Watt v Forests NSW

[2007] NSWADT 197

CITATION:	Watt v Forests NSW [2007] NSWADT 197
DIVISION:	General Division
PARTIES:	APPLICANT Gerry Watt RESPONDENT Forests NSW
FILE NUMBER:	063292
HEARING DATES:	23 February 2007
SUBMISSIONS CLOSED:	4 April 2007
DATE OF DECISION:	29 August 2007
BEFORE:	Montgomery S - Judicial Member
CATCHWORDS:	access to documents - business affairs - access to documents - confidential material - Freedom of Information Act - access to documents - business affairs - Freedom of Information Act - access to documents - confidential material
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Forestry Act 1916 Freedom of Information Act 1982 (Cth) Freedom of Information Act 1989
CASES CITED:	Attorney-General's Department v Cockroft (1986) 64 ALR 97. C H Real Estate Ply Ltd (t/a Raine and Horne Commercial Penrith) v Penrith City Council [2005] NSWADT 147 Colakovski v Australian Telecommunications Corporation (1991) 100 ALR 111 Corrs Pavey Whiting & Byrne v Collector of Customs (1987) 14 FCR 434 Fomiatti v University of Western Sydney (No 2) [2006] NSWADT 210 Freeland v General Manager, Liverpool City Council [1999] NSWADT 95 Gales Holdings Pty Ltd v Tweed Shire Council [2005] NSWADT 168 General Manager, WorkCover Authority of NSW v Law Society of NSW [2006] NSWCA 84 Leichhardt Municipal Council v Roads and Traffic Authority [2005] NSWADT 37 Mangoplah Pastoral Co Ply Ltd v Great Southern Energy [1999] NSW ADT 93 Neary v State Rail Authority [1999] NSWADT 107 at 42. P v Greater Western Area Health Service [2007] NSWADT 87 Public Service Association and Professional Officers Association, Amalgamated Union of NSW v Director General, Premier's Department [2002] NSWADT 277 Re B and Brisbane North Regional Health Authority (1993) 1 QAR 279 Re Cannon and Australian Quality Egg Farms Limited (1994) 1 QAR 491 Robinson v Director General, Department of Health [2002] NSWADT 222 Taylor v WorkCover Authority [2003] NSWADT 186 University of New South Wales v Gerard Michael McQuirk [2006] NSWSC 1362 Wittingslow Amusements Group v Environmental Protection Agency (NSWSC 23 April 1993) Wyatt Co (NZ) Ltd v Queenstown – Lakes District Council [1991] 2 NZLR 180 Zagami v Waste Service NSW [2005] NSWADT 217
REPRESENTATION:	APPLICANT J Svenson, solicitor RESPONDENT D Giles, solicitor
ORDERS:	The decision under review is set aside. In its place the decision is made that the documents containing the unit price of pulp supplied by Forests NSW from the areas included in the Eden NSW Forest Agreement and the Southern NSW Regional Forest Agreement are to be released in full within 28 days.

1 The Applicant applied to Forests NSW (‘FNSW’) under the Freedom of Information Act 1989 (‘the FOI Act’) for access to information as follows:

‘1) The volume (gross and net) in cubic metres of logs sold, in each year from 1995 till the present (inclusive), for each log grade by each NSW native forest management area.

2) The definition of Log Grades.

3) The royalty rate in dollars per metre cubed for each log grade in each NSW native forest management area for each of the years mentioned in 1 above.

In regard to request no. 3, I seek the actual stumpage price of the log before felling and cartage, which excludes roading charges and other Government levies.’

2 In response to this request FNSW provided documents relating to each of the four forestry regions. This included material relating to the South Coast region of NSW, which comprises the Eden and Southern Regional Forest Agreement (‘RFA’) areas.

3 The Applicant then sought a breakdown of the pulp volume and unit rate figures for the South Coast region into figures for the Eden and Southern Regional Forest Agreement areas. The figure for the region was stated as $14.26 per cubic metre. His request was as follows:

‘1) This request is based on the understanding that the area called South Coast in the letter referred to above, covers both the areas included in the Eden NSW Forest Agreement and the Southern NSW Forest Agreement. My request is that the Pulp Volume and Unit Rate figures for the South Coast be broken down into the Pulp Volume and Unit figures for both the areas covered by the Eden NSW Forest Agreement and the Southern NSW Regional Forest Agreement.

2) Please provide (a) the definition of ‘Salvage’ timber and (b) the use for Salvage timber and examples of the products that Salvage timber is made into.

3) Is any of the Salvage timber sent for pulping and if so what is the Volume and Unit Rates for that which is taken from the South Coast NSW Forest Agreement and the Eden NSW Forest Agreement areas?’

4 FNSW advised the Applicant that it would provide the volume figures, but would not be able to release the unit rates on the grounds that they are ‘exempt documents’ under clause 13 of Schedule 1 of the FOI Act. In the reasons provided for its determination FNSW stated:

‘In part 1 of your request you sought access to the volume of pulp and the unit rate for the area covered by the Eden Forest Agreement and the area covered by the Southern Forest Agreement.

The volume of pulp supplied from each region is documented as part of the Regional Forest Agreement reporting process. Attached is an extract from the Forests NSW return to the Forest Agreement ESFM Criteria and Indicators Report showing pulp volumes for 2003/04 in each of the two RFA regions, expressed in tonnes. As advised in my letter of 25 July 2005, Forests NSW is not able to release information on the unit rates you sought.

This is because pulp is supplied by Forests NSW from the Eden Forest Agreement region and the Southern Forest Agreement region under Wood Supply Agreements which contain a confidentiality clause. Disclosure of information about price for supply under that Agreement would found an action for breach of confidence based on the confidentiality clause. I have, therefore, determined that documents showing the unit price are exempt documents under clause 13 of Schedule 1 of the Act’.

5 The Applicant sought an internal review of FNSW's determination not to release the information requested. The reasons provided in relation to the internal review determination stated in part:

‘I note that you have been provided with answers to most of the inquiries and requests made in your FOI application of 15 July 2005. The subject matter on which you now request an internal review is Forests NSW determination not to release the unit price of pulp supplied by Forests NSW from the areas included in the Eden Forest Agreement and the Southern Forest Agreement. The reason being that if such information was released Forests NSW would be in breach of a confidentiality clause in the agreement with the customer relating to the supply of pulpwood.

As requested by you I enclose the relevant confidentiality clause in the Agreement.

I have reviewed all the correspondence and the documentation upon which the FOI coordinator based his decision and I am of the view that the release of the information you have sought on the unit price of pulp supplied by Forests NSW from the areas included in the Eden Forest Agreement and the Southern Forest Agreement would constitute a breach of the confidentiality clause in the Wood Supply Agreement. Accordingly I am of the view that the decision to refuse the release of this information was correct.

I have considered your submission for the release of the information based on public interest grounds. There is no public interest test applying to a determination under Clause 13(a) of Schedule 1 of the FOI Act.

I also wish to point out that included amongst exempt documents under the FOI Act are documents affecting business affairs of any agency or other person. If such documents disclose information that has a commercial value to the agency or other person, they are exempt documents and their release is prohibited. Documents containing the unit price of pulp supplied by Forests NSW from the areas included in the Eden Forest Agreement and the Southern Forest Agreement fall within this category of documents and their release would in any event be prohibited.

6 South East Fibre Exports Pty Ltd (“SEFE”) is FNSW's only customer for native forest pulpwood in the South Coast forestry region. SEFE is the owner of the Eden woodchip mill and a subsidiary of one of Japan’s biggest paper manufacturing company, Nippon Paper Industries Co. Ltd (‘NPI’). FNSW supplies SEFE pulpwood from the Southern Regional Forest Agreement area under a wood supply agreement dated 22 February 1989 (‘the Southern WSA’) and from the Eden Regional Forest Agreement area under a wood supply agreement dated 5 March 1999 (‘the Eden WSA’).

7 The Southern WSA does not contain a confidentiality clause. Clause 40 of the Eden WSA provides:

‘40. CONFIDENTIALITY

40. No party will disclose the contents of this Agreement or any information or documents received by it in connection with the negotiation of this Agreement or pursuant to the provisions of this Agreement without the prior written consent of the other parties, except to the extent that:

40.1 the information is available to the public generally;

40.2 that party is required to make the disclosure by law or to make any filing, recording or registration required by law;

40.3 the disclosure is necessary or advisable for the purposes of obtaining any consent, authorization, approval, or licence from any public body or authority;

40.4 it is necessary that the disclosure be made to any taxation or fiscal authority;

40.5 the disclosure is made on a confidential basis to the professional advisers of that party for the purpose of obtaining advice in relation to this Agreement or the enforcement of this Agreement or otherwise for the purpose of consulting those professional advisors; or

40.6 the disclosure is required or desirable to be made in pursuance of any procedure for discovery of documents and any proceedings before any court, tribunal or regulatory body.’

8 The Applicant applied to the NSW Ombudsman for a review of FNSW's decision. The Ombudsman’s Investigation Officer formed a preliminary view that he could see no good reason why the document withheld from the Applicant should remain exempt under any provisions of clause 7 of Schedule 1 to the FOI Act. He also referred to the public interest in public authorities not entering express statements that attempt to predetermine exemption of documents from the FOI Act and that the document should not remain exempt under clause 13(a) of Schedule 1 purely because of the confidentiality agreement. He further stated that he considered that the public interest is the ultimate determining factor as to whether a document should remain exempt.

9 The Ombudsman’s Investigation Officer subsequently met with representatives of FNSW to discuss the FOI Application and following that meeting he wrote to the Applicant stating that he had reversed his preliminary determination and would no longer recommend release of the information. This conclusion was stated to be based on clause 7 of Schedule 1 to the FOI Act.

10 The Applicant has applied to the Tribunal for external review of the determination to refuse him access to the information he seeks. For convenience I will refer to the information sought as the “royalty rate”.

Applicable legislation

11 Section 5 of the FOI Act provides that the objects of the FOI Act are to extend, as far as possible, the rights of the public to obtain access to information held by the Government. Section 16 of the FOI Act provides that a person has a legally enforceable right to be given access to an agency's documents in accordance with the FOI Act. It is common ground that FNSW is an ‘agency’ within the parameters of section 16. Agencies exempt by section 9 of the FOI Act are listed in Schedule 2 to the Act. The list does not include FNSW.

12 The legally enforceable right to be given access to documents is subject only to such restrictions as are reasonably necessary for the proper administration of Government. The discretions conferred by the FOI Act shall be exercised, as far as possible, so as to facilitate and encourage the disclosure of information.

13 Section 24(1) of the FOI Act provides that after considering an application for access to a document, the agency is to determine whether access to the document is to be given or refused, and any charge payable for giving access and/or dealing with the application. Under section 25(1)(a) of the FOI Act, an agency has discretion to refuse access to a document. Grounds on which access may be refused are set out in section 25 and include that a document is ‘an exempt document’. An ‘exempt document’ is defined in section 6 to mean (among other things) a document referred to in any one or more of the provisions of Schedule 1. Pursuant to section 61 of the FOI Act the agency has the burden of establishing that its determination was justified.

14 Clause 7 of Schedule 1 of the FOI Act provides as follows:

7 Documents affecting business affairs

(1) A document is an exempt document:

(a) if it contains matter the disclosure of which would disclose trade secrets of any agency or any other person, or

(a1) if it contains matter the disclosure of which would disclose the commercial-in-confidence provisions of a government contract (within the meaning of section 15A), or

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

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

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

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

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

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

15 Clause 13(a) of Schedule 1 of the FOI Act provides as follows:

‘13 Documents containing confidential material

A document is an exempt document:

(a) if it contains matter the disclosure of which would found an action for breach of confidence’

16 In NSW, logs intended to be woodchipped for paper pulp (‘pulp logs’) are logged from State forests and private land, woodchipped at a chip mill and then sold by the green tonne or cubic metre. Some woodchips from other sources such as saw mill waste might also be processed at the chip mill. A ‘royalty’ is paid to FNSW in exchange for the logs extracted from lands under FNSW’s control.

17 Division 3 of the Forestry Act 1916 is headed ‘Payment of royalty’. Section 30 which falls within Division 3 of that Act defines ‘royalty’ to mean ‘a royalty payable under this Division’. Sections 30A to 30B of the Forestry Act provide:

30A Royalty for timber, products and forest materials

(1) The holder of a timber licence, products licence or forest materials licence shall, in accordance with this Division, pay to the commission a royalty in respect of the timber, products or forest materials taken in pursuance of the licence.

(2) Nothing in subsection (1) requires the payment of a royalty in respect of timber taken in pursuance of a timber licence from land the subject of a tenure specified or described in the First Schedule where the timber is derived from trees which, in the opinion of the commission, have been planted or established and have been maintained by careful tending and improvement as a woodlot or forest or for the purpose of tree-farming or have been planted or established as a windbreak or for the beautification of the land.

30AA Limitation on royalty

Despite any other provision of this Division, the commission is not entitled to a royalty in respect of any timber or products:

(a) derived from trees that have been established on land that is the subject of a forestry right within the meaning of section 87A of the Conveyancing Act 1919 , and

(b) taken in accordance with the forestry right and any restriction on use or covenant imposed in connection with the forestry right,

unless the forestry right is granted by the commission.

30B Amount of royalty

A royalty shall be such amount as the commission may from time to time determine either generally or in a particular case or class of cases.

18 FNSW relies on three affidavits (sworn 28/9/06, 01/12/2006 and 13/03/2007) and oral evidence of Brian James Royal and an affidavit (sworn 4/10/06) of Peter Mitchell. Mr Royal has been the Sales Co-ordinator South, Commercial Services Branch of FNSW since 2001. He is responsible for the marketing of all native forest log products harvested from State forests and other Crown-timber Lands, within the area stretching south from Sydney to the Victorian border and west to Albury. Mr Mitchell is the General Manager of SEFE.

19 FNSW asserts that the documents that contain the information sought are exempt under clauses 13(a), 7(1)(b), and 7(1)(c) of Schedule 1 to the FOI Act. FNSW also asserts that release of the documents that contain the information is not in the public interest.

Clause 13(a)

20 FNSW says that the disclosure of the information sought would found an action for breach of confidence. It relies on the decision in Public Service Association and Professional Officers Association, Amalgamated Union of NSW v Director General, Premier's Department [2002] NSWADT 277 where Judicial Member Britton stated in relation to clause 13:

51 Clause 13(a) of Schedule 1 states that a document is exempt ‘if it contains matter the disclosure of which would found an action for breach of confidence’. Clause 13(b) makes a document exempt ‘if it contains matter the disclosure of which would disclose information obtained in confidence and [which] could reasonably be expected to prejudice the supply of such information to the Government or to an agency, and [which] would be contrary to the public interest.’

52 In Re B and Brisbane North Regional Health Authority (1993) 1 QAR 279 it was held that the words ‘for an action of breach of confidence in the Queensland FOI Act should be taken to refer to a legal action brought in respect of an alleged obligation of confidence in which reliance was placed on one or more of the following causes of action: (i) a cause of action for breach of an obligation of confidence; (ii) a cause of action for breach of a contractual obligation of confidence; (iii) a cause of action for breach of a fiduciary duty of confidence and where account is taken of the recognised defences to an action for breach of confidence.

53 It was further held that the test of exemption was to be evaluated by reference to a hypothetical legal action in which there is a clearly identifiable plaintiff possessed of appropriate standing to bring a suit to enforce an obligation of confidence said to be owed to that plaintiff in respect of information held by the agency to which the relevant FOI application was made. If the hypothetical cause of action was an equitable action for breach of confidence, five matters had to be established: first, the information must be capable of being specifically identifiable as information which is secret rather than generally available; second, the subject matter of the obligation of confidence must not be trivial or useless or generally known; third, the information must have been communicated in circumstances such as to fix the recipient with an equitable obligation not to use the information in an unauthorised way; four, it must be established that the disclosure of the information would constitute an unauthorised disclosure; and, five, it must be established that the giver of the information would suffer a detriment, not necessarily pecuniary, such as loss of privacy or embarrassment.

54 In Corrs Pavey Whiting & Byrne v Collector of Customs (1987) 14 FCR 434, the majority held that the Federal equivalent of cl.13(a) conferred exempt status on ‘a document which contains confidential information received under circumstances importing an obligation of confidence, without regard to those considerations of public policy [such as ‘just cause’ and ‘clean hands’] which courts have allowed an influence in determining whether to grant or withhold remedies for ‘breach of confidence’ in exercise of equitable or common law jurisdiction.’ (See Jenkinson J at 438 and also Sweeney J at 435.)

21 FNSW also relies on views expressed in Fomiatti v University of Western Sydney (No 2) [2006] NSWADT 210 where the Tribunal considered a claim for exemption under clause 13(a) in relation to access to contracts that contained a confidentiality clause providing that both parties to the contract ‘will not disclose any of the details of this agreement other than by mutual agreement or if required by law’. Judicial Member Wilson stated [at 12]:

11 [ Re B and Brisbane North Regional Health Authority ] discusses the scope of a similar exemption in terms of a hypothetical legal action brought by a plaintiff with standing to bring a suit to enforce an obligation of confidence. This appears to be a very sensible and workable approach to clause 13(a) of our legislation. This would mean that the question for clause 13(a) purposes is simply whether the matter contained in the document under review could be protected from disclosure by appropriate legal proceedings brought by a person with the necessary legal standing against a person who is bound by the confidence.

12 This broad view of clause 13(a) is the better construction. Clause 24 of the document under review imposes a contractual obligation of confidence in relation to the ‘details of this agreement’ and the parties to the agreement could take steps to enforce this obligation and to seek a remedy for actual breach. Consequently clause 13(a) has application and the document itself is one over which this head of exemption may be properly claimed. It follows from clause 13(a) that the entire document is exempt. Partial release under the Act is still open to the Agency under its general discretion. Also, partial release pursuant to s.25(4) of the Act is also possible even though clause 13(a) requires a finding that the document is exempt in toto. This arises by reason that s.25(4) requires consideration of whether ‘exempt matter’, as defined, may be practicably deleted. ‘Exempt matter’ is defined as being matter by reason of which the document is exempt; if exempt matter can be excised the document ought to be released even though it is totally exempt as a document under clause 13(a). However, in this case s25(4) cannot be applied successfully as clause 24 protects all the details of the agreement. The Respondent’s general discretion is a matter that has already been considered by the Respondent and dealt with satisfactorily.

…

14 The Applicant’s submissions were put in a balanced way and with precision, despite the fact that he is necessarily unaware of the full contents of the document. They 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.

22 FNSW contends that it is apparent from the views expressed in Fomiatti that if there is an enforceable contractual obligation not to disclose information, disclosure of the information is prima facie exempt under clause 13(a); and an exception to the contractual obligation in relation to information that is ‘required by law’ to be disclosed will not, by reference to section 16, provide the means to set aside the exemption available under clause 13(a).

23 FNSW further contends that the prices payable under the Eden WSA are set in accordance with procedures and methodology prescribed by the WSA and submits that therefore those prices are ‘information pursuant to the provisions of’ the Eden WSA.

24 FNSW further contends that as a consequence of the confidentiality clause in the Eden WSA, the information sought is subject to an enforceable contractual obligation not to disclose. As such the release of the information without SEFE’s consent would found an action for breach of confidence and clause 13(a) prima facie exempts the disclosure. Further, the exemption under clause 13(a) is not displaced by reference to the ‘disclosure by law’ qualification in the confidentiality clause and the operation of section 16. That being the case, in accordance with Fomiatti's case it follows that the information is exempt under clause 13(a).

25 FNSW concedes that the Southern WSA does not contain a confidentiality clause. However, it contends that as it has already disclosed the combined average prices for the Eden WSA and Southern WSA to the Applicant, separate disclosure of the Southern WSA price information must necessarily disclose the Eden WSA price in breach of the Eden WSA confidentiality clause. It argues that in this sense the disclosure of the Southern WSA information in combination with the prior disclosure will found an action for breach of confidence.

Clause 7(1)(b)

26 The Clause 7(1)(b) exemption relates to the diminution or destruction of the commercial value of information. A document is exempt if the disclosure would disclose information that has a commercial value to any agency or any other person, and could reasonably be expected to destroy or diminish the commercial value of the information.

27 FNSW submits that an objective of this exemption is to protect a person or companies from commercial disadvantage which they might suffer if commercially sensitive or commercially valuable information was to be disclosed: Wittingslow Amusements Group v Environmental Protection Agency (NSWSC 23 April 1993) per Powell J at p 29. It points to Freeland v General Manager, Liverpool City Council [1999] NSWADT 95 as support for the argument that the ‘royalty rate’ can be ‘commercial information’ for the purposes of clause 7(1)(b). In that matter the Tribunal considered a land valuation underpinning the sale of land that, if released, would undermine the sale and so lead to a new valuation being required and held that to have commercial value under clause 7(1)(b)(ii).

28 FNSW also refers to guidelines produced by the Ombudsman’s office at page 75 and contends that these suggest that information which, if disclosed, could reasonably be expected to assist a competitor to compete more effectively against the owner (or supplier) of the information, or provide an unfair commercial advantage over another has value in commerce.

29 FNSW submits that ‘royalty’ is the price payable for pulpwood supplied under the individual WSA's and is information that could reasonably be expected to assist a competitor (eg the Victorian Government's forestry enterprise agency VicForests) to compete more effectively against FNSW in the pulpwood market. It contends that its expectation is reasonable and in accordance with commonly understood and known market principles. It relies on views expressed in Leichhardt Municipal Council v Roads and Traffic Authority [2005] NSWADT 37 where Needem JM stated at 54:

54 The risk or expectation required for exemption of documents must not be minimal or nominal; it must be a risk which is able to be identified and of which some evidence can be given. A mere concern about, or worry of a possibility of damage to business affairs is not sufficient. While the ‘value’ of the information in the document need not be able to be quantified, it must be substantive.

30 FNSW is unable to precisely quantify the commercial value, but contends that the value is substantive.

31 FNSW concedes that under take or pay provisions of the WSAs SEFE is required to pay for pulpwood it fails to take from FNSW. However, it says that SEFE currently takes approximately 65,000 over take or pay levels. This is the amount SEFE could stop taking from FNSW without triggering any contractual take or pay obligations. The take or pay obligations represent the minimum amount SEFE must take or for which it must pay. While the WSAs both have take or pay provisions they only apply if SEFE takes less than 85% (Eden WSA) and 65% (South Coast WSA) of SEFE's annual entitlement. FNSW's competitors would therefore be given the opportunity to compete with FNSW for SEFE's business in relation to the remaining 15% and 35% respectively.

32 FNSW asserts that evidence submitted by the Applicant and FNSW establishes SEFE takes pulpwood from VicForests and private property and that these are genuine competitors. It says that SEFE takes more pulpwood from VicForests than from FNSW. While it does not dispute that VicForests already has long term contracts with SEFE for an annual supply, FNSW asserts that without knowing the precise terms of those contracts no inference can be drawn regarding the impact of those contracts on competition between FNSW and VicForests for SEFE's business. However, it contends that FNSW has good reason to be concerned and that sales reductions have occurred since the aggregated royalty figure for the Eden and Southern RFA regions has been released.

33 In response to the Applicant’s assertion that the royalty figures are now three years old FNSW asserts that as prices are relatively stable the prices sought to be disclosed are fairly indicative of current prices and in that sense the passage of time has not materially detracted from the commercial value of the pricing information. FNSW refers to comments by Judicial Member Higgins in Gales Holdings Pty Ltd v Tweed Shire Council [2005] NSWADT 168 who stated at paragraph [22] of the decision:

22 Whether the information for which exemption has been claimed has a commercial value must be determined as at the date of making a determination under the FOI Act.

34 However, FNSW contends that Gales Holdings does not explicitly stand for the proposition that the commercial value of the information is to be determined at the time of the Tribunal's decision because the Judicial Member went on to state at paragraph [77] of the decision:

77 In my opinion, the document does not, on its face, identify any information, which is of commercial value. The fact that a price is quoted and a particular methodology and strategy is referred to does not make it of commercial value. Even if it were of commercial value, how it could be of commercial advantage to opposing consultants at the time the Applicant made its FOI request is difficult to see as the proposal related to a specific task, which was accepted by the Respondent Council and performed by the proposer (Core Economics) several years ago (see [97] below). As there is no other evidence before the Tribunal as to the commercial value of the information in the Document, I find that the Respondent has failed to satisfy the Tribunal that Document 6 is exempt under cl.7.

35 FNSW contends that it can be inferred from this comment that the Judicial Member considered that in that case the relevant time was when the Applicant made its FOI request. FNSW also contends that section 66(2)(b) of the Administrative Decisions Tribunal Act 1997 supports the proposition that ordinarily the relevant time to determine commercial value is at the date of the original determination. That section gives retrospective effect to the Tribunal's decision unless the Tribunal makes orders that provide otherwise.

36 FNSW also relies on views expressed in C H Real Estate Ply Ltd (t/a Raine and Horne Commercial Penrith) v Penrith City Council [2005] NSWADT 147 for the proposition that information that has commercial value will have that value diminished within the meaning of clause 7(1)(b)(ii) if the release of the information diminishes the competitive edge of the holder of the information in future contests with its competitors. In that matter the Tribunal’s President stated at paragraph 54:

54 As to Pages 17-18: This sets out the methodology to be employed in bringing the site to market, marketing it and conducting the sale. Though the general parameters would be well understood by experienced real estate agents, the particular details of the strategy involve the business and commercial affairs of CH. They have some commercial value. The Tribunal is satisfied, on the evidence, that release could reasonably be expected to diminish the commercial value to CH of that information, in that its competitive edge in any future contests with other real estate agents would be diminished. The second requirement of cl 7(1)(c) is satisfied for the similar reasons.

37 It is FNSW's submission that it holds a reasonable expectation that the release of the royalty information on a regionally specific basis will diminish its competitiveness. It asserts that it has identified that expectation, and that the expectation is far from minimal or nominal and further that the Tribunal does not need expert evidence to accept that in a competitive market knowledge of a competitor's cost structures and prices is valuable information that can be exploited in the increasing market share. It further submits that the diminution of its competitiveness with other SEFE suppliers satisfies the requirements of clause 7(1)(b)(ii).

38 FNSW does not agree with the Applicant’s contention that the price information is of no commercial value to SEFE as SEFE's major customers are its owners and therefore the release of price information is unlikely to affect its international price negotiations. It is FNSW's evidence that SEFE's customers for the pulpwood that is the most difficult to sell are not related entities of SEFE.

39 FNSW does not dispute the Applicant’s evidence regarding the availability of an approximate chip mill gate price and the availability of other information as to royalties. However, it says that a single average approximate mill gate price would not allow a competitor to approximately calculate the royalty payable by SEFE to FNSW on a regional basis as mill gate price is the total of the price paid for the timber on the stump and the cost of harvesting and hauling the timber to the mill. As the timber comes from multiple sources (eg private property, FNSW, VicForests and sawmill residue) stumpage price will vary in accordance with the source and the harvesting and haulage costs will vary depending on harvesting conditions, haulage distance and varying road conditions.

Clause 7(1)(c)

40 The Clause 7(1)(c) exemption relates to damage to the business or financial affairs of the agency. A document is exempt if the disclosure would disclose information concerning the business, professional, commercial or financial affairs of any agency or any other person, and could reasonably be expected to have an unreasonable adverse effect on those affairs or to prejudice the future supply of such information to the Government or to an agency.

41 FNSW submits that the royalty rates/prices payable by SEFE are part of its ‘business, commercial or financial affairs’ and it argues that the potential effect of disclosure of its regionally specific royalty rates would be a loss of sales to SEFE and consequential loss of pulpwood sale revenue; revenue losses to both FNSW and the broader industry as a result of loss of efficiencies in integrated harvesting operations; and increased costs to FNSW resulting from loss of efficiencies in silvicultural treatment of regional forests.

42 FNSW submits that the adverse effects that it has identified are unreasonable in the circumstances. It contends that its expectation of unreasonable adverse effect is far from irrational, absurd or ridiculous, or speculation or conjecture and that its expectation of loss of sales is consistent with well known and understood market behaviour.

43 FNSW points to the evidence of Mr Mitchell who stated that if the information sought is disclosed, SEFE will have to cease supplying this commercially sensitive information to FNSW in order to protect its position in future negotiations with suppliers. This in turn will prejudice the capacity of FNSW to negotiate appropriate licence and royalty rates. FNSW submits that this is clear evidence that it could reasonably be expected that the disclosure of the royalty rates would prejudice the future supply of such information to FNSW.

Public Interest

44 It is common ground that FNSW is a statutory corporation and government trading enterprise and as such it is accountable to the Government for its commercial performance. FNSW says that it relies on revenue from sales of harvested log products to fund its operating expenses and to make annual dividend payments to Treasury. It points to the obligation imposed by section 11(1)(a) of the Forestry Act 1916 that FNSW is responsible for the management and control of State forests and other Crown-timber lands ‘in such manner as best serves the public interest’.

45 FNSW argues that the public benefits from and has an interest in FNSW meeting its own overheads and making payments into consolidated revenue. This process both frees up and increases consolidated revenue available to the government to run NSW. The public also benefits from, and has an interest in, a sustainable forest based industry in the Southern and Eden RFA areas. FNSW says that this is the fundamental premise that underpins Regional Forests Agreements.

46 FNSW concedes that there is a public interest in knowing the price FNSW is charging industry for publicly owned timber resource. It says that it has released the amalgamated price information for the Southern and Eden RFA's to the Applicant in recognition of that public interest. The amalgamated figure discloses the average price FNSW charges SEFE for all pulpwood it supplies to it. In FNSW's submission, this figure provides a basis for public assessment and accountability of its management of the pulpwood sales to SEFE. However, it has declined to disclose pricing information on a separate regional basis because in its view the disclosure has potential commercial impacts for FNSW and broader regional socio economic impacts that outweigh the benefits associated with widespread public knowledge of that information.

47 FNSW submits that this approach is driven by the Government's requirements and its statutory obligation to manage and control public commercial forests for the public interest, rather than attempting to secure a monopoly. FNSW's concern is that it will lose market share if the information is disclosed, not that it will be unable to increase market share so as to achieve market monopoly.

48 FNSW acknowledges that the decision in University of New South Wales v Gerard Michael McQuirk [2006] NSWSC 1362 confirmed that the Tribunal has discretion to order access to be given to documents which are exempt documents under the FOI Act if it decides that to do so is the correct and preferable decision with regard to the material then before it. FNSW submits that any decision by the Tribunal to grant access to the information notwithstanding the relevant documentation is exempt, should not only take into account public interest matters, but the whole of the material before it, particularly having regard to SEFE's rights in relation to breach of confidence.

49 FNSW submits that the Premier's Memorandum is irrelevant to this matter as it only applies to procurement contracts and does not apply to contracts where the government supplies goods or services. FNSW argues that there are a whole range of different considerations to be taken into account between disclosure practices for government procurement contracts and government supply contracts, not the least of which being the implications for government trading enterprises competing with the private sector or another state's government agency. It says that if the Premier had considered the Memorandum sets out good practice for all government contracts, procurement and supply he would have specified that it apply to all such contracts. It further says that the Memorandum recognises that procurement contracts may have Commercial in Confidence information that is not required to be disclosed and that it allows for tenders to nominate information they consider should not be disclosed and why. It further says that the Memorandum has been superseded by s 15A of the FOI Act which it submits does not apply to contracts where the government supplies goods or services and does not require disclosure of commercially sensitive information or documents that are exempt under the FOI Act.

Applicant’s case

50 The Applicant relies on his own evidence and that of Dr Ian Penna, an Honorary Research Fellow with the School of Anthropology, Geography and Environmental Studies at the University of Melbourne. He disputes that the asserted exemptions apply and asserts that even if the Tribunal finds the documents are exempt it should nevertheless order their release.

Penna’s statements

51 Dr Penna provided two statements (15 November 2006 and 8 February 2007) in response to the statements of Mr Royal. Annexed to the first of Dr Penna’s statements is a chapter from his PhD dissertation Penna, I. W. (2002) The Political Ecology of the Japanese Paper Industry, Submitted in total fulfilment of the requirements of the degree of Doctor of Philosophy, School of Anthropology, Geography and Environmental Studies, University of Melbourne, Parkville. This dissertation analysed and discussed the industry's fibre supply, paper/board manufacture and distribution, and product use.

52 Dr Penna provided a background to SEFE’s involvement in the pulp log market. This evidence is not disputed. SEFE is owned by two Japanese companies: NPI and Itochu Corporation. NPI is one of the largest paper manufacturers in Japan and imports woodchips from around the world. These two owner companies are SEFE's major ‘customers’ for woodchips. In 2005 SEFE shipped a total of 845,550 green tonnes of hardwood chips, and the company made an after-tax profit of $7,968,447.

Clause 7(1)(b)

53 The Applicant contends that the document sought is not exempt pursuant to either clause 7(1)(b) or 7(1)(c). In support of that contention he relies on previous decisions of this Tribunal and also the NSW Ombudsman’s office FOI Policies and Guidelines Second edition July 1997 relating to the application of the FOI Act and the authorities referred to in those guidelines.

54 For a document to be exempt under clause 7(1)(b) it must contain information that has a commercial value to an agency or other person, and its release could reasonably be expected to destroy or diminish the commercial value of the information.

55 The expression ‘commercial value’ is not defined in the FOI Act. The Applicant refers to Gales Holdings where Judicial Member Higgins stated at paragraph [24]:

24 Again the question of whether the material for which an exemption is claimed has a commercial value and that disclosure of it could reasonably be expected to destroy or diminish its commercial value is a question of fact. And in order to make such a determination, the Respondent must produce evidence on which such a finding can be made. In Surf Life Saving Australia Pty Ltd (at [32 to 34]) the President upheld the applicant’s argument that the respondent had failed to discharge its onus under s. 61 of the FOI Act as it had failed to place material before the Tribunal as to whether disclosure of the material could reasonably be expected to destroy or diminish the commercial value of the information.

56 The Ombudsman's Guidelines state that to fall within clause 7(1)(b), the information's commercial value must be clearly demonstrated and the fact that information relates to commercial matters is quite insufficient; the information must have value in commerce. Information that has a value in commerce is information which, if disclosed, could reasonably be expected to assist a competitor to compete more effectively against the owner or supplier of the information, or to provide an unfair commercial advantage over another.

57 The Applicant submits that any ‘commercial value’ held by the information must be value at the time of determination, in this instance at the time any decision is made by the Tribunal in these proceedings: Gales Holdings at paragraph [22].

58 The Applicant disputes FNSW’s claim that release of the information has the potential to reduce FNSW’s sales because the information can be used by FNSW’s competitors to in the formulation of their pricing strategies to under cut FNSW's unit price’. Similarly, he disputes Mr Mitchell’s claim that if SEFE's competitors for pulpwood from FNSW knew the royalty rate paid to FNSW by SEFE, those competitors could offer FNSW a better price, and so cause SEFE to lose FNSW as its supplier. The Applicant says that these arguments are flawed, and that the information sought does not have ‘commercial value’ to either FNSW or SEFE.

59 Firstly, the Applicant says that the ‘royalty rate’ referred to in section 30A of the Forestry Act may be distinguishable from the ‘price information’ referred to by SEFE in the sense that it may be only one component of the ultimate ‘price’ paid by SEFE for the pulp logs and of the price paid by SEFE's buyers for the processed pulp. If ‘commercial price information’ is distinguishable from royalty rate, FNSW's arguments will not apply.

60 Secondly, the Applicant submits that the release of royalty figures by region could not reasonably be expected to assist a competitor to compete more effectively against FNSW as owner’ of the information. The reasons for this are, firstly, that the WSAs contain a ‘take or pay clause’ whereby FNSW is required to supply, and SEFE is required to pay for, pulp logs allocated to them under the WSAs even if they don't take them. And secondly, the Eden RFA contains an undertaking that a minimum of 345,000 tonnes per annum of pulpwood is to be supplied from the Eden region for 20 years. This would discount FNSW’s assertions.

61 In relation to competition, the Applicant says that FNSW has not established that either VicForests or private landowners represent genuine competitors to FNSW as required by the authority in Gales Holdings. He argues that FNSW must establish that either sectors wish to, or can, supply pulp logs to SEFE, or that they can supply pulp logs of the same quality or quality or as relatively cost effectively as FNSW. Dr Penna suggests that this is not the case. Similarly it is not established that the other pulpwood customers of FNSW are genuine competitors to SEFE for the FNSW pulp logs. It is not established whether they are in a position to use more wood or pay more for pulpwood.

62 The Applicant contends that VicForests and private landowners are not genuine competitors to FNSW, and/or that the release of the royalty figures would not assist these sectors to compete more effectively against FNSW. The Applicant says that SEFE already has long term contracts for an annual supply of up to 295,000 tonnes of pulpwood from Victoria and that if VicForests were able to undercut FNSW's sale of pulp logs to SEFE any more than it already does, it presumably would have done so. Taking into account economic haulage distance limitations, VicForest's commitments to other suppliers, and other matters, it may be that SEFE already takes as much wood as they could take from Victorian forests.

63 Similarly, the Applicant contends that SEFE already undertakes forestry operations on private land and if private landowners could undercut FNSW's sale of pulp logs to SEFE any more than they already do, they presumably would have done so. Further, there are restrictions on the amount of native forest timber that can be taken from NSW private land due to the provisions of the Native Vegetation Act 2003 (‘NVA’). Section 12 of the NVA makes it an offence to clear native vegetation in areas to which the Act applies without development consent or according to the terms of a property vegetation plan. Clearing for private native forestry on private land is only permitted up until the earlier of 1 July 2007 (c1ause 41(2) Native Vegetation Regulation 2005) or it is established that the clearing concerned will improve or maintain environmental outcomes or the forestry meets some other exemption or defence under the NVA.

64 Dr Penna stated that he considers it reasonable to conclude that private forest owners are not in a position to substantially influence the pulp log market supplying SEFE, especially by offering large volumes at low prices over a long period, nor will they be in a position to influence that market. Dr Penna also stated that he considers it unlikely that the release of royalties figures that are now 3 years old, for a small region such as south eastern NSW, will influence the current and future behaviour of other pulp wood sellers.

65 It is common ground that an aggregated royalty figure of $14.26/cubic metre for the Eden and Southern RFA regions has already been released. The Applicant contends that FNSW has not established that the release of this figure has reduced its sales in those areas. If FNSW is seriously contending that the release of the aggregated figures has already caused a reduction in sales of pulp log it must provide evidence of this to the Tribunal.

66 Further, the Applicant provided evidence that VicForests released pulp log royalty rates for two companies (Newmerella Logging Company Pty Ltd and Midway Wood Products Pty Ltd) and there is no evidence that VicForest's market share has been significantly undermined by competitors as a consequence of the release of this information. The Applicant argues that if VicForests was willing to release its royalty rates to the public, then FNSW can also at least provide royalty rates as requested. The Applicant further argues that the release of this information also contradicts Mr Royal's statement that FNSW does not have access to the pricing structure of its competitors. Dr Penna deposed that it possible to obtain information as to royalties through other sources, and that competitors would already be expected to have a fair to good understanding of costs paid by competitors in their industry.

67 The Applicant submits that, for the above reasons, the royalty rate sought is not information that has ‘commercial value’ to FNSW or SEFE within the meaning of clause 7(1)(b)(i).

68 It is common ground that FNSW operates in a commercially competitive environment, and in compliance with the National Competition Policy. The Applicant contends that by maintaining that the royalty rate should remain secret because of the necessity to avoid competition, FNSW is seeking to enjoy the benefits of the commercial market while also attempting to secure a monopoly. Further, in operating on a commercial footing, FNSW has the option of offering SEFE whatever royalty rate it considers will enable it to maintain its market share. The Applicant also argues that SEFE's ownership by its major customers means the release of the royalty rate is unlikely to affect SEFE's international price negotiations. He also disputes the purported social and economic impacts of a reduction in royalties by FNSW.

69 The Applicant contends that even if the Tribunal considers that the royalty rate sought is the same as ‘region specific price information’, and that the information has ‘commercial value’, then for the above reasons their release could not reasonably be expected to ‘diminish’ that commercial value. He relies on views expressed by Judicial Member Needham at paragraph [54] of Leichhardt Municipal Council set out above and submits that if the royalties have any ‘commercial value’ the risk of it being diminished by release is ‘minimal or nominal’. He says that the risk has not been substantiated by the necessary evidence and is more in the nature of a ‘worry of a possibility of damage to business affairs’ and therefore is not sufficient to meet the threshold for exemption under clause 7(1)(b)(ii). He submits that it is not sufficient only to ‘give perspective’ to the issue. Rather, FNSW must establish, on the balance of probabilities, that the royalty rate is information with substantive ‘commercial value’ and that release of that information could reasonably be expected to destroy or diminish the commercial value of the information.

70 He argues that the test for exemption under clause 7(1)(b) relates to the commercial value of the information itself not the ‘value’ of the royalty rate. He submits that the question to be asked is not ‘will the release of the information cause the royalty rate to drop?’ Nor is it ‘will the release of the information cause FNSW's revenue from pulp log sales to drop, or increase the cost of sawmilling?’ He contends that the appropriate question for clause 7(1)(b) is ‘will the release of the information cause the value of the information as to what the royalty rate is to drop?’

71 He says that when properly distinguished in this way, it is clear that the quantum of the royalty rate is not the type of commercial information covered by clause 7(1)(b). Clause 7(1)(b) is not intended to prevent release of information that does not have a commercial value. No evidence as to how the commercial value of the information will be affected by the release of the information has been given. All of FNSW's evidence has been towards the fact that the release of the information will cause FNSW's revenue from pulp log sales to drop, or will increase the cost of sawmilling.

72 The Applicant makes two alternative submissions in case this argument is not accepted. Firstly, he says that FNSW has not provided persuasive evidence that any of the feared outcomes will happen. All of FNSW's evidence as to the effects on pulp log revenue and the cost of sawmilling was given by Mr Royal, FNSW's Sales Manager. The Applicant argues that Mr Royal does not have experience or expertise to know whether the release of the information would cause FNSW's revenue from pulp log sales to drop, or increase the cost of sawmilling to local sawmillers. Mr Royal's position is in marketing. To the extent that this position deals with financial matters, it is limited to budgeting and accounting practices for the forestry area south of Sydney to the Victorian border and west to Albury. In relation to Mr Royal's previous positions, to the extent that these involved financial matters they too were limited to the preparation of budgets (including budget projections) for individual forestry operations and capital projects.

73 His experience and expertise is not in the making of complex economic and socioeconomic projections such as the impact of royalty price on the ability of FNSW (as a whole or locally) to manage the forests, or in knowledge of individual sawmillers' operating costs such that he can predict their ability to maintain ‘economic harvesting costs’, or know what their total ‘harvesting cost’ would be.

74 In his oral evidence Mr Royal referred to an expert consulted by FNSW when information as to socioeconomic matters is needed. The Applicant argues that Mr Royal does not have the expertise to give such evidence. He contends that Mr Royal’s evidence as to socioeconomic matters was outside his area of expertise. This included evidence such as ‘the ability of FNSW to maintain operations, treat the forests silviculturally and for the sawmill industry to maintain economic harvesting costs’; the percentage and dollar amount per cubic metre and per year by which the harvesting cost of sawlogs for local sawmills would rise; and even the increase to the ‘total cost of sawmilling’, if pulp log was only bought at the ‘take or pay level’ of 65,000 tonnes. The Applicant submits that FNSW's case consists of untested assertions and that at the very least individual sawmilling cost and profit information would be necessary to prove the assertions made by Mr Royal, and properly persons with direct knowledge of that information would make them e.g. managers of those local sawmilling operations.

75 He submits that Mr Royal's opinion in regards to the ‘commercial value’ of the royalty rate should be disregarded. As no other evidence has been adduced as to the applicability of clause 7(1)(b), FNSW's case on this exemption must fail.

76 The Applicant also contends that Freeland v General Manager, Liverpool City Council is distinguishable from the current facts in that the relevant ‘information’ in Freeland was secret valuation documents for land under uncompleted contract of sale to a purchaser who could rescind the contract if the valuation was known. In the present case the other contracting party is SEFE, which already knows the royalty rate.

Clause 7(1)(c)

77 For a document to be exempt under clause 7(1)(c) it must contain information concerning the business, professional, commercial or financial affairs of an agency or an other person, and its release could reasonably be expected to have an unreasonable adverse effect on those affairs or to prejudice the future supply of such information to the Government or to an agency.

78 The Applicant concedes that it is fair to characterise royalty rates as part of FNSW's ‘business, commercial or financial affairs’. However, he submits that for the same reasons set out in regard to clause 7(1)(b)(ii), an adverse effect on the business, commercial or financial affairs of FNSW could not ‘reasonably be expected’ to arise as a result of releasing the royalty rates. He referred to views expressed by Deputy President Hennessy in Robinson v Director General, Department of Health [2002] NSWADT 222 at [66] as authority for the proposition that the judgment required of the decision-maker in relation to this must be reasonable and not irrational, absurd or ridiculous. The decision maker should have real and substantial grounds for his or her decision and not mere speculation or conjecture.

79 The Applicant further submits that FNSW has not established that the release of royalty rates would be used by competitors to FNSW in the formulation of their pricing strategies to undercut FNSW's unit price or by SEFE's competition to undercut SEFE, so as to have an adverse effect on its business, commercial or financial affairs. He submits that this claim is ‘mere speculation and conjecture’. He further says that even if the Tribunal considers that release of royalty information could be used by competitors to FNSW to under cut FNSW’s unit price, this is not the type of ‘adverse effect’ covered by clause 7(1)(c)(i). He compared the current proceedings, where only one small component of the ‘financial affairs’ of FNSW is sought, not its entire pulpwood supply structure, with the situation in Zagami v Waste Service NSW [2005] NSWADT 217 where I accepted the agency’s argument that the information sought could ‘undermine the negotiating position of the Agency in respect of its dealings with potential clients, via tender or otherwise and would generally have serious implications for the operation of the Agency in the context of a competitive market’

80 The Applicant submits that the question of whether an adverse effect is unreasonable in any given circumstance should be assessed taking into account all relevant factors. He says that while there is no ‘public interest’ aspect to clause 7(1)(c), the public interest in disclosure is to be taken into account in relation to whether any adverse effect is unreasonable. He further says that even if the Tribunal considers that use of royalty rate information by competitors to undercut FNSW's unit price is an effect that could ‘reasonably be expected’ to arise, and that this is an ‘adverse’ effect intended by clause 7(1)(c)(i), this is balanced by the public interest in releasing the information.

81 The Applicant submits that given that FNSW is a government entity managing and profiting from public forests, any adverse effect on FNSW as a result of release of the royalty figures is not ‘unreasonable’. Similarly any adverse effect on SEFE would not be unreasonable, given that it is a highly successful private company dominating the pulp wood market in south eastern NSW and making significant profit from public forests.

82 With respect to clause 7(2)(c)(ii), the Applicant relies on Re Actor's Equity Association of Australia and Australian Broadcasting Tribunal (No.2) (1985) 3 AAR 1 for his submission that the expectation that release of the information could prejudice the future supply of such information to the Government or to an agency has to be reasonable and not fanciful, imaginary or contrived. He argues that the expectation must be based on real and substantial grounds when looked at objectively and that mere speculation or conjecture is insufficient: Attorney-General's Department v Cockroft (1986) 64 ALR 97.

83 The Applicant refers to Mr Mitchell’s statement that if the information sought, is disclosed under the FOI Act ‘SEFE will have to cease supplying this commercially sensitive information to Forests NSW in order to protect its position in future negotiations with suppliers.’ The Applicant says that clause 7(1)(c)(ii) refers to the supply of ‘such information’, i.e. the information sought to be released. The Applicant contends that he does not seek the release of the ‘commercially sensitive information’ supplied by SEFE. It seeks the release of royalty rates, which are not supplied by SEFE. Royalty rates are set by FNSW pursuant to clause 30B of the Forestry Regulation, albeit in consultation with SEFE.

84 The Applicant also points to the views of Dr Penna that it is possible to collect information on woodchip supply chain cost structures through reading, interview or purchase and that if SEFE stops supplying information to FNSW for negotiations, it may be possible for FNSW to obtain at least some of that information from other sources.

85 Consequently, the Applicant submits, SEFE's warning of its intention to cease supplying information to FNSW cannot be taken to indicate the royalty rates should be exempted under this second limb of clause 7(1)(c)(ii).

Clause 13(a)

86 A document is an exempt document pursuant to clause 13(a) of Schedule 1 if it contains matter the disclosure of which would found an action for breach of confidence. The application was refused because of the confidentiality clause in the Eden WSA. The Southern WSA does not contain a confidentiality clause. However, FNSW contends that as it has already disclosed the combined average prices for the Eden WSA and Southern WSA, separate disclosure of the Southern WSA must necessarily disclose the Eden WSA price. The relevant part of the confidentiality clause provides:

‘No party will disclose the contents of this Agreement or any information or documents received by it in connection with the negotiation of this Agreement or pursuant to the provisions of this Agreement without the prior written consent of the other parties.’

87 SEFE asserted that ‘release of this information would constitute an actionable breach of the WSA and our Company therefore reserves its rights to seek remedy if such a breach is to occur’. The Applicant disputes SEFE’s assertion. He argues that the royalty rate set by FNSW is not ‘information received by’ FNSW from SEFE or anyone else. Similarly, he is not seeking information received by FNSW pursuant to the provisions of the WSA.

88 He argues that it is irrelevant that the formula by which the royalty rate is set is in the WSA, because he is not seeking that formula, or that it is set by reference to information provided by SEFE, because he is not seeking that information. Consequently the confidentiality clause does not prevent release of the information.

89 The Applicant relies on the Ombudsman's Guidelines for support for the proposition that the purpose of clause 13 is to protect the flow of confidential information to government agencies and with the intention of preventing information from outside an agency, given in confidence to that agency, and received as such, from being disclosed under the FOI Act. He argues that SEFE did not provide the royalty rates to FNSW, and he does not seek any ‘confidential information’ that SEFE did supply. He says that royalty rates are set independently of the WSAs and contends that FNSW has not shown that the royalty figures themselves are contained in the WSAs. If there are other ‘documents’ that contain the royalty figures aside from the WSAs, this is not prevented from release by clause 40 of the Eden WSA.

90 The Applicant submits that the reference to ‘an action for breach of confidence’ in clause 13(a) is a reference to proceedings in equity for a remedy when one party has breached another's ‘confidence’ in such a way as to give rise to a remedy at law. He argues that if the WSA does not contain a confidentiality clause, the information for that region cannot be excluded by clause 13(a), as the criteria in clause 13(a) would not arise. It is irrelevant that it may be possible to ‘work out’ figures contained in an agreement that does contain a confidentiality clause, as this would not found an action for breach of confidence.

91 The Applicant further submits that the confidentiality clause in the Eden WSA specifically exempts information that the party is required to disclose by law. He submits that section 16 of the FOI Act imposes such a requirement.

92 The Applicant agrees with the view initially expressed by the Ombudsman’s Investigation Officer that the document he seeks should not remain exempt under clause 13(a) purely because of the confidentiality agreement and that the public interest is the ultimate determining factor as to whether a document should remain exempt.

Public Interest

93 Section 25(1) of the Act provides that an agency ‘may’ refuse access to a document if it is an exempt document. That is, it need not refuse access to the document even if it is ‘exempt’. The Applicant submits that University of New South Wales v Gerard Michael McGuirk is authority for the proposition that the Tribunal has an overriding discretion to release documents that are otherwise ‘exempt’ under Schedule 1. The test for whether to release a document is ‘whether to release it is the correct and preferable decision with regard to the material then before the Tribunal’. If the release of documents is in the public interest, their release is ‘the correct and preferable decision’. In the exercise of the Tribunal's discretion to release ‘exempt’ documents, it is to take into account the public interest in obtaining access to the documents in accordance with the objects of the Act: Mangoplah Pastoral Co Ply Ltd v Great Southern Energy [1999] NSW ADT 93 at [85].

94 The Applicant argues that there is public interest in knowing the way different forest regions are commercially valued and the amount for which public forest pulp logs are being sold to private interests. The Applicant does not dispute that ‘the public benefits from and has an interest in FNSW meeting its own overheads and making payments into consolidated revenue’. However, he contends that public knowledge in general and in particular is also a public benefit. Truth and transparency, especially as to the management of public assets, assist in public benefit being determined and achieved.

95 The Applicant also agrees that the public has an interest in a ‘sustainable forest based industry in the Southern and Eden RFA areas’. However he considers that the high intensity industrial logging operations undertaken for woodchipping by FNSW are not sustainable (whether ecologically or economically), and that significant low impact forest industries that are sustainable (such as tourism, beekeeping and recreation) are undermined by FNSW's woodchipping activities. Consequently maintenance of FNSW's woodchipping activities should not be considered as relevant to determining whether release of the royalty rates is ‘in the public interest’.

96 The Applicant says that because it relies on the evidence of Mr Royal, FNSW has not made a convincing argument with respect to the potential commercial impacts for FNSW and broader regional socio-economic impacts that would flow from release of the royalty rate sought, where such impacts have not resulted from release of the amalgamated information.

97 In relation to FNSW's submission that it would not be a level playing field if the information was released because the private sector is not bound to release information under FOI the Applicant points to Dr Penna’s observation that the playing field between FNSW and private landowners is already clearly uneven - in favour of FNSW. As Dr Penna deposes, private landowners are not genuine competitors to FNSW for SEFE 's custom, and are unlikely to be able to offer SEFE a lower price for pulp logs even if they knew the price at which SEFE bought the pulp logs. For this reason the release of the royalty information would not undermine a ‘level playing field’ between FNSW and private landowners.

98 The Applicant asserts that FNSW’s assertion that releasing the information has the potential to reduce FNSW’s sales and the arguments built on this presumption are without foundation. He argues that if VicForests was willing to release its royalty rates to the public, then FNSW can do so. His application for internal review set out a number of factors which he says support the argument that the information he seeks should be released in the public interest:

FNSW is a publicly owned organisation, which trades in wood taken from publicly owned forests which grow on publicly owned land.

It is in the interests of the public that they know the truth of all aspects of the FNSW operations related to our South East NSW publicly owned forests.

Most people care about the natural environment for many important reasons.

Most of the public are opposed to the woodchipping of native forests. This was reflected in Mr. Bob Carr's promise in March 1995 to end the export of woodchipping by the year 2000. Credible surveys more recently show that about 80% of the public oppose woodchipping of native forests.

To say the least, the woodchipping of native forests has met with much opposition and it continues to split the community in the regions and the cities.

FNSW's determination not to release the documents in this instance means that important information is not being provided to the public - information which is necessary to help the public understand what is happening.’

Victorian and NSW forests are a public resource. They are not privately owned by SEFE. Once the forests are logged, they are regenerated into tree farms lacking in the age and diversity of the previous forest, and they never regenerate to the rich and diverse forest habitat that was once there. The community has a right to know the price at which its precious forests are being sold to commercial interests. This information should be made public to allow debate in regard to the relationship between the Unit Rate figures and the community, ecological and water production value of these forests.

99 He further submits that a private company should not be able to determine whether information held by a government agency about the use of a public resource should be released under an Act designed for that purpose. If the information does not come within the strict exemptions permitted by the FOI Act it must be released.

Findings

100 As I have indicated above, the Applicant has sought access to the unit price of pulp supplied by Forests NSW from the areas included in the Eden Forest Agreement and the Southern Forest Agreement. FNSW asserts that the documents that contain the information sought are exempt under clauses 7(1)(b), 7(1)(c) and 13(a) of Schedule 1 to the FOI Act. FNSW also asserts that release of the documents that contain the information is not in the public interest and it declined to release the information. The burden of establishing that the determination is justified lies on FNSW.

101 One of the stated objects of the FOI Act is to extend, as far as possible, the right of the public to obtain access to information held by the Government. The Act also acknowledges that there are circumstances where providing access to documents may adversely affect the legitimate interests and rights of members of the community. For example, giving access to information may constitute an unwarranted invasion of a person's affairs.

102 The main purpose of the clause 7 exemptions is to avoid disclosing confidential information provided by the business community to government and exposing businesses to commercial disadvantage. This protection also applies to the business affairs of agencies: The NSW FOI Manual - A joint publication of NSW Department of Premier and Cabinet and the NSW Ombudsman - August 2007 (“the 2007 FOI Manual”) at paragraph 12.4.2.

Clause 7(1)(b)

103 A document may be exempted from release under this clause 7(1)(b) if it would disclose information that has a commercial value; and the disclosure could reasonably be expected to destroy or diminish the commercial value of the information.

104 The first arm of this clause requires a positive finding that the relevant information has a commercial value. Only after that finding is made is it necessary to consider whether disclosure could reasonably be expected to destroy or diminish the commercial value of the information. In this matter the relevant information is the royalty rate i.e. the unit price of pulp supplied by FNSW from the areas included in the Eden Forest Agreement and the Southern Forest Agreement.

Does the royalty rate have a commercial value?

105 The meaning of the expression “commercial value” has been considered in a number of cases. In Re Cannon and Australian Quality Egg Farms Limited (1994) 1 QAR 491 Commissioner Albietz considered the expression in some detail for the purposes of interpretation and application of a similarly worded provision in section 45(1)(b) of the Queensland FOI Act. After a careful analysis of a number of authorities he identified two possible interpretations of the phrase "commercial value". The primary meaning is that information has a commercial value to an agency or person if it is valuable for the purposes of carrying on the commercial activity in which that agency or other person is engaged. The second meaning is that information has a commercial value to an agency or person if a genuine arms-length buyer is prepared to pay to obtain that information from that agency or person, such that the market value of the information would be destroyed or diminished if it could be obtained under the FOI Act from a government agency which has possession of it.

106 He was not prepared to accept that the investment of time and money is a sufficient indicator in itself of the fact that information has a commercial value. He said that it could be argued on that basis that most, if not all, of the documents produced by a business will have a commercial value because resources were invested in their production, or money expended in their acquisition. He regarded this as too broad a proposition because information can be costly to produce without necessarily being worth anything. A contra view is expressed in the cases cited in Neary v State Rail Authority [1999] NSWADT 107 at 42.

107 In Re Cannon and Australian Quality Egg Farms Limited Commissioner Albietz also noted that the information in question must have a commercial value to an agency or another person at the time that an authorised decision-maker under the FOI Act comes to apply the provision and that information that was once valuable may become aged or out-of-date such that it has no remaining commercial value.

108 In the present case, the relevant information is the royalty rate, which is some three years old. Adopting the approach taken in Re Cannon and Australian Quality Egg Farms Limited, I do not think that it is likely that a genuine arms-length buyer would be prepared to pay to obtain that information. The information may have been of value to an arms-length buyer at the time it was created but I think it is unlikely that it would be the case today. In my view, if an arms-length buyer would be prepared to pay to obtain royalty rate information they would only be interested in the current royalty rates. FNSW has asserted that prices are relatively stable and that the prices sought to be disclosed are fairly indicative of current prices however I have no firm evidence on which I can conclude whether or not the rate has remained steady since that time. In the absence of such evidence I am not satisfied that the royalty rate has a commercial value under this test.

109 The alternative test proposed by Re Cannon and Australian Quality Egg Farms Limited is that the royalty rate is valuable for the purposes of carrying on the commercial activity in which FNSW or SEFE is engaged. I agree that Freeland v General Manager, Liverpool City Council can be distinguished on its facts. Nevertheless, I accept that in some circumstances a royalty rate can be commercial information for the purposes of clause 7(1)(b). I accept that the current rate would be valuable for the purposes of carrying on the commercial activity because it is the rate under which FNSW and SEFE carry out their respective obligations. However, the royalty rate under consideration is no longer current. That being the case I do not consider that it has the same value. I agree with the Applicant’s submission that the commercial value must be clearly demonstrated and FNSW has the burden of doing so.

110 In my view, FNSW has not established that the royalty rate has a commercial value for the purposes of the exemption under clause 7 of Schedule 1 to the FOI Act.

111 However, in case I have wrongly formed this view, I will consider the issue of whether the disclosure of the royalty rate could reasonably be expected to destroy or diminish the commercial value.

Could the disclosure of the royalty rate reasonably be expected to destroy or diminish its commercial value?

112 In Re Cannon and Australian Quality Egg Farms Limited Commissioner Albietz observed that much “information which is valuable for the purpose of carrying on commercial activity will remain valuable even though it is fairly widely disseminated, for example, the trade or professional knowledge commonly referred to as "know-how", which characteristically is generally known among competitors in a particular industry”. This is demonstrably correct.

113 In this matter, it is FNSW's submission that it holds a reasonable expectation that the release of the royalty rate will diminish its competitiveness. It has asserted that the royalty rate is information that could reasonably be expected to assist a competitor to compete more effectively against FNSW in the pulpwood market. While the WSAs both have take or pay provisions, FNSW's competitors, particularly VicForests and private landowners, would therefore be given the opportunity to compete with FNSW in relation to a large portion of SEFE's business. The potential loss of sales to SEFE would have a consequential loss of pulpwood sale revenue; revenue losses to both FNSW and the broader industry as a result of loss of efficiencies in integrated harvesting operations; and increased costs to FNSW resulting from loss of efficiencies in silvicultural treatment of regional forests.

114 FNSW also asserts that the release of the royalty rate is likely to affect SEFE's international price negotiations because SEFE's customers for the pulpwood that is the most difficult to sell are not related entities of SEFE.

115 In contrast, the Applicant argues that FNSW has not presented any evidence to show how the disclosure of the royalty rate could reasonably be expected to destroy or diminish its commercial value. All of FNSW's evidence has been towards the fact that the release of the information will cause FNSW's revenue from pulp log sales to drop, or will increase the cost of sawmilling i.e. that the quantum of the royalty rate would be destroyed or diminished. He contends that the appropriate question for clause 7(1)(b) is ‘will the release of the information cause the value of the information as to what the royalty rate is to drop?’

116 I agree with the Applicant with respect to the approach to be taken. FNSW has the burden of showing how the commercial value of the royalty rate could be expected to be destroyed or diminished. I accept that VicForests has released some information in regard to royalty rates. There is no suggestion that any commercial value of those rates has been affected by their release. It may be that it has retained its value even though it was released. I also accept the evidence given by Dr Penna in regard to the capacity of VicForests or private landowners to compete against FNSW and in my view that evidence casts doubt on whether either VicForests or private landowners represent genuine competitors to FNSW. In my view the evidence given on behalf of FNSW is insufficient to overcome that doubt. While I accept that Mr Royal is able to give evidence as to the general operation of the market in which he operates, I agree with the Applicant’s submission that Mr Royal’s evidence as to socioeconomic matters was outside his area of expertise. FNSW has failed to produce appropriate independent evidence to support its assertions and in my opinion has not presented more than ‘a mere concern about, or worry of a possibility of damage to’ any commercial value of the royalty rate.

117 It follows, in my view, that the exemption under clause 7(1)(b) is not made out.

Clause 7(1)(c)

118 A document may be exempted from release under clause 7(1)(c) if (a) it would disclose information concerning the business, professional, commercial or financial affairs of an agency or person and (b) it could reasonably be expected that the disclosure of the information would either (i) have an unreasonable adverse effect on those affairs; or (ii) prejudice the future supply of such information to the Government or to an agency.

119 The Applicant has conceded that it is fair to characterise the royalty rates as part of FNSW's ‘business, commercial or financial affairs’. However, he submits that an adverse effect on those affairs could not ‘reasonably be expected’ to arise as a result of releasing the royalty rates.

Could reasonably be expected

120 The expression ‘could reasonably be expected’ has been considered in a number of cases. The words refer to an expectation for which real and substantial grounds exist when looked at objectively. The words call for the decision-maker to discriminate between unreasonable expectations and reasonable expectations, between what is merely possible (e.g. merely speculative/conjectural "expectations") and expectations which are reasonably based, i.e. expectations for the occurrence of which real and substantial grounds exist: Re "B" and Brisbane North Regional Health Authority (1994) 1 QAR 279 at paragraph [160].

121 The Full Federal Court in Re: Searle Australia Pty Ltd and: Public Interest Advocacy Centre and Department of Community Services and Health (1992) 108 ALR 163 considered that, in the context of the interpretation of the similar exemption in section 43 of the Freedom of Information Act 1982 (Cth) (“Cth FOI Act”), the word "unreasonably" should be given its ordinary meaning. If something could reasonably be expected it must not be purely speculative, fanciful, imaginary or contrived.

122 In Neary v State Rail Authority the Tribunal’s President considered a number of Federal Court cases which examined this issue in the context of the interpretation of the similar exemption in section 43 of the Cth FOI Act. He stated at paragraph [35] – [36]:

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

123 The inclusion of the expression ‘unreasonable’ as an element of this exemption requires a judgement about disclosure that takes into account all of the relevant circumstances and a balancing of legitimate interests. In Colakovski v Australian Telecommunications Corporation (1991) 100 ALR 111 the Federal Court held that the question of whether disclosure was unreasonable required consideration of what amounts to a limited public interest test.

124 In Re Chandra and Minister for Immigration and Ethnic Affairs (1984) 6 ALN N257, the AAT said:

‘(51) ... [I]t is not every document, the disclosure of which would involve the disclosure of information relating to the personal affairs of a person, that is exempt from disclosure under the Act. Exemption is only attracted if the disclosure would involve the unreasonable disclosure of information relating to those affairs. Whether a disclosure is "unreasonable" requires, in my view, a consideration of all the circumstances, including the nature of the information that would be disclosed, the circumstances in which the information was obtained, the likelihood of the information being information that the person concerned would not wish to have disclosed without consent, and whether the information has any current relevance.’

125 The ‘adverse effect’ must be sufficiently serious or significant to cause concern to a properly informed reasonable person (Re Thies and Department of Aviation (1986) 9 ALD 454).

126 In this matter FNSW submits that the potential adverse effect of disclosure the royalty rates would be a loss of sales to SEFE and consequential loss of pulpwood sale revenue; revenue losses to both FNSW and the broader industry as a result of loss of efficiencies in integrated harvesting operations; and increased costs to FNSW resulting from loss of efficiencies in silvicultural treatment of regional forests. It further submits that these adverse effects are unreasonable in the circumstances and its expectation is far from irrational, absurd or ridiculous, or speculation or conjecture and that its expectation of loss of sales is consistent with well known and understood market behaviour.

127 In contrast, the Applicant submits that FNSW has not established that the release of royalty rates would be used by competitors to FNSW in the formulation of their pricing strategies to undercut FNSW's unit price or by SEFE's competition to undercut SEFE. He further submits that for the same reasons set out in regard to clause 7(1)(b)(ii), an adverse effect could not ‘reasonably be expected’ to arise as a result of releasing the royalty rates. He further says that even if the Tribunal considers that release of royalty information could be used by competitors to FNSW to under cut FNSW’s unit price, this is not the type of ‘adverse effect’ covered by clause 7(1)(c)(i).

128 I agree with the Applicant in this regard. For the same reasons set out above in regard to clause 7(1)(b)(ii), I am not satisfied that the evidence given on behalf of FNSW is sufficient to overcome the doubt as to whether either VicForests or private landowners represent genuine competitors to FNSW. Nor am I satisfied that FNSW has shown that the information has any current relevance. Taking into account all the other relevant factors I am not satisfied that release of the royalty rates could reasonably be expected to have an unreasonable adverse effect on the business affairs of FNSW or SEFE.

Could it reasonably be expected that the disclosure of the royalty rates would prejudice the future supply of such information to the Government or to an agency?

129 On the issue of whether the disclosure of information can reasonably be expected to prejudice the future supply of such information, in the context of the Cth FOI Act the majority of the Court in Attorney General's Department v Cockcroft said:

"In our opinion, in the present context the words 'could reasonably be expected to prejudice the future supply of information' were intended to receive their ordinary meaning. That is to say, they require a judgment to be made by the decision-maker as to whether it is reasonable, as distinct from something that is irrational, absurd or ridiculous, to expect that those who would otherwise supply information of the prescribed kind to the Commonwealth or any agency would decline to do so if the document in question were disclosed under the Act."

130 Mr Mitchell stated that if the royalty rates were disclosed, SEFE would cease supplying commercially sensitive information to FNSW. FNSW submits that this is clear evidence that the disclosure would prejudice the future supply of such information to FNSW.

131 In contrast, the Applicant submits that royalty rates are not supplied by SEFE. Royalty rates are set by FNSW pursuant to clause 30B of the Forestry Regulation. He argues that clause 7(1)(c)(ii) is concerned with the future supply of ‘such information’, i.e. the royalty rates. He says that there is no basis on which the Tribunal could conclude that the future supply of royalty rates would be prejudiced by the release of these royalty rates.

132 In my opinion, it is reasonable to conclude that if the royalty rates were disclosed, SEFE might adopt the approach that it has foreshadowed and cease supplying commercially sensitive information to FNSW. Clearly this would be a prejudice of the future supply of information to FNSW. It would restrict the information available to FNSW and that would in turn affect FNSW’s ability to negotiation future royalty rates. However, in my view, the information that SEFE might withhold is not ‘such information’ or ‘information of the prescribed kind’. I agree with the Applicant that the expression ‘such information’ is a reference to the information that is sought to be released i.e. the royalty rates. I also agree that royalty rates are not supplied by SEFE and therefore their release cannot prejudice their future supply.

133 It follows, in my view, that the exemption under clause 7(1)(c) is not made out.

Clause 13(a)

134 A document may be exempted from release under clause 13(a) of Schedule 1 states that a document is exempt ‘if it contains matter the disclosure of which would found an action for breach of confidence’.

135 The focus of this exemption is on ensuring that confidences that would be protected in an action for breach of confidence are capable of protection from disclosure under the FOI Act: Re B and Brisbane North Regional Health Authority.

136 FNSW says that the disclosure of the royalty rates would found an action for breach of confidence because of the inclusion of the confidentiality clause in the Eden WSA. The relevant part of the confidentiality clause provides:

‘No party will disclose the contents of this Agreement or any information or documents received by it in connection with the negotiation of this Agreement or pursuant to the provisions of this Agreement without the prior written consent of the other parties. ‘

137 FNSW argues that the royalty rates are ‘information pursuant to the provisions of’ the Eden WSA and subject to an enforceable contractual obligation not to disclose. As such the release of the information without SEFE’s consent would found an action for breach of confidence. FNSW relies on views expressed in Fomiatti as support for its contention that if there is an enforceable contractual obligation not to disclose information, disclosure of the information is prima facie exempt under clause 13(a). FNSW further contends that disclosure of the information is not ‘required by law’ and none of the other exceptions referred to in the confidentiality clause are applicable and therefore the exemption available under clause 13(a) has been correctly asserted.

138 FNSW concedes that the Southern WSA does not contain a confidentiality clause. However it argues that the disclosure of the Southern WSA information in combination with the prior disclosure will found an action for breach of confidence.

139 The Applicant disputes SEFE’s assertion. He argues that the royalty rates are set by FNSW and are not ‘information received by’ FNSW from SEFE or anyone else. It follows, in his submission, that the royalty rates cannot have been received by either FNSW or SEFE ‘in connection with the negotiation’ or ‘pursuant to the provisions of’ the WSA. FNSW has not shown that the royalty figures themselves are contained in the WSAs. Consequently the confidentiality clause does not prevent release of the information. He further argues that if there are other ‘documents’ that contain the royalty figures aside from the WSAs, this is not prevented from release by the Eden WSA the confidentiality clause. In any event, he says that disclosure pursuant to section 16 of the FOI Act is disclosure ‘required by law’ and therefore disclosure will not found an action for breach of confidence.

140 The Applicant submits that clause 13(a) cannot exempt release of the royalty rates for the areas covered by the Southern WSA, as the criteria in clause 13(a) would not arise. He says that it is irrelevant that it may be possible to ‘work out’ figures for the Eden WSA area, as this would not found an action for breach of confidence.

Would disclosure of the royalty figures found an action for breach of confidence?

141 Judicial Member Britton considered the words ‘found an action for breach’ in Public Service Assn and Professional Officers Assn, Amalgamated Union of NSW v Director-General, Premier’s Department. Her views have been set out above.

142 There is some uncertainty in the case law as to whether it is necessary to take into account the possibility of defences to an action in determining whether such an action could be ‘founded’. In Taylor v WorkCover Authority [2003] NSWADT 186 the Tribunal’s President stated at paragraph [40]:

40 Arguably the words used in cl 13(a) exclude from view the possible defences that might be available to the hypothetical defendant to the hypothetical action for breach of confidence. The exemption is expressed to be available to be invoked where the threatened disclosure (here under FOI) would `found' an action for breach of confidence.

143 In Re B and Brisbane North Regional Health Authority Commissioner Albietz considered a comparable provision in section 46(1)(a) the Qld FOI Act and stated:

119 There may be a threshold issue of statutory construction as to whether the words "would found an action" in s.46(1)(a) direct attention only to the elements which a plaintiff must establish in order to set up a cause of action for breach of confidence, without regard to any defences that may apply to defeat the cause of action, or whether the words require the existence of defences which would defeat an action for breach of confidence to be taken into account. Since the recognised defences to an action for breach of confidence generally reflect public interest considerations for refusing to enforce an obligation of confidence, I consider that it is consistent with the general scheme of the Act (in which public interest considerations, and the balancing of competing public interest considerations are predominant, as explained in my decision in Re Eccleston ) that s.46(1)(a) should be interpreted as requiring defences to an action for breach of confidence to be taken into account. This certainly appears to have been the intention of the Commonwealth Parliament when employing the like words in the amended s.45 of the Commonwealth FOI Act - see the penultimate sentence in the relevant paragraph from the Explanatory Memorandum set out at paragraph 29 above. I am also encouraged in this view by the fact that Gummow J in Corrs Pavey , after holding that the term "breach of confidence" was used in the former s.45 of the Commonwealth FOI Act in the sense well known to the law as the description of a particular class of legal proceeding, went on to consider and apply the defences to an equitable action for breach of confidence (at ALR p.451 ff).

144 Commissioner Albietz discussed a number of defences that might be available to defeat an action for breach of confidence. In my view any action for breach of confidence must have a reasonable chance of success to attract this exemption. In order to establish whether or not that is the case any available defence may be taken into account.

145 In the present matter there is evidence to support the assertion that SEFE may bring an action for breach of confidence against FNSW if the royalty rates are disclosed. It appears that the basis of such an action would be an alleged breach of the contractual obligation of confidence contained in the Eden WSA confidentiality clause. In order to determine whether release of the royalty rates would found such an action requires an evaluation of the terms of the confidentiality clause.

146 Once the confidentiality clause is examined it is apparent that the view argued by the Applicant is correct. The royalty rates have not been received by either FNSW or SEFE ‘in connection with the negotiation’ or ‘pursuant to the provisions of’ the WSA. Unless it can be shown that the royalty figures themselves are contained in the WSAs, their release would not found an action for breach of confidence.

147 I agree with the view expressed by the Ombudsman’s Investigation Officer that the royalty rates should not remain exempt under clause 13(a) purely because of the confidentiality clause. There is a clear public interest in public authorities not entering express statements that attempt to predetermine exemption of documents from the Act or in order to avoid the possibility of disclosure under the FOI Act.

148 It is an implied term of any contract between individuals that the promises of their contract will be subject to statutory obligations: Wyatt Co (NZ) Ltd v Queenstown – Lakes District Council [1991] 2 NZLR 180 per Jeffries J at 191. Public authorities that are subject to the provisions of the FOI Act must comply with the letter and spirit of the FOI Act. If Fomiatti is to be taken as suggesting that an enforceable contractual obligation not to disclose information means that disclosure of the information is exempt under clause 13(a), I disagree.

149 It follows, in my view, that the exemption under clause 13(a) is not made out.

150 If I am wrong in regard to my conclusion that none of the asserted exemptions apply, it is necessary that I consider whether access should be given to the royalty rates anyway.

The residual discretion to override the exemptions

151 The Tribunal has a discretion to order access to be given to documents which are exempt documents under the FOI Act: University of NSW v McGuirk. It is necessary to balance the factors supporting the exemption against any public interest or other considerations justifying exercise of the residual discretion to override the exemption in order to determine whether or not the correct and preferable decision is to order access to be given to an exempt document.

152 I agree with the approach adopted by Acting Deputy President Handley in P v Greater Western Area Health Service [2007] NSWADT 87 as to how the discretion should be exercised. He stated at paragraph [39]:

First, in cases where exercise of the residual discretion is in issue, the Tribunal must first consider whether particular documents are exempt under the Act, and only if it finds documents to be exempt should it then consider whether to exercise the residual discretion. Second, the discretion should only be exercised where there are strong grounds justifying the overriding of an exemption. The approach to be taken is one of balancing the competing interests involved according to the words of the Act, bearing in mind the stated objects of the Act: General Manager, WorkCover Authority of NSW v Law Society of NSW [2006] NSWCA 84, at par 151. In NSW, the public interest is a relevant matter in determining whether there are strong grounds justifying exercise of the discretion, and this should be considered in the light of the objects of the FOI Act, set out in s 5.

153 This developed the approach he had taken in Retain Beacon Hill High School Committee Inc v NSW Treasury [2007] NSWADT 55 and is consistent with that adopted by Smith JM in Mangoplah. Mangoplah was cited with approval by Nicholas J in McGuirk. At paragraph [91] of Mangoplah Smith JM stated that there is:

‘a need to locate special or overriding circumstances or interests before an exempt document is released, but only in the sense that some reason particular to the circumstances should be found for not claiming the exemption. I would not see the question as necessarily suggesting that such a release would be rare, unusual or exceptional. In some areas of government, there may be many documents which fall within an exemption but, for example, whose public interest in release is overwhelming, or whose potential for relevant damage is so obviously remote as to leave disclosure totally innocuous.’

154 Each of the parties presented argument with respect to exercise of the residual discretion. The arguments were limited to why the public interest favours either the withholding or release of the royalty rates. (see paragraphs [44]-[49] and [93] - [99] for a summary of those submissions.)

155 FNSW argues that the public has an interest in a sustainable forest based industry in the Southern and Eden RFA areas and that the public benefits from and has an interest in FNSW meeting its own overheads and making payments into consolidated revenue. The Applicant does not dispute these points. However, he argues that there is public interest in knowing the way different forest regions are commercially valued and the amount for which public forest pulp logs are being sold to private interests. He contends that the public benefits from truth and transparency in regard to the management of public assets, assist in pubic benefit being determined and achieved. He considers that the maintenance of operations that are not sustainable is not a relevant factor in determining whether or not the release of the royalty rates is ‘in the public interest’.

156 As indicated above, the residual discretion should only be exercised where there are strong grounds justifying the overriding of an exemption. In my view, the potential socio-economic impact that would flow from release of the royalty rate is a highly relevant factor. If FNSW were correct in its assessment of the potential impact, very strong grounds would need to be found to justify disclosure of the royalty rate. In my view, the factors favouring disclosure are sufficiently strong to justify disclosure. These factors all favour the opportunity for debate on an issue of significant public interest - the socio-economic and ecological value of these publicly owned forests and whether the existing operations provide an adequate return to the community from the use of a public resource. An uninformed public cannot usefully participate in that debate.

157 This approach is consistent with the following statement by Hon Wal Murray, Deputy Premier, Minister for State Development and Minister for Public Works, in the second reading speech on the introduction of the Freedom of Information Bill 1988 into the NSW Legislative Assembly on 2 June 1988. (see Hansard Debates (NSW) vol 102, 1399).

It has become commonplace to remark upon the degree of apathy and cynicism which the typical citizen feels about the democratic process. Voters feel that, having made their marks upon ballot papers on polling day, they can have no further effect on, and make no further contribution to, the process of government until the next election. This feeling of powerlessness stems from the fact that electors know that many of the decisions which vitally affect their lives are made by, or on advice from, anonymous public officials, and are frequently based on information which is not available to the public. The government is committed to remedying this situation.

The freedom of information legislation now before this House will mean that voters will have the opportunity to scrutinize the actions of the Government and the bureaucracy. Giving the people access to the information used by the decision-makers will restore a meaningful level of accountability and induce a much higher level of public participation, awareness and interest in policy making and government itself. This freedom of information legislation will strengthen democracy by helping to provide the people with a basis on which government policies and actions can be discussed and debated, as well as allowing the performance of the Government to be judged fairly at election time. It will permit a more informed electorate to make rational judgments.

158 I agree with the Applicant that there is a public interest in an informed debate about the most appropriate uses to be made of this publicly owned asset. The price at which a publicly owned asset is being sold to private interests is a significant factor in that debate. It is my view that the correct and preferable decision is that the royalty rates should be disclosed.

Order

The decision under review is set aside. In its place the decision is made that the documents containing the unit price of pulp supplied by Forests NSW from the areas included in the Eden NSW Forest Agreement and the Southern NSW Regional Forest Agreement are to be released in full within 28 days.