Tribond Developments Pty Ltd v Kenneth Trevor Griffin Attorney-General of the State of South Australia

[1997] FCA 338

IN THE FEDERAL COURT OF AUSTRALIA )
  )
SOUTH AUSTRALIA DISTRICT REGISTRY )    No SG 101 of 1996
  )
GENERAL DIVISION                 )

BETWEEN:

TRIBOND DEVELOPMENTS PTY LTD

First Applicant

RODNEY ABEL

Second Applicant

ANNE SELINA ABEL

Third Applicant

- and -

THE HON. KENNETH TREVOR GRIFFIN,
  ATTORNEY-GENERAL OF THE STATE OF
  SOUTH AUSTRALIA

First Respondent
  and First Cross-Respondent

THE STATE OF SOUTH AUSTRALIA

Second Respondent
  and Second Cross-Respondent

ADVERTISER NEWSPAPERS LIMITED

Third Respondent
  and Cross-Claimant

KURT ESSER

Third Cross-Respondent

REASONS FOR DECISION

CORAM:    Mansfield J
PLACE:    Adelaide
DATE:     8 May 1997

The issue

The Court has before it for determination a notice of motion dated 18 March 1997 brought by Advertiser Newspapers Ltd ("the Advertiser") seeking in these proceedings leave to cross-claim against the Honourable Kenneth Trevor Griffin, as Attorney-General for South Australia ("the Attorney-General") and the State of South Australia ("the State"), and against Kurt Esser ("Mr Esser") in terms of a document entitled Amended Cross-Claim dated 25 March 1997 ("the cross-claim").

It is probably the case that the leave sought is unnecessary as the proceedings were commenced by application supported by statement of claim, rather than by affidavit:  Federal Court Rules ("the Rules"), O5 rr1(1), 4, 5 and 6 and compare rr7, 8 and 9.  It was, however, acknowledged that even if the cross-claim proposed were made, then Mr Esser would promptly apply to strike it out under either O20 r2 or O11 r16 of the Rules either as disclosing no reasonable cause of action, or as an abuse of process.  Accordingly, counsel for the Advertiser and for Mr Esser agreed that the Court should rule on the motion as if leave were required, thereby addressing the question of whether that part of the cross-claim relating to Mr Esser, namely pars7-12, would be permitted to remain as part of the cross-claim.  The grounds on which the leave sought was opposed are the same as the grounds upon which any strike out application would be pursued in any event.

The cross-claim stands as against the Attorney-General and the State, and no complaint is made about that part of it.  To the
extent necessary, I give leave to make or maintain the cross-claim relating to those parties, namely in pars1-6 of the cross-claim.

In addressing the issue, I am mindful that I should strike out the cross-claim as a pleading under O11 r16 of the Rules or dismiss the cross-claim under O20 r2 of the Rules in only the clearest of cases; the attack on the pleading must clearly show an unsustainable case or one that is unarguable:  Dey v Victorian Railways Commissioners (1949) 78 CLR 62; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125. The exercise of such a power should be only with great caution: Webster v Lampard (1993) 177 CLR 598.

For the purpose of any decision based upon O11 r16 of the Rules, I base my conclusion only on the pleadings; I assume the facts alleged will be made out.  For the purpose of any decision based upon O20 r2 of the Rules, I am entitled to have regard to other materials.  In that regard, I note the admission by counsel for the applicants and for Mr Esser that the allegation by the Advertiser that Mr Esser was at material times acting as agent of the applicants will not be put in issue.

The principal claim

It is necessary to understand the nature of the application against the respondents, including the Advertiser.  The following brief recital emerges from the allegations in the statement of claim, and to the extent necessary from the Advertiser's defence.  It is of course a matter for trial as to whether the allegations are proved.  The allegations emerge as follows.

Tribond Developments Pty Ltd ("Tribond") sued the State of South Australia ("the State") and the West Beach Trust ("the Trust") for damages in excess of $23 million in the Supreme Court of South Australia in relation to a decision by the State to discontinue a proposed development of an entertainment theme park to be known as Marineland at West Beach in South Australia.  That decision was of considerable public interest and political controversy, including the conduct of an inquiry by, and a report from, a Select Committee of the Legislative Council of the Parliament of the State.  In October 1996 the Supreme Court proceedings were settled, and that settlement was recorded in a Deed of Release dated 24 October 1996 ("the Deed").  One term of the Deed was that, subject to certain exceptions not relevant in the events which happened, the amount of the settlement sum payable under it was to be and remain confidential.  Both Rodney Abel ("Mr Abel") and Anne Selina Abel ("Ms Abel") (together, "the directors"), as directors of Tribond, were required to and did sign an Acknowledgment ("the Acknowledgment") annexed to and forming part of the Deed so as to bind them to its terms.  Tribond and the directors would not have signed the Deed and the Acknowledgment but for the confidentiality term.

The basis of this proceeding then emerges as follows.

The Attorney-General was and is the Attorney-General of the State.  He knew that the amount of the settlement sum was to be confidential to the parties to the Deed, and that non-disclosure of the amount of the settlement sum was important to Tribond and to the directors, as the fact of settlement without disclosure of the settlement was seen by Mr Abel as a means of preserving or vindicating his international reputation as a designer and operator of Marineland theme parks in the face of the controversy which had surrounded the proposed development and its cancellation, especially as the settlement sum was a modest one.  On or about 4 November 1996 the Attorney-General, in a telephone conversation with Colin James ("Mr James"), a journalist employed by the Advertiser, revealed to Mr James the amount of the settlement sum, in circumstances where he knew or expected that that figure would then be published in 'The Advertiser' newspaper and it was so published on 5 November 1996.  The Attorney-General also disclosed the settlement sum in a radio interview broadcast on 5 November 1996.  Those disclosures are alleged to have been deliberate and intentional breaches of the Deed, so as to entitle Tribond and the directors to damages, including aggravated and exemplary damages, for breach of contract and for breach of an equitable obligation to maintain confidentiality of the settlement sum and for breach of a common law duty to take reasonable care to preserve confidentiality of the settlement sum.  The State is sued as
vicariously liable for the Attorney-General's conduct.

The claim against the Advertiser is on the basis that Mr James was acting in the course of his employment.  It is alleged that Mr James knew, by having been so told by Mr Abel, that the amount of the settlement sum was confidential.  Thus, in procuring the information from the Attorney-General and in causing its publication, the Advertiser is alleged also to be liable to the applicants for damages on the basis that it wrongly interfered with the contractual relationship between the applicants and the State, as parties to the Deed, and was a party to or assisted the breaches of an equitable obligation of confidence and/or the common law duty alleged against the State.

The defence filed by the Advertiser, apart from formal matters and from admitting Mr James' employment and the publication on 5 November 1996 referred to, either denies or does not admit the applicants' allegations.  It then alleges that Mr Abel, for himself and as agent of both Tribond and Ms Abel, frequently breached a certain confidentiality agreement signed on 11 February 1989 in his dealings with the Advertiser (it is not clear where this allegation goes, except that it is said to be conduct which disentitles the applicants from getting the relief claimed) and on 4 November 1996 on his initiative Mr Abel had a telephone discussion with Mr James during which the settlement processes were disclosed, including Mr Abel revealing (accurately) a range within which the settlement sum
was negotiated without indicating that the terms of settlement were confidential.

To that point, there are clearly matters of fact in issue, which can only be resolved at trial, and upon the determination of which will of course depend the outcome of the claim.

It is the further allegations in that defence which set the scene for the cross-claim now under consideration.  The Advertiser in its defence alleges that the applicants cannot succeed in their claim in equity against it because Mr Esser, as their agent, contacted Mr James on 6 November 1996 to ask the source of the information about the settlement sum, as published in The Advertiser newspaper on 5 November 1996.  Mr James told Mr Esser "off the record" that his source was the Attorney-General.  Thus, it is alleged, the information that the Attorney-General was the source of the Advertiser's awareness of the settlement sum was confidential, as was Mr James identity as having disclosed to Mr Esser the detail of his discussion with the Attorney-General, as Mr James would not otherwise have revealed that information.  There is therefore said to be a breach of confidence in including within the applicants' statement of claim the detailed allegation that on or about 4 November 1996 the Attorney-General deliberately and intentionally breached the confidentiality term in the Deed by telling Mr James what that sum was.

The cross-claim

The cross-claim alleges, as does the Advertiser's defence, that at all material times Mr Esser was acting as the agent of the applicants.  For reasons which appear below, I regard that allegation as significant.

It is not necessary to refer in detail to the nature of the cross-claim against the Attorney-General or the State.  It is important, however, that it is alleged against all cross-respondents that the conversation between Mr James and the Attorney-General on 4 November 1996 was not a confidential conversation, and was not "off the record".  Again, I regard that allegation as most significant.  It means, from the Advertiser's point of view, that the fact that the Attorney-General was the source of the information as to the settlement sum published in the Advertiser on 5 November 1996 was not itself confidential.  Even assuming some law which protects journalists from disclosing a confidential source (about which I do not need to comment, but see John Fairfax and Sons Ltd v Cojuangco (1988) 165 CLR 346 at 354), Mr James would not therefore have sought to protect the identity of the Attorney-General as his source of that information, whether in giving evidence or in the production of his notes or in some other pre-trial procedure, nor would he have claimed that his identity as the recipient of that information was itself confidential. Indeed, the article published in The Advertiser newspaper of 5 November 1996 revealed that. Thus, I do not think the circumstances are at all like those obtaining in G v Day [1982] 1 NSWLR 24.

The conversation between Mr James and Mr Esser on 6 November 1996 was nevertheless expressed to be "off the record".  It is alleged that, as a consequence,

"8.1the information conveyed by James to Esser was to be confidential;

8.2the fact that James had passed information to Esser the agent for the applicants was to be confidential;

8.3James was not to be publicly associated with the detail of the conversation between himself and Griffin."

and that Mr James would not have had the conversation with Mr Esser had it not been understood to that effect.  Thus, it goes on to claim, the communication of that information by Mr Esser to the applicants, and then the allegation in the applicants' statement of claim that on 4 November 1996 the Attorney-General had disclosed to Mr James the amount of the settlement sum, was in breach of that confidence, causing the Advertiser loss and damage.  The claimed loss and damage is claimed to the full extent of the Advertiser's liability to the applicants in the claim generally (not limited to the claim in equity against it, and compare its defence), and secondly for its loss of reputation for journalistic integrity and impartiality.

The submission of counsel for Mr Esser was that, to make out the cause of action, it is necessary

1. that the information conveyed was confidential

1. that the information was communicated in circumstances importing an obligation of confidence, and

1. that there must have been an unauthorised use of information to the detriment of the provider of it

Coco v AN Clark (Engineers) Ltd [1969] RPC 41 at 47, and The Commonwealth of Australia v John Fairfax & Sons Ltd (1980) 147 CLR 39 per Mason J at 51. Counsel for the Advertiser did not contest that proposition, nor seek to argue for some other view of the law.

Upon the pleadings, the matters alleged in par8.1 of the cross-claim set out above are simply not made out and could not be made out.  It is specifically asserted that the information provided by the Attorney-General to Mr James was not confidential, that being the information conveyed by Mr James to Mr Esser.  Thus, quite apart from any submission that that information was not confidential because the substance of it had already been disclosed by the Advertiser in the newspaper article the preceding day:  cf Saltman Engineering Coy Ltd v Campbell Engineering Coy Ltd [1948] 65 RPC 203 at 215, G v Day (above) at 37-40, in this instance it is the Advertiser's pleadings themselves which provide the foundation for that conclusion.

There is another significant feature of the cross-claim.  The breach of confidence alleged against Mr Esser is the disclosure by Mr Esser to the applicants of the information provided to him by Mr James, and thus the causing of the pleading as to the Attorney-General being the source of the information as to the settlement sum contained in the Advertiser article of 5 November 1996.  That complaint of breach by disclosure to the applicants does not sit at all with the allegation that Mr Esser was at material times the agent of the applicants.  Thus, again, as Mr Esser was the agent of the applicants, any information provided to him was in effect provided to the applicants.  It is not consistent with the pleading to assert that the information was provided to Mr Esser in a personal capacity and to the exclusion of the applicants.  Thus, despite the conclusionary allegation that the publication of the information by Mr Esser to the applicants was in breach of the alleged duty of confidence, it does not lie with the primary factual allegation (not in dispute) of Mr Esser's agency.

Accordingly, it seems to me, the cross-claim is flawed and cannot be allowed to stand.  Firstly, the pleading is that the information provided by Mr James to Mr Esser was not itself confidential information.  Secondly, in regard to the disclosure complained of, even assuming the information conveyed by Mr James was confidential, the breach alleged is only the publication by an agent to his principals of that information when the agency is specifically alleged.

In those circumstances, it is unnecessary to decide whether (or whether it is arguable) that a conversation said to be 'off the record' might otherwise give rise to a cause of action if information provided by, or to, a journalist in such circumstances is publicised beyond that authorised.  Nor is it necessary to consider what is (or what is arguably) meant in the particular circumstances by that expression.  Mr James, on the pleadings, appears to have desired to preserve impartiality in any issue between the applicants and the Attorney-General, but he conveyed (on the pleading) non-confidential information to an agent for a disclosed principal.  I do not see how, as a matter of law, he can complain of the agent conveying that information to the principal.  Nor do I need to consider whether, in any event, the 'off the record' communication by Mr James to Mr Esser could provide some right on the part of the Advertiser to complain in law in the circumstances, as distinct from Mr James having a personal right to do so.  The corollary of that proposition or assumption by the Advertiser in seeking to maintain the cross-claim may be that the provision of 'off the record' information to a journalist, or the identity of a journalist's source of such information, which a journalist would regard as confidential (again, I make no comment as to whether any such claim is legally valid) is the property of the employer of the journalist, so that the employer could insist on its disclosure to the employer, and the employer "owned" any such right of confidentiality rather than the journalist.  See eg X Ltd v Morgan-Grampian
(Publishers) Ltd [1991] 1 AC 1.

Nor is it necessary to decide on the submission that the cross-claim against Mr Esser is an abuse of process.  I observe in passing that it is not apparent to me why the Advertiser, if its claim is a good one, would choose to expose itself to a judgment against it in favour of the applicants when it could otherwise use the allegations presently made in the cross-claim by way of defence and set off, and perhaps cross-claim, against the applicants so as to avoid any judgment against it at all, but then choose only to pursue the agent for the disclosed principal for indemnity:  see Williams v Spautz (1992) 174 CLR 509 at 526-528. Of course, it also has asserted a separate claim for damages for loss of its reputation by the making of the allegation in the applicants' statement of claim that the Attorney-General was the source of the information as to the settlement sum. Such a claim, fairly described as subsidiary, could also be brought against the applicants as the common fact is that Mr Esser was the agent of the applicants. In addition, as to that claim, I do not need to consider whether it is clearly unsustainable in light of the fact that the Advertiser had published the same information itself, perhaps without the full detail of the discussion with the Attorney-General, the preceding day.

Accordingly, I propose to strike out pars7-12 of the cross-claim, or if it as yet has no status as such, to refuse leave to file and serve the proposed cross-claim in so far as it
contains pars7-12 making allegations against Mr Esser.  I do not think it necessarily follows that the Advertiser ought not have an opportunity to reformulate any proposed defence, set-off or cross-claim against the applicants or any cross-claim against Mr Esser.  It may be that it wishes to pursue such a cross-claim in an acceptable way in some form presently not clearly identified.  It should be given the opportunity to do so.

I do not think it appropriate at this point to finally determine under O20 r2 of the Rules that the Advertiser should forever be put out of Court in relation to any claims arising from that communication on 6 November 1996 between Mr James and Mr Esser as agent of the applicants.

It is nevertheless appropriate that, if the Advertiser wishes to proceed further in respect of that communication, it should do so promptly.  I am mindful of the common desire for this matter to be listed for hearing as soon as convenient.  I direct that the Advertiser do file and serve any proposed amendment to its defence or set-off or cross-claim against the applicants, or any proposed separate cross-claim against Mr Esser, within fourteen days of the date of publication of these reasons.

I certify that this and the preceding       pages are a true copy of the Reasons for Decision of the Honourable Justice Mansfield.

Associate:

Dated:

Counsel for the Applicants       :    Mr K Esser

Solicitors for the Applicants        :    Jamison & Associates

Counsel for the First and        :    Mr A Besanko QC
     Second Respondents               with Mr J Daenke

Solicitors for the First and     :    Daenke O'Donovan
     Second Respondents

Counsel for the                  :    Mr A Harris
     Third Respondent                 with Ms C D'Arcy
  (on 18 April 1997)
  Mr A Short
  (on 20 March 1997)

Solicitors for the               :    Minter Ellison
     Third Respondent

Counsel for the                  :    Mr N Moshinsky QC
     Third Cross-Respondent           (on 20 March 1997)
  Mr D MacLean
  (on 18 April 1997)

Solicitors for the               :    Jamison & Associates
     Third Cross-Respondent

Hearing Dates:                   :    20 March 1997 and
  18 April 1997