptions apply, then it would have said so and created a further ‘carve out’ provision.
In conclusion, the “required by law” clause is an express contractual acknowledgment that if information in a document is required to be disclosed by the FOI Act then that will not be a breach of the CEP Contract. There is no reason to differentiate between s 45 and the other provisions of the FOI Act.
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 on the authorities I will mention below 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.
The most well-known authority with respect to breach of confidence is Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) [1987] FCA 266; (1987) 14 FCR 434 (Corrs Pavey). The dissenting judgment of Gummow J has been accepted as the law with respect to breach of confidence and forms the basis of the Guidelines at [5.159] which set out the five criteria which must be satisfied to found an action for breach of confidence. In the Corrs Pavey decision, the obligation of confidence did not arise from a contract but rather from the circumstances of the provision of information to the Australian Customs Service which gave rise to an equitable duty of confidence. Gummow J confirmed that it was not a case of breach of contract and set out the four (and possibly five) criteria that must be satisfied to make out a case for protection of confidential information in equity at page 443:
As I have indicated the case is to be approached in terms of the general law, not as a case of confidence protected by contract, but as one, if anything, of confidence protected in equity. It is now settled that in order to make out a case for protection in equity of allegedly confidential information, a plaintiff must satisfy certain criteria. The plaintiff (i) must be able to identify with specificity, and not merely in global terms, that which is said to be the information in question, and must also be able to show that (ii) the information has the necessary quality of confidentiality (and is not, for example, common or public knowledge), (iii) the information was received by the defendant in such circumstances as to import an obligation of confidence, and (iv) there is actual or threatened misuse of that information: … . It may also be necessary, as Megarry J thought probably was the case (Coco v Clark (AN) (Engineers) Ltd [1969] RPC 41 at 48 ), and as Mason J (as he then was) accepted in the Fairfax decision was the case (at least for confidences reposed within government), that unauthorised use would be to the detriment of the plaintiff. This last aspect may be put to one side in the present case, because the use to which Syntex would put the information would plainly be detrimental to Alphapharm.
The Tribunal in Kamminga and Australian National University (1992) 26 ALD 585 (Kamminga) observed that there is some ambiguity in the term “breach of confidence” and stated at pages 591-592:
… it is not clear whether it covers the situation where there is a contractual right of confidence. It may be that it does so in all situations, or it may be that it does so only in those situations where a plaintiff could invoke the auxiliary jurisdiction in equity in relation to a breach of confidence.
The Tribunal in Kamminga did not go on to resolve the ambiguity and it would appear from later authorities that the ambiguity remains to this day.[3]
[3] see Meagher Gummow & Lehane’s Equity: Doctrines and Remedies 5th edition at 42-095 at 42-100
Deputy President Forgie in Callejo and Department of Immigration and Citizenship [2010] AATA 244; (2010) 51 AAR 308 (Callejo) conducted a comprehensive analysis of the authorities and concluded:
165. An action for breach of confidence is an action of the sort described by Gummow J in Corrs Pavey. His Honour set out four elements it comprises and queried a fifth. If a document is to be an exempt document under s 45 of the FOI Act, all four, and possibly five, elements must be established before it can be said that its disclosure under the legislation would found an action for breach of confidence. I will return to the fifth element of detriment later in these reasons.
166. It may be that the information was given under a contract and that there is a term of the contract prohibiting its dissemination. Without more, disclosure, or threatened disclosure of that information may be the basis for, and so found, an action for breach of contract. It would only found an action for breach of confidence if the five elements referred to by Gummow J in Corrs Pavey were present. As the authorities referred to in B and B indicate, it may often be the case that circumstances will give rise to actions both in contract and in equity for breach of confidence.
In Ramsey Health Carev Information Commissioner & Anor [2019] QCATA 66, Justice Daubney sitting as President of the Queensland Civil and Administrative Appeals Tribunal considered DP Forgie’s interpretation of Gummow J in Corrs Pavey and said:
60. It is clear, as a matter of general law, that the jurisdictional bases for an action for breach of confidence extend to cases in which contracts are relied on to protect confidential information and cases in which the obligation of confidence arises in equity.
Daubney J concluded that:
66. … the phrase “action for breach of confidence” … ought not be construed as being limited to referring only to an equitable cause of action for breach of confidence but rather, in accordance with the general law, that term also encompasses an action for breach of a contractual obligation of confidence.
Whilst Daubney J in Ramsey Health Care expressed some disagreement with DP Forgie in Callejo, their reasoning is consistent in so far as they both recognise that an action for breach of confidence may arise from a contractual breach of confidence.
I conclude with respect to s 45 that a document is an exempt document if its disclosure would found an action for breach of confidence based upon a breach of contract. This does not have the consequence that any disclosure of information defined under a contract as being confidential would found an action for breach of confidence. The breach of contract must amount to a breach of confidence. For example, if the information lacked the necessary quality of confidentiality because of its nature or because it was publicly available then a disclosure of such information would not be a breach of confidence despite there being a contractual obligation to not disclose. It follows that whether a disclosure would found an action for breach of confidence under s 45 requires more than a consideration of the elements of an action in contract.
In Moorgate Tobacco Co Ltd v Philip Morris Ltd (No. 2) (1984) 156 CLR 414 (Moorgate Tobacco) at page 438, Deane J, delivering the judgment of the High Court, said with respect to the equitable jurisdiction to grant relief against disclosure of confidential information:
Like most heads of exclusive equitable jurisdiction, its rational basis does not lie in proprietary right. It lies in the notion of an obligation of conscience arising from the circumstances in or through which the information was communicated or obtained. Relief under the jurisdiction is not available, however, unless it appears that the information in question has “the necessary quality of confidence about it” (per Lord Greene MR, Saltman, supra, at p 215) and that it is significant, not necessarily in the sense of commercially valuable (see Argyle v Argyle [1967] Ch 302 at 329), but in the sense that the preservation of its confidentiality or secrecy is of substantial concern to the plaintiff. That being so, the starting point of the alternative argument must be the identification of the relevant confidential information.
Following on from Moorgate Tobacco, Gummow J in Corrs Pavey identified the elements of a claim for protection in equity of confidential information which resulted in the five criteria in [5.159] of the FOI Guidelines.
Naval Group contend that a breach of a contractual obligation of confidence is sufficient to found an action for breach of confidence and therefore sufficient to satisfy s 45. In other words, Naval Group contend that I need not satisfy myself with respect to the five criteria set out by Gummow J in Corrs Pavey and found within the Guidelines. Naval Group says it is enough to establish that disclosure would amount to a breach of clause 9.3.
Optus Networks Pty Ltd v Telstra Corporation Ltd (2010) 265 ALR 281; [2010] FCAFC 21, at 290, stands for the proposition that a contractual duty of confidence may co-exist with an equitable duty of confidence:
38. The notion that no equitable duty of confidence arises where there is a comparable contractual duty is opposed to much authority. Dr Dean says that ‘Equitable protection … may be used in preference to an existing contractual obligation or alongside a contractual obligation’: R Dean, The Law of Trade Secrets and Personal Secrets, 2nd ed, Lawbook, Pyrmont, 2002, at [2.55] where many examples in the case law are recorded.
If the duty of confidence arising from the CEP Contract is both contractual and equitable, then what test does one apply for a breach? Naval Group contends that it is the test for breach of contract which on its face is less onerous than establishing the five criteria required to establish a breach of confidence in equity.
I reject the contention of Naval Group that any disclosure in breach of clause 9.3 would amount to a breach of confidence. It may well do so; but to determine if a breach of the CEP contract gives rise to an action for breach of confidence one would consider the same five criteria put forward by Gummow J in Corrs Pavey and included in the FOI Guidelines. In practice, those five criteria will most likely be easier satisfied when there is a contract with terms identifying the confidential information and acknowledging the obligation of confidence once it is received.
For the reasons set out below, I consider that in this case, the contractual breach gives rise to satisfaction of the five criteria.
On my analysis, even if there is a contractual relationship between the confider and the confidant, the five criteria still need to be satisfied. My analysis is consistent with the FOI Guidelines which provide at [5.158] that the FOI Act expressly preserves confidentiality where that confidentiality would be actionable at common law or in equity and which further provide at [5.159] that to found an action for breach of confidence (whether arising in equity or by contract) the five criteria must be satisfied.
I turn now to the five criteria.
Can the information be identified with specificity?
The information in question is the total ‘Australian Build Price’ and the total sustainment cost from year one to year forty including labour, material and other costs defined as a Deliverable in the CEP contract. The price and the cost are contained in a single page document and can therefore be identified with specificity.
Does the information have the necessary quality of confidence?
The CEP Contract treats the information as confidential by imposing an obligation on both parties to keep the Contract Information which includes the Deliverables confidential and to not disclose it except as authorised. Mr Sammut deposed in his affidavit that Defence treats the Deliverables received under the CEP Contract as confidential information and that the estimates given by Naval Group have not been disclosed. Mr Mercier deposed in his affidavit that the information in question is kept within a secure document management system and has not been disclosed by Naval Group.
I find that the information has the necessary quality of confidence because it is commercially sensitive information imparted by Naval Group on the express contractual basis that it is confidential and is not to be disclosed except in limited circumstances.
Has the information been communicated and received on a mutual understanding of confidence?
The evidence in support of the satisfaction of this criteria is the CEP Contract itself which required Naval Group to provide the information as a contract Deliverable and requires the Commonwealth to keep confidential all Contract Information. The evidence from Mr Sammut and Mr Mercier for and on behalf of the parties to the CEP Contract was that the information has been treated in accordance with the terms of the contract with the strictest confidence and has not been disclosed.
Is disclosure threatened without authority?
Naval Group has not authorised the disclosure of the information and expressly opposes it. The terms of the CEP Contract do not provide authority for disclosure. As discussed above, the “required by law” does not operate as authority to disclose because the FOI Act does not provide an unqualified right of access to the information. This criterion is satisfied.
Will disclosure cause detriment?
I note that there is some doubt on the authorities as to whether detriment is a necessary element to establish a breach of confidence. For example, in Ammon v Consolidated Minerals Ltd[No 3],[4] Martin CJ observed:
The third element of the cause of action identified by Megarry J in Coco (at 47), was described by him as ‘an unauthorised use of the information to the detriment of the party communicating it’. In Lac Minerals Ltd v International Corona Resources Ltd [1989] 2 SCR 574; (1989) 16 IPR 27, this third element was referred to by LA Forest J as the element of misuse of the information. That terminology avoids specific reference to the element of detriment – an element which later cases strongly suggest is not an essential component of the equitable claim for breach of confidence – see for example Attorney-General v Observer Ltd (1990) 1 AC 109; National Roads and Motorists’ Association Ltd v Geeson [2001] NSWCA 343; (2001) 40 ACSR 1 at [58]; N P Generations Pty Ltd v Feneley [2001] SASC 185; (2001) 80 SASR 151 at [21]. Although the matter is not entirely free from doubt, the better view seems to be that detriment is not an essential element of the cause of action.
[4] [2007] WASC 232
The learned authors of Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies (5th ed), [5] proposed that it is safer to apply the statement of principle by the Full Federal Court in Optus Networks Pty Ltd v Telstra Corporation Ltd,[6] in which the Court adopted a previous formulation by Gummow J[7] and said that there are four elements to a claim for breach of confidence in equity, not including detriment.
[5] At [42]-[100]
[6] [2010] FCAFC 21; (2010) 265 ALR 281, 290 [39]
[7] Smith Kline & French Laboratories (Aust) Ltd (1990) 22 FCR 73, 87
Despite this uncertainty, I will approach the matter by reference to the FOI Guidelines which provides that all five criteria must be satisfied in order to found an action for breach of confidence. The Guidelines say:
5.171. The fifth element for a breach of confidence action is that unauthorised disclosure of the information has, or will, cause detriment to the person who provided the confidential information. Detriment takes many forms, such as threat to health or safety, financial loss, embarrassment, exposure to ridicule or public criticism. The last three are applicable only to private persons and entities, but not to government.
5.172. The AAT has applied this element in numerous cases, but whether it must be established is uncertain. The uncertainty arises because of an argument that an equitable breach of confidence operates upon the conscience (to respect the confidence) and not on the basis of damage caused. Despite the uncertainty, it would be prudent to assume that establishing detriment is necessary.
Mr Mercier deposed in his affidavit to the adverse impacts on Naval Group were the information to be disclosed. Senator Patrick submitted that there would be no detriment to Naval Group because it would be impossible for a competitor to “reverse engineer” Naval Group’s estimated costs for components of the submarine and its manufacturing based on the singular figure requested. However, Mr Mercier explained that the disclosure of the information would help competitors of Naval Group to better understand its pricing strategies and costs components for submarines. This is especially so for the other two participants in the competitive evaluation process (CEP) who have additional knowledge about the assumptions and requirements that Naval Group relied upon and to which it responded when preparing the tender. I consider this advantage to Naval Group’s competitors to be 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.
Other claims under s 47(1), s 47E(d) and s 47G(a)
The applicant claims that the information in question is 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 Tribunal finds that the document in issue is fully exempt from disclosure pursuant to s 45 of the FOI Act. Consequently, the Tribunal sets aside the decision of the Australian Information Commissioner dated 13 August 2020 and substitutes a decision that the information requested by Senator Patrick on 16 June 2018 is exempt from disclosure.
I certify that the preceding one hundred and fifty-eight (58) paragraphs are a true copy of the reasons for the decision herein of Deputy President Britten-Jones.
..[SGD]….......................................
Associate
Dated: 14 December 2021
Date of hearing: 8 and 9 June 2021 Representative for the Applicant: Justin Davidson Solicitors for the Applicant: Australian Government Solicitor Counsel for the Other Parties Brent Michael Solicitors for the Other Parties Allens Representative for the Respondent: Self-represented
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