FEDERAL COURT OF AUSTRALIA

Crown Resorts Limited v Zantran Pty Limited [2020] FCAFC 1

ORDERS

THE COURT ORDERS THAT:

1.    The respondent be refused leave to file and rely upon the proposed notice of contention provided to the Court on 2 September 2019.

2.    The appeal be allowed.

3.    Order 1 made by the primary judge on 8 May 2019 be set aside and in lieu thereof there be an order that the interlocutory application filed by Zantran Pty Limited on 3 October 2018 be dismissed.

4.    Within seven days of publication of reasons, each of the parties file and serve an outline of submissions, limited to two pages, setting out the nature of the order as to costs for which it contends as to the costs of the application for leave to appeal and the appeal.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

ALLSOP CJ:

Introduction

1    I have read the reasons to be published of Lee J. I agree with the orders proposed by his Honour and in the reasoning therefor; I also agree generally with his Honour’s reasons. Given the importance of the matter, I would prefer to express for myself why I consider the approach of the learned primary judge to have been, with respect, in error.

2    The error was in applying the approach of J Forrest J in AS v Minister for Immigration and Border Protection (Ruling No 6) [2016] VSC 774; 53 VR 631. That approach involved the proposition (reflected in the terms of the relief sought and granted in the proceeding below) that the Court possessed power, discretionary in character, to relieve a person of a subsisting and otherwise enforceable obligation of confidence owed to a party to the litigation if to do so, on balance, was in the interests of the more convenient running of the litigation and so in the administration of justice. This power was said to be derived from the cases concerned with the voidness or unenforceability of contract, or provisions in contracts, that have a tendency to interfere with or affect the administration of justice when placed in the context of modern statutory and judicial approaches to litigation and case management, exemplified by Pt VB of the Federal Court of Australia Act 1976 (Cth) and, in particular, provisions such as ss 37M, 37N and 37P; ss 7, 48 and 49 of the Civil Procedure Act 2010 (Vic) (the subject of discussion by Forrest J in AS v Minister); and Pt 6 Div 1 of the Civil Procedure Act 2005 (NSW).

3    These statutory provisions, and the now numerous cases concerned with them, provide for an overarching or overriding purpose in the conduct of civil litigation that demands of lawyers and litigants an approach to litigation that best promotes the efficient, timely and cost effective resolution of the real issues in dispute. These obligations may, to a degree, be imprecise in their demands or imperfect in their character; nevertheless, they are real, and capable of practical enforcement in the conduct and case management of civil litigation. The existence and enforcement of these obligations and of the overarching or overriding purpose are informed by, and a product of, the high public purpose and public policy that, to the extent possible, the exercise of judicial power by the courts should be available to the public to resolve their disputes in a timely and cost-effective way. Such availability and access to the administration of justice can be seen to be an incident of the Rule of Law.

4    These obligations lie upon litigants and their lawyers in how they conduct themselves in their disputes before the courts. The courts themselves are obliged to approach the management and control of litigation informed by reference to the same considerations. The effects of these obligations are real and powerful; and the width and strength that they give to the power of the courts in case management of litigation should be recognised. Such recognition should not, however, distort the reach of that procedural power into some false warrant of authority to set aside, revoke or suspend substantive rights of parties to litigation.

5    Judicial power has, as one of its hallmarks, a necessary protective feature: the resolution of disputes through the determination of the rights and duties or obligations of parties by and through the application of judicial technique and method based on fair procedure. Through such a process, the rights of parties are protected, and parties are thereby protected from unlawful exercises of power, whether public or private. Through the protection of the rights of parties, the enforcement of obligations of parties, and the control of power thereby, society is protected. This protection or vindication of rights and enforcement of duties and obligations according to principle and by legitimate judicial technique and method marks out the nature of judicial power. Any proposition that, in aid of a more efficient exercise of such power, a court has authority to set to one side, revoke or suspend a party’s legitimate right to call for confidence or silence in another so as to “relieve” that other from the burden of the obligation calls into question the legitimacy of such authority, and whether it could properly be seen as an incident of judicial power.

6    This is not to say that an apparent right to the confidence or silence of another must be taken at face value without challenge (whether substantive or procedural) in order to ascertain its legitimacy or enforceability.

7    Where, as here, a third party to litigation is subject to apparent contractual restraint in communicating with one party to the litigation (Z), the benefit of which restraint is enjoyed by the other party to the litigation (Cr), Z may approach the matter in a number of ways. It may seek to have the Court exercise procedural powers to require the third party to divulge the information, notwithstanding, or even assuming, the validity or enforceability otherwise of the apparent contractual restraint. Or, it may, by some appropriately framed procedural vehicle seek to contest the validity or enforceability of the apparent contractual restraint. Such a course would require the holder of the benefit of the apparent contractual right (Cr) to seek to enforce it, or the party seeking access to the information (Z) to seek to have the apparent contractual right declared void or unenforceable. To the extent that Z was concerned as to the availability of sufficient material or evidence for the successful prosecution of such declaratory proceedings, the remedy of preliminary discovery may be available.

8    None of this was done here. Rather, the approach in AS v Minister was relied upon to seek to relieve third parties for limited purposes, by interlocutory order, effectively in the conduct of case management, of their obligations of confidence based on contractual provisions not asserted or shown to be void or unenforceable, or based on a public policy of efficient civil litigation, entitling a discretionary approach to the enforcement of contractual confidentiality provisions.

9    For the reasons that follow, and by reference to the reasoning of Lee J, such an approach was contrary to principle.

The background and context to the dispute

10    The respondent to the appeal (Zantran) has commenced representative proceedings under Part IVA of the Federal Court of Australia Act against the appellant (Crown) for relief including damages arising from alleged contraventions of the Corporations Act 2001 (Cth), the Australian Securities and Investments Commission Act 2001 (Cth), and the Australian Consumer Law set out in Schedule 2 to the Competition and Consumer Act 2010 (Cth) by failing to notify the Australian Securities Exchange of certain matters and by making certain representations.

11    The matters that it is said should have been notified and the asserted misleading character of the representations arise from how Crown conducted its business in, or involving citizens of, the People’s Republic of China. The relevant information and risk said to be known to Crown was set out in paras 34 to 36 of the Statement of Claim, as follows:

34.    On and from 6 February 2015 (or in the alternative on and from 19 June 2015) by reason of the matters pleaded in paragraphs 17 to 33:

(a) Crown's China Operations were in breach of Chinese law (China Operations Illegal Information); and/or

(b) Crown's China Operations possessed characteristics which were a target of the Chinese Gambling Crackdown (China Operations Crackdown Information);

35.     On and from 6 February 2015 (or in the alternative on and from 19 June 2015) by reason of the matters pleaded in paragraphs 17 to 34 above, there existed a risk that:

(a) Crown employees would be charged, arrested, detained, prosecuted or convicted by Chinese authorities for commission of crimes in contravention of Chinese laws in relation to gambling (Employee Detention Risk);

(b) in circumstances where Crown employees were charged, arrested, detained, prosecuted or convicted by Chinese authorities for commission of crimes in contravention of Chinese laws in relation to gambling, Crown would be forced to terminate its China Operations (China Operations Enforcement Risk);

(c) in circumstances where Crown terminated its China Operations, Crown would suffer a significant reduction in Crown's Chinese VIP Revenue (Chinese VIP Revenue Risk); and/or

(d) in circumstances where Crown suffered a significant reduction in Crown's Chinese VIP Revenue, it would suffer a significant reduction in Crown's total revenue (Revenue Risk).

36.     On and from 6 February 2015 (or in the alternative on and from 19 June 2015) Crown was aware (within the meaning of the ASX Listing Rule 19.12) of:

(a) the China Operations Illegal Information;

(b) the China Operations Crackdown Information;

(c) the Employee Detention Risk;

(d) the China Operations Enforcement Risk;

(e) the Chinese VIP Revenue Risk; and/or

(f) the Revenue Risk.

12    The alleged misleading representations were to the effect that Crown had in place adequate risk policies concerning its business and operations in China, and that its marketing as a luxury brand to Chinese “VIP gamblers” would continue.

13    The inadequacy of notification and the misleading character of the representations have at their heart (at least on one iteration of the claims) what is said to be the breach of Chinese law by Crown’s employees in China and Crown’s knowledge of that illegality.

14    In October 2016, employees of Crown, along with a senior employee of Crown (Mr Jason O’Connor) were arrested and detained or questioned in China. This became public knowledge. In June 2017, employees of Crown were charged with, pleaded guilty to, and were convicted of, gambling offences before and in the Baoshan District People’s Court. Sixteen employees received prison sentences. Fines were imposed. These fines were paid by Crown, or a related company.

15    Earlier, in February 2017, a proposed securities class action was announced by the solicitors for Zantran, Maurice Blackburn. The proceedings were commenced on 4 December 2017.

16    Meanwhile, in late August 2017, the husband of one of the Crown employees who went to prison (Ms Jenny Jiang) telephoned the response centre of Maurice Blackburn and advised that Ms Jiang and other former employees would be willing to give evidence in the proposed class action. The difficulty for Maurice Blackburn and those preparing the case was that the former employees (or at least 16 of the 18 relevant to the orders under appeal) had entered into written contracts of employment with Crown that contained confidentiality provisions. Further, 17 of the 18 (not Ms Jiang) entered into deeds with Crown (called Finalisation Deeds in respect of 16 and a Separation Deed in respect of one) which ended their employment with Crown. All these deeds had confidentiality clauses. One aspect of the application and evidence before the primary judge was that these deeds were not in evidence, with the exception of the terms of the confidentiality provisions in them. This was a product of the procedural course taken. The focus of the application brought by Zantran was not a declaration of the unenforceability or voidness of the contracts or their provisions by reference to substantive principle, but whether there should be some form of interlocutory relief from the enforcement of the confidentiality provisions in aid of the more efficient management of the case.

17    A potentially important consequence of this focus and the lack of attention to the different contracts was that there was no distinction drawn between, and no focus given to, the circumstances of the terms of unremarkable confidentiality clauses in employment contracts, and the terms of contracts entered into with people, 16 of whom were not long released from prison, in the finalisation of their employment relationships with Crown, in what might be thought to have been, or could possibly have been, an attempt to keep secret (including perhaps from potential opponents in litigation) any knowledge or involvement of Crown in the acts or omissions that had brought about such serious consequences for these employees in China.

18    Maurice Blackburn wished to speak to these (now former) employees of Crown but all had at least one express confidentiality clause and 15 had two such clauses: Ms Jiang was only bound by her employment contract, and Ms Tang and Ms Cai did not have, or may not have had, written employment contracts, but did sign Finalisation Deeds.

The orders sought and made

19    The course undertaken by Zantran was to file an interlocutory application seeking orders that:

1.    Those persons listed in Appendix A are, for the purposes of:

a.    conferring with the solicitors and counsel to the applicant; and

b.     providing an outline of evidence or affidavit in this proceeding,

relieved of any obligations of confidence owed by them to the Respondent.

2.     The persons listed in Appendix A are relieved of any obligations of confidence owed by them to the Respondent with respect to the provision by them to the solicitors for the applicant of any document produced by the prosecution or the Baoshan District Court in connection with the prosecution and conviction of the detained.

Nineteen employees were named.

20    I do not think criticism should be directed at anyone (client or legal representative) for the course chosen in the light of the orders and judgment in AS v Minister.

21    The primary judge made the following order:

1.    The persons listed in Appendix "A" are, for the limited purposes of:

(a)    conferring with the Applicant's legal representatives and providing a witness statement or an outline of evidence in this proceeding; and/or

(b)     providing to the Applicant's legal representatives any document produced by the prosecution or the Baoshan District Court in the People's Republic of China in connection with their criminal prosecution and conviction in China;

relieved of any obligations of confidence owed by them to the Respondent.

There were 18 persons listed in Appendix A.

22    The form of the order made and the primary judge’s reasons assume the validity of the obligations of confidence, and the power in the court to “relieve” a party from such a valid obligation, for a limited purpose by the exercise of a discretion in favour of the more convenient running of litigation commenced in the Court. This can be seen in the primary judge’s reasons at [112]–[114]:

112     I respectfully adopt J Forrest J's summary of the applicable principles in AS (at [16] and [26]), with which neither party took issue. For clarity I reiterate them, as follows:

(a)     an obligation of confidentiality (whether contractual or equitable) will not be enforced by a court, or will be treated by a court as void, if it has an adverse effect on the administration of justice;

   (b)     this principle is applicable to both criminal and civil proceedings;

(c)     for the protection of a confidence to be lost there must be some 'public element' relevant to the administration of justice that is affected;

(d)     determining whether the protection of a confidence should be removed depends on the circumstances, including the following:

    (i)     what information is sought to be protected;

(ii)     the extent of the protection said to be afforded by the agreement;

    (iii)     whether the rights of third parties are affected; and

    (iv)     whether there are any wider public policies involved;

(e)    A court will not usually interfere with a party's preparation of a case for trial and, in particular how it lawfully obtains evidence to support the case.

113     As J Forrest J also noted (at [26]), the cases which have addressed the question of disclosure of confidential information in the context of pre-trial preparation demonstrate that:

(a)     courts are reluctant to relieve a witness of a confidentiality obligation in the pre-trial phase of litigation;

(b)     each case turns upon the nature of the confidential relationship, any relevant legislation and whether there is a real prospect of an adverse effect upon the administration of justice which outweighs the public interest in protecting the confidence; and

(c)    the balancing exercise requires consideration of the various matters set out in (d)(i)-(iv) above.

In applying the relevant principles in a particular case the Court must weigh any competing factors and determine whether the public interest is better served by enforcing, or not enforcing, the obligation of confidentiality: Sanofi at [53]; AG Australia at [177].

114     The primary question is whether refusal to make the orders, thereby allowing enforcement of the former Crown employees' obligations of confidence, will have an adverse effect on the administration of justice. For the reasons I now explain, I consider there is a public interest in the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible and I am satisfied that in the circumstances of the present case if the orders are not made there is likely to be a serious adverse effect on the administration of justice.

23    The problem facing Zantran and those advising it was not novel. It involved and involves the enforceability (or not, as the case may be) of confidentiality clauses in the context of litigation in which one party to litigation seeks to obtain and then use information which another person has, whether that person is (as here) the other party, or a stranger, to the litigation. There have been a number of cases dealing with the issue.

General principles

24    A party may be bound to an obligation of confidence not to disclose information by express or implied contract or contractual term, or by equity. The identification of these legal foundations of confidence is not an exercise in idle taxonomy. It frames the nature and content of the principles by reference to which confidence will be protected, or not, as the case may be. This involves considerations of both common law and equity, and of their respective relationships with statute.

25    Even in the absence of a contract, equity will grant relief in personam not to disclose or use information other than for the purpose for which it was communicated if the nature of the information and the circumstances in which it was communicated call for that confidence to be respected by reference to notions of conscience: Moorgate Tobacco Co Ltd v Philip Morris Ltd [No 2] [1984] HCA 73; 156 CLR 414 at 437–438 (Deane J); Commonwealth of Australia v John Fairfax & Sons Ltd [1980] HCA 44; 147 CLR 39 at 50–52 (Mason J); Interfirm Comparison (Australia) Pty Ltd v Law Society of New South Wales [1975] 2 NSWLR 104 at 117–119 (Bowen CJ in Eq); Lord Ashburton v Pape [1913] 2 Ch 469 at 475; Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203 at 215; Coco v AN Clark (Engineers) Ltd [1969] RPC 41 at 47; Talbot v General Television Corporation Pty Ltd [1980] VR 224 at 230.

26    In aid of legal rights based in express or implied contract, equity may enforce confidentiality provisions, subject to equitable defences, one of which is unclean hands, and subject to any appropriate exercise of discretion.

27    The question whether a contract or a contractual provision is void or unenforceable (the distinction being important) is a matter of common law and will be determined by reference to principle involving questions of public policy.

Iniquity, public policy, voidness and unenforceability

28    The aphorism that there is no confidence in iniquity derives from the judgment of Wood V-C in Gartside v Outram (1856) 26 LJ Ch (NS) 113. The case involved the attempt by the plaintiffs to prevent the defendant, a former employee, from disclosing his former employer’s transactions. There was no express confidentiality provision; it was necessary to imply one. The case was thus in equity’s jurisdiction in aid of the plaintiffs’ legal rights. The defendant sought to interrogate the plaintiffs on their business practices which the defendant had pleaded were fraudulent. The question was whether the interrogatories were irrelevant or relevant, and thus whether they should be answered. The Vice-Chancellor decided that they were relevant and should be answered. In the Law Journal report, Wood V-C was recorded as saying at 114:

The equity upon which the bill is founded is a perfectly plain and simple one, recognized by a number of authorities and most salutary to be enforced, by which any person standing in the confidential relation of a clerk or servant is prohibited, subject to certain exceptions, from disclosing any part of the transactions of which he thus acquires knowledge. But there are exceptions to this confidence, or perhaps, rather only nominally, and not really exceptions. The true doctrine is, that there is no confidence as to the disclosure of iniquity. You cannot make me the confidant of a crime or a fraud, and be entitled to close up my lips upon any secret which you have the audacity to disclose to me relating to any fraudulent intention on your part: such a confidence cannot exist.

In the Weekly Reporter (5 WR 35 at 36) his Lordship was recorded as saying:

The rule, however, as to confidence was subject to certain exceptions, under one of which the present case fell, or rather it was not within the rule at all; for where there was fraud no confidence ever had or ever could exist.

In this Jurist report (3 Jur (NS) 39 at 40) he was recorded as saying:

There are confidences, which are rather to be called “non-confidences.” There can be no confidence which can be relied on to restrain the disclosure of iniquity: such a confidence never did exist, and never can.

29    These expressions of the matter could be, and have been, viewed in a number of ways: as denying the necessary element of (legally recognised) confidentiality to the communication; or as a defence of just cause or excuse to disclosure for breaking the confidence: Fraser v Evans [1969] 1 QB 349 at 362 (Lord Denning MR), approved by Goff J in Church of Scientology of California v Kaufman [1973] RPC 627 at 629, Church of Scientology of California v Kaufman [1973] RPC 635 at 649 and 653, and Megarry V-C in Malone v Metropolitan Police Commissioner [1979] 2 All ER 620 at 634–635; or as the basis for a defence of unclean hands: Weld-Blundell v Stephens [1919] 1 KB 520 at 527, and 533–534 and 547–548, Hubbard v Vosper [1972] 2 QB 84 at 99–101, A v Hayden [1984] HCA 67; 156 CLR 532 at 545 (Gibbs CJ); AG Australia Holdings Ltd v Burton [2002] NSWSC 170; 58 NSWLR 464 at 519–520; or as the basis for not implying a term of fidelity into the relevant contract or at least one that could be seen to extend to the conduct in question: Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) [1987] FCA 266; 14 FCR 434 at 453 and 455 (Gummow J).

30    Gummow J discussed Gartside v Outram at some length in Corrs Pavey 14 FCR at 452–456. He did so in a judgment directed at rejecting the line of English cases that had flowed from Gartside v Outram to the effect that there was a “public interest” defence of the width expressed in Woodward v Hutchins [1977] 1 WLR 760 at 764 that the issue was “balancing the public interest in maintaining the confidence against the public interest in knowing the truth.” Gummow J noted in Corrs Pavey 14 FCR at 451 that this broad defence had been rejected in Australia: Castrol Australia Pty Ltd v EmTech Associates Pty Ltd (1980) 51 FLR 184 (Rath J). (It is to be noted that Zantran did not (at least in terms) seek to argue this line of English cases.) In the above context, Gummow J saw Gartside v Outram as “less striking and more readily understood in terms of basic principle”: 14 FCR at 454–455. At 455, his Honour described that basic principle as follows:

It is that any court of law or equity would have been extremely unlikely to imply in a contract between master and servant an obligation that the servant’s good faith to his master required him to keep secret details of his master’s gross bad faith to his customers. Likewise, before any express contractual obligation of confidence is enforced at law or in equity the term relied on must be valid at law. A v Hayden… provides one example.

31    Thus, the refusal of Wood V-C to countenance protection of iniquity was recognised by Gummow J as reflective of basic principles of law and equity in refusing, by various means, including the implication of a contractual term of confidence, to give legal force to the protection from disclosure of fraud or gross bad faith. Finally, as part of the rejection of the general free-standing principle expressed in the English cases, Gummow J accepted that there may be an equitable principle (not concerned with contractual protection of confidence) directed to the attribute of confidence that equity would protect. Gummow J said at 456:

Where the plaintiff asserts a contractual right, the law of contract, supplemented by equitable defences where equitable relief is sought, sufficiently deals with the situation. Any principle of the kind I am now considering will be applied in equity where there is no reliance on contractual confidence. That principle, in my view, is no wider than one that information will lack the necessary attribute of confidence if the subject-matter is the existence or real likelihood of the existence of an iniquity in the sense of a crime, civil wrong or serious misdeed of public importance, and the confidence is relied upon to prevent disclosure to a third party with a real and direct interest in redressing such crime, wrong or misdeed.

32    This expression of the matter is similar to what Campbell J said in AG v Burton 58 NSWLR at 518–519.

33    Given the way the matter proceeded before his Honour, and on appeal, it is appropriate to draw out what is within (if I may respectfully say) the judgment of Gummow J in Corrs Pavey. The iniquity of the kind or character discussed by Wood V-C in Gartside v Outram is not irrelevant in circumstances where there is an express confidentiality contract or clause. It will be directly relevant to a defence of unclean hands, as recognised in the cases and by Gummow J. Such iniquity, depending upon the circumstances, may have a role to play in the exercise of any discretion whether to enforce the clause in injunctive proceedings brought in the auxiliary jurisdiction. Further, neither law nor equity would imply any term into an employment contract to protect disclosure of fraud or gross bad faith of the employer.

34    It can be accepted that where there is an express term in a contract as to confidentiality it will be enforced by a court of equity subject to equitable defences, including any discretionary considerations, unclean hands and subject to identified public policy that makes void or unenforceable a contract or a contractual provision as to confidence. The principles underlying and informing such notions of public policy should not be seen as part of an entirely separate universe of discourse from the considerations as to what is confidence recognisable by equity, what is an available defence to injunctive relief in aid of legal rights and what terms will be implied into a contract. Thus, as Campbell J said in AG v Burton 58 NSWLR at 519, even where there is an express confidentiality clause it will be unenforceable (his Honour said “void”) in circumstances where there is a contract:

…to keep secret the committing of a widespread and serious fraud, and that a contract to keep quiet about such a fraud would be void regardless of whether the way the defendant was proposing to breach the contract was by bringing legal proceedings, or assisting other people to bring legal proceedings, to redress the consequences of the fraud.

35    The debate before the primary judge and on appeal focused on the question of the administration of justice. The breadth of that focus, however, is apt to cause a confusion between, on the one hand, the ascertainment of the proper limits of a public policy which makes void or unenforceable a particular contract or contractual term as contrary to the administration of justice, and, on the other hand, the assertion of a power in the court to modify the effects of an enforceable contractual provision in aid or furtherance of the public interest in the efficient conduct of civil litigation and so in the administration of justice.

36    I have earlier set out ([22] above) the principles which the primary judge applied. One way of putting the matter is as follows: A party can be relieved (pro tanto) of a contractual obligation of confidence if there is a real prospect that, not to do so, would have an adverse effect on the administration of justice by interfering with the efficient running of civil litigation, and if, in the circumstances, that adverse effect outweighed the public interest in the protection of the confidence by the enforcement of the contract.

37    The difficulty with that expression of the matter is that it posits a source of legal authority in the court not to enforce a binding contract. That legal authority is not to be found in an equitable defence to the enforcement of the contract, nor from a finding that the contract or term is contrary to public policy, nor from any specific statutory source; but rather it is to be found in the public interest in the convenient administration of justice.

38    Another way of expressing the matter, or the proposition in AS v Minister, and seeking to confront, somewhat more directly, the substantive enforceability of the provision, is to posit a public policy which can form the basis of a conclusion that a contractual confidentiality provision is unenforceable if it would have an adverse effect on the administration of justice by impeding the efficient running of civil litigation, the assessment of which involves weighing up competing factors in favour of and against the conclusion of unenforceability.

39    This approach treats public policy as a discretionary judgment in all the circumstances of the case. There is no satisfactory foundation in principle for such an approach.

AS v Minister

40    AS v Minister was a class action in which AS sued the Commonwealth and others including Serco Australia Pty Ltd (Serco) (joined by the Commonwealth) in relation to his and others’ detention on Christmas Island. Serco ran the facility. A former Serco employee was willing to speak with AS’s solicitors (Maurice Blackburn). He was bound by a confidentiality agreement. There was no suggestion in AS v Minister (as there is none here) that the agreement could prevent the employee from being called to give evidence. Serco sought to insist on the confidentiality clause to prevent the preparation of a witness statement in conference. No fraud was pleaded. It was a case in negligence. The essence of the argument of AS was shortly stated by Forrest J at [7]:

AS argues that it is in the public interest that the lawyers be able to interview [the witness] prior to the trial, and that this is consistent with the aims of the Civil Procedure Act 2010 (Vic) (CPA). There is a potential for the case to be disrupted if [the witness] is not relieved of his confidentiality obligations.

41    In setting out the principles he took to apply at [16] of the judgment (set out at [22] above in [112] of the primary judge’s reasons) Forrest J relied on A v Hayden 156 CLR, Richards v Kadian [2005] NSWCA 328; 64 NSWLR 204 and Jones v Treasury Wine Estates Limited [2016] FCAFC 59; 241 FCR 111 (the final authority not being discussed in any detail).

42    Before turning to Richards v Kadian, Forrest J briefly discussed the judgment of Campbell J in AG v Burton. In those reasons, Campbell J exhaustively examined the cases and principles in this area. His Honour found no public policy that would permit the conclusion that the relevant confidentiality agreement was void or unenforceable. At [20] of his reasons, Forrest J, however, characterised or summarised the approach of Campbell J as follows:

His Honour accepted that the exercise was one of balancing policy considerations underpinning the administration of justice against the public interest in protecting the confidentiality obligations contained in a contract of employment.

43    With the utmost respect, that expression of the matter is both to oversimplify and to misstate what Campbell J did. From page 488 [79] Campbell J examined voidness through public policy. After examining A v Hayden, his Honour examined exhaustively the method of finding the relevant public policy, including perverting or interfering with the course of justice in criminal and civil law, and the availability of confidential and privileged material and evidence in court proceedings. The paragraphs of Campbell J’s judgment to which Forrest J referred (58 NSWLR at 512 [170]–[172]) and the whole of his Honour’s judgment are not reflective of any balancing exercise, but a rejection of the proposition that the community had adopted by law a policy that a former employee who has promised not to disclose information was free to tell someone who bona fide believed that the information would advance civil litigation. AG v Burton does not support the approach in AS v Minister; it is in the teeth of it.

44    Forrest J then referred to and relied upon Richards v Kadian 64 NSWLR 204. That case involved a suit by a minor alleging medical negligence against his former paediatrician. In the course of pre-trial preparation the lawyers for the defendant paediatrician wanted to interview two other doctors who had treated the child. For the doctors to speak to the defendant’s lawyers would have been a breach of confidentiality arising from the doctor-patient relationship. The defendant asserted waiver of that privilege; but also asserted a claim that the obligation of confidence should not prevent the solicitors speaking with the former doctors.

45    At first instance ([2004] NSWSC 382; 61 NSWLR 222) Campbell J said at 240–241 [46], citing AG v Burton:

…The mere fact that confidential information might be of use to a party to civil litigation is not enough to cause an obligation of confidence not to apply…

46    Thus, Richards v Kadian can be seen as an effective appeal from Campbell J in AG v Burton.

47    In AS v Minister, Forrest J dealt with Richards v Kadian at [23] of his reasons as follows:

I have already referred to parts of this judgment in setting out the relevant principles. Beazley JA analysed many of the authorities and concluded:

The real question for determination is when the court will not permit an obligation of confidence to be insisted upon. As appears from the above review of authorities, the principle has always been stated in association with an identifiable public interest that goes beyond the private civil rights of parties to the obligation. [Ibid 224–5 [84]]

Her Honour then said:

This case involves private litigation between the parties … The claimant has a right to defend the allegations against him. To that extent, the administration of justice is involved. Ankur also has a confidential relationship with his treating doctors that the law will protect unless it can be said that to do so may interfere with the administration of justice. However, the language of the case law is clear: an obligation of confidence will only be overcome where there is some matter of public interest that requires it. That will only be so where, to use the language of Asquith LJ in Monkland v Jack Barclay Ltd “the contract is incontestably and on any view inimical to the public interest.” Party/party litigation of the type here is not of that nature. [Ibid 225 [86]]

There may be a balancing exercise, depending upon the nature of the confidential information, the public interest said to be affected and whether there is any other public interest consideration. This too is clear on the authorities. However, in this case, that question does not arise, as, contrary to Senior Counsel’s submission, the obligation of confidence is not being insisted upon in circumstances where it is contrary to public policy to do so. [Ibid 225 [87]]

48    Those passages do not support the principles expressed by Forrest J. Beazley JA dealt with confidentiality in Richards v Kadian 64 NSWLR at 210–225 [16]–[87]. Her Honour’s examination of the relevant authorities attracted the agreement of Hodgson JA and Stein A-JA. After discussion of Egerton v Brownlow (1853) 4 HL Cas 1; 10 ER 359, Weld-Blundell v Stephens [1919] 1 KB 520, Howard v Odhams Press Ltd [1938] 1 KB 1, Initial Services Ltd v Putterill [1968] 1 QB 396; [1967] 3 All ER 145, and British Steel Corporation v Granada Television Ltd [1981] AC 1096, her Honour summarised at 216 [46] the following principles from these cases, as follows:

The following, at least, is apparent from the foregoing cases. The principle that an obligation of confidentiality will not be enforced by a court, or will be treated as void if it interferes with the administration of justice, is not confined to criminal cases, but extended also to civil cases. That does not mean, however, that any interference will suffice to render an obligation of confidentiality unenforceable or void. Rather, in order for the protection of a confidence to be lost, there needs to be some public element relevant to the administration of justice that is affected. This was the subject of discussion in Egerton v Brownlow, Weld-Blundell v Stephens and Howard v Odhams Press. The mere fact that a confidentiality provision may have the effect of protecting the disclosure of a crime or some other wrong does not necessarily render the provision contrary to public policy. It will depend upon all the circumstances, including what information is sought to be protected, the extent of the protection said to be afforded by any confidential agreement, whether the rights of third parties are necessarily affected and whether there are any wider public policy questions involved. In particular circumstances, the court may be required to weigh up or balance competing interests in determining whether the confidentiality clause should be enforced: see Initial Services Ltd v Putterill, per Lord Denning MR and British Steel Corporation v Granada.

49    The balancing exercise to which Beazley JA here refers should not be misunderstood. It only arises when it has been found that to insist on the obligation of confidence would be against identified public policy. Even if it is against public policy there may then be competing interests that tend against disclosure. This is the balancing exercise to which her Honour was referring. There was no occasion for any balancing of considerations between the operation of different public policies because her Honour found no operative public policy.

50    Against the background of [46] her Honour examined A v Hayden and related cases at 64 NSWLR 217–222 [48]–[74], and AG v Burton at 64 NSWLR 222–224 [75]–[83]. Her Honour’s conclusions were at [84]–[87], as follows:

84    In my opinion, the claimant’s argument based upon the principles said to emerge from the English authorities and from A v Hayden, that the opponents are not entitled to insist upon the obligation of confidence between themselves and their treating doctors, should be rejected. As I have already indicated, there is no doubt that the principle, that the law will in certain circumstances not protect an obligation of confidence, extends to civil cases. The authorities have been clear on this for over a century. The real question for determination is when the court will not permit an obligation of confidence to be insisted upon. As appears from the above review of the authorities, the principle has always been stated in association with an identifiable public interest that goes beyond the private civil rights of the parties to the obligation. In my opinion, on the authorities, the claimant is in no stronger a position here than was the defendant in Weld-Blundell v Stephens.

85    The principle that there is no property in a witness does not assist. That principle is designed to ensure that relevant evidence can be brought before the court. A party cannot constrain a witness from giving evidence regardless of the relationship between the party and the witness, except to the extent that the law so provides. For example, the Evidence Act 1995 (NSW) provides that certain persons (including spouses and children) are not compellable to give evidence in a criminal trial of communications between themselves and the accused (see s 18, cf s 19). That does not mean, however, that the right of a party to call evidence in court operates so as to permit or require a potential witness to breach an obligation of confidence other than in the giving of evidence. Put simply, it does not mean that in the pre-trial phase, a party wishing to call a witness bound by an obligation of confidence, can require the witness to provide information that will breach the obligation of confidence.

86    This case involves private litigation between the parties. The opponents have engaged the legal system in seeking redress for an alleged wrong. They have a right to do so. The claimant has a right to defend the allegations against him. To that extent, the administration of justice is involved. Ankur also has a confidential relationship with his treating doctors that the law will protect unless it can be said that to do so may interfere with the administration of justice. However, the language of the case law is clear: an obligation of confidence will only be overcome where there is some matter of public interest that requires it. That will only be so where, to use the language of Asquith LJ in Monkland v Jack Barclay Ltd, “the contract is incontestably and on any view inimical to the public interest”. Party/party litigation of the type involved here is not of that nature.

87    I would also reject the claimant’s argument that there is no balancing exercise involved in determining whether an obligation of confidence can be insisted upon in circumstances where there is an interference with the administration of justice. There may be a balancing exercise, depending upon the nature of the confidential information, the public interest said to be affected and whether there is any other public interest consideration. This too is clear on the authorities. However, in this case, that question does not arise, as, contrary to senior counsel’s submission, the obligation of confidence is not being insisted upon in circumstances where it is contrary to public policy to do so.

51    A reading of [84]–[87] would lead to a rejection of any proposition that the enforceability of a confidentiality clause in the context of pre-trial preparation of civil litigation is to be decided upon by reference to discretionary considerations involving a balancing exercise in which weight is given to the efficient preparation of litigation. What must be found for a clause to be unenforceable is that it is contrary to a found public policy. There is no basis to consider that her Honour expressed the view that a clause which has the effect of impeding or affecting the efficient preparation of litigation is against public policy; the expression of reasons at [84]–[87] is to the contrary of any such proposition. That this is how one should read Richards v Kadian is reinforced by the evident approval of aspects of AG v Burton and her Honour’s recognition of the obiter statements in A v Hayden that went beyond the administration of the criminal law.

52    Beazley JA accepted as correct (at 223 [78]) Campbell J’s view in AG v Burton that the ratio of A v Hayden was that the confidentiality clause was void as an interference with the administration of the criminal law. Nevertheless her Honour’s analysis of A v Hayden (at 217–220 [48]–[63]) revealed obiter views in A v Hayden that were expressed more widely, in relation to the administration of the civil law; and that those obiter statements should be followed. These obiter statements in A v Hayden included the following statement by Mason J at 156 CLR 559:

The difficulties in ascertaining the existence and strength of an identifiable public interest to which the courts should give effect by refusing to enforce a contract are so formidable as to require that they “should use extreme reserve in holding such a contract to be void as against public policy, and only do so when the contract is incontestably and on any view inimical to the public interest”, to use the words of Asquith L.J. in Monkland v. Jack Barclay Ltd. [[1951] 2 K.B. 252, at p. 265].

53    Further, at 64 NSWLR 223–224 [79]–[80] Beazley JA referred with apparent approval to how Campbell J had approached the question of public policy in AG v Burton. Her Honour said:

79    Given his view as to the ratio in A v Hayden, Campbell J concluded that other bases needed to be found if the confidentiality clause with which he was dealing was to be struck down. That conclusion caused his Honour to consider, in the first instance, the following issues in order to determine if there was any principle of law that might assist in the determination of that question. Those issues were: how to find public policy; the perversion of the course of justice (including attempts to do so) in the criminal law; and interference with the course of justice in the civil law. His Honour then considered the particular issue of confidentiality and the availability of evidence in court proceedings. For present purposes it is sufficient to refer briefly to the question as to how a court approaches the task of formulating “public policy”, and then to the issue that bears more directly on this case, namely, the issue of confidentiality and evidence in proceedings.

80    In relation to the first issue — the task of formulating policy — Campbell J observed (at 493 [92]), in conformity with the authority upon which he relied and which is referred to below, that the answer to that question will change over time “from generation to generation”. It is implicit in that comment that changes will be affected by the gamut of influences that prompt generational change, including social, economic and political factors. Given that premise, public policy is to be determined having regard to the “ideas which for the time being present in a community as to the conditions necessary to ensure its welfare”: see Re Morris (Deceased) (1943) 43 SR (NSW) 352 at 355–356, per Jordan CJ. The concept of “public policy” is not, however, immutable: see Re Morris (Deceased); Wilkinson v Osborne (1915) 21 CLR 89 at 97, per Isaac J; A v Hayden; R v Young (1999) 46 NSWLR 681 at 700, per Spigelman CJ. The task of formulating public policy, which involves formulating what has already come to be regarded by the community as governing its “corporate life” (see Wilkinson v Osborne (at 97)) must be approached cautiously. The court will only declare a contract void as against public policy “when the contract is incontestably and on any view inimical to the public interest”: Monkland v Jack Barclay Ltd [1951] 2 KB 252 at 265, per Asquith LJ, adopted by Mason J in A v Hayden (at 559) (set out at 218 [55] supra).

54    In the light of the approach of Beazley JA to Campbell J’s judgment in AG v Burton and of the correct understanding of her Honour’s expression of principle, Richards v Kadian is not only not authority in support of the approach in AS v Minister, but is directly contrary to it.

55    No submission was put that we should not follow Richards v Kadian.

56    In AS v Minister, after surveying the case law, Forrest J said at [26]:

This limited excursus demonstrates several things. First, courts are reluctant to relieve a witness of a confidentiality obligation in the pre-trial phase of litigation. Secondly, and this is the qualification — each case turns upon the nature of the confidential relationship, any relevant legislation and whether there is a real prospect of an adverse effect upon the administration of justice which outweighs the public interest in protecting the confidence. Thirdly, that the balancing exercise requires consideration of the various issues described in [16(d)].

There is, with respect, no basis in the authorities for this approach. The relevant public policy must be identified. Richards v Kadian is authority to the effect that a relationship of confidence and a confidentiality clause (as in AG v Burton) will not be held to be unenforceable only on the basis that to enforce it will impede or interfere with pre-trial preparation of civil proceedings by preventing pre-trial examination of witnesses compellable at trial.

57    Later in his judgment in undertaking the balancing exercise, Forrest J referred to the importance of ss 48 and 49 of the Civil Procedure Act 2010 (Vic) (the Victorian State equivalents of provisions in Pt VB of the Federal Court of Australia Act). His Honour said at [33]–[35]:

33    It is clear that Parliament, by the enactment of the CPA and in particular ss 48 and 49, requires a court, as a matter of public policy in the judicial administration of proceedings, to take into account both pre-trial and trial processes in ensuring that the overarching purpose is fulfilled.

34    The importance of the CPA, and its effect on the management of litigation was recognized by the High Court in Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd, [(2013) 250 CLR 303)] in which it said of its NSW analogue:

The evident intention and the expectation of the CPA is that the court use these broad powers to facilitate the overriding purpose. Parties continue to have the right to bring, pursue and defend proceedings in the court, but the conduct of those proceedings is firmly in the hands of the court. It is the duty of the parties and their lawyers to assist the court in furthering the overriding purpose.

That purpose may require a more robust and proactive approach on the part of the courts. Unduly technical and costly disputes about non-essential issues are clearly to be avoided. However, the powers of the court are not at large and are not to be exercised according to a judge’s individualistic idea of what is fair in a given circumstance. Rather, the dictates of justice referred to in s 58 require that in determining what directions or orders to make in the conduct of the proceedings, regard is to be had in the first place to how the overriding purpose of the CPA can be furthered, together with other relevant matters, including those referred to in s 58(2). The focus is upon facilitating a just, quick and cheap resolution of the real issues in the proceedings, although not at all costs. The terms of the CPA assume that its purpose, to a large extent, will coincide with the dictates of justice. [Ibid 323 [56]–[57] (emphasis added)].

35    So the option here is between allowing the lawyers for AS to prepare the case with adequate appreciation of matters which may well be relevant to the case of AS against the Commonwealth (and to its third party proceedings against Serco and IHMS), as against [the witness] being called ‘cold’ without anyone, including the Court, knowing positively whether his evidence will be of marginal or critical relevance.

58    At [39], [40], [42] and [43] Forrest J said:

39    I consider that there is a real and not fanciful prospect that by requiring [the witness] to give evidence ‘cold’, the orderly management of the trial will be impacted adversely…

40    The nature of this case is also [a] relevant consideration in determining where the interests of justice truly lie. AS is only eight years of age…

…

42    In summary, in this day and age, the principle upon which Serco insists simply does not stack up against the modern ethos of pre-trial and trial management in the context of this case. The necessary public element is the expeditious and fair management of the trial and the pre-trial process. On this basis alone I would accede to making the orders sought by AS.

43    Additionally, I can see no unfairness to Serco…

59    Though these paragraphs are not an exhaustive statement of the balancing exercise undertaken, they reveal with clarity the nature of the discretionary exercise.

Conclusion

60    As I have sought earlier to emphasise, there can be no doubt as to the importance of the over-arching purpose and case management considerations to be found in Pt VB, and like provisions. They do not, however, form an adequate foundation for a conclusion that it is against public policy for a party in litigation to seek to enforce a valid contractual confidentiality clause when to do so would or might impede the conduct of private civil litigation. This is especially so when there are pre-trial interlocutory procedures that may be availed of to extract the information from prospective witnesses prior to, or at an early and separate stage of, the trial. As Mason J said in A v Hayden at 559, courts “should use extreme reserve in holding… a contract to be void as against public policy, and only do so when the contract is incontestably and on any view inimical to the public interest.”

61    The approach of the primary judge was to follow that of Forrest J in AS v Minister. For the above reasons, that approach was impermissible and contrary to principle.

62    As is perhaps apparent from what I have already said, nothing in these reasons should be taken as support for the proposition that the provisions in question before the primary judge are not capable of being shown to be unenforceable. The matter was not approached, nor disposed of, on the basis of asserted iniquity or criminality as the foundation for public policy making the relevant provisions or contracts void or unenforceable. I refer to what Campbell J said in AG v Burton, set out at [34] above. It is unnecessary to comment on the width or terms of the principle expressed by his Honour and its relationship with conduct which amounts to a systematic engagement in conduct which is a criminal offence by a law of a foreign country. Nor was the matter approached on the basis that a substantial purpose and/or the effect of the Finalisation Deeds and Separation Deed was to impede or hinder the prosecution of any action of the kind that has been brought: cf Commonwealth of Australia v Sanofi (formerly Sanofi-Aventis) [2017] FCA 382 at [51] and [82]. It may be that it is for the applicants to show a prima facie case that Crown engaged in a systematic course of conduct contrary to, and known to be contrary to, the laws of China, or that the purpose and effect of the Finalisation Deeds and Separation Deed was to impede or hinder litigation in a court, or in this Court. If the facts are sufficient to demonstrate such a prima facie case, it may be open to seek a declaration that the deeds and contracts, or their relevant provisions, were either void or unenforceable on that account as seeking to keep secret a course of criminal conduct by the laws of China which were the foundation of civil wrongs or of contravention of statute in Australia: cf Trade Practices Commission v Allied Mills Industries Pty Ltd (1980) 55 FLR 108, or as seeking to impede or interfere with litigation in this or another Court. If doubt existed about the availability of sufficient evidence for the successful prosecution of such declaratory proceedings, it may be that preliminary discovery would be available. This is not how the matter has proceeded to this point.

63    Orders should be made as proposed by Lee J.

Associate:

Dated:    22 January 2020

REASONS FOR JUDGMENT

WHITE J:

64    I agree with the orders proposed by Lee J for the disposition of this appeal. While I agree generally with the reasons of Lee J, I express specific agreement with the reasons of the Chief Justice.

Associate:

Dated:    22 January 2020

REASONS FOR JUDGMENT

LEE J:

A    INTRODUCTION & LEAVE TO APPEAL

65    The representative applicant below (Zantran) sought an order before the primary judge that 19 former employees (employees) of Crown Resorts Limited (Crown) be “relieved of any obligations of confidence owed by them to [Crown]” for the limited purposes of: (a) conferring with the lawyers of Zantran in a pending class action before the Court and “providing an outline of evidence or affidavit” in the proceeding; and/or (b) providing to the lawyers “any document produced by the prosecution or the Baoshan District Court in the People’s Republic of China” in connexion with the employees’ “criminal prosecution and conviction in China”. The primary judge made such an order in relation to 18 of the 19 employees (Order).

66    The Order was not a traditional declaratory order, the purpose of which is not to create rights but to indicate what they have always been; nor was it an established type of order, declaratory in form, which created a new legal relationship such as an adoption order or decree of divorce. Rather it was an order, made pursuant to provisions of the Federal Court of Australia Act 1976 (Cth) (Act), upon application by a stranger to a contract, which upon its making, prevented a party to a contract from enforcing some of the terms of the bargain struck with its contractual counterparty.

67    At the conclusion of oral argument, the Court was satisfied that the decision of the primary judge warranted reconsideration on appeal. For reasons explained below, although there is a question as to whether the Order was final rather than interlocutory, there was no need to reach a concluded view as to the Order’s proper characterisation because, to the extent leave was required, the Court determined that leave ought to be granted. Crown was deprived of rights not found to be void or unenforceable absent the making of the Order. Even if the prejudice might not be thought to be substantial, the limbs of the test identified in Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-399 (Sheppard, Burchett and Heerey JJ) bear upon each other, so that the degree of prejudice necessary in one case may be different in another if, such as here, the proposed appeal raises an important point of principle.

68    I propose to address the determination of the appeal by reference to the following headings:

    B    The Proceeding Below and the Background to the Order

    C    The Relevant Legal and Equitable Principles

    D    The Reasoning of the Primary Judge

    E    The Grounds of Appeal

    F    Consideration of Crown’s Arguments

    G    The Proposed Notice of Contention

    H    Conclusion and Orders

B    THE PROCEEDING BELOW AND THE BACKGROUND TO THE ORDER

B.1    How the Issue Arose

69    The Order was in the terms it was because of the decision of the moving party, Zantran, to frame and then contest an issue that arose in a class action in a particular way. The relevant issue that arose was not novel in commercial litigation. Put generally, it can be stated as whether one party to litigation could obtain information, apparently relevant to facts in issue in a proceeding from a third party to the litigation, when that third party is bound by obligations of confidence owed to the other party to the litigation and to obtain that information prior to trial, so that consideration could be given to calling the third party as a witness.

70    The issue arose in this case because Mr Jeff Sikkema, the husband of Ms Jenny Jiang (one of the employees) telephoned the solicitors for Zantran and represented to them that he was seeking legal representation for a class action on behalf of Ms Jiang and the employees who had been detained in China. Mr Sikkema also said that Ms Jiang and the other employees would be willing to give evidence in the then proposed securities class action.

71    Mr Donnelly, a solicitor working on the proposed securities class action, later telephoned Mr Sikkema and advised that discussing the relevant information with him, his wife or any of the other employees would “create issues of confidentiality and conflict of interest due to the possible presence of confidentiality clauses in any employment contract or any possible non-disclosure agreements”.

72    Although the terms of any legal obligations of confidence were not then known, the evident caution of Mr Donnelly was sensible and commendable. As the primary judge later found, the contractual position between Crown and the employees differed, but relevantly contracts of employment (Employment Contracts) were entered into with 17 of the 19 employees and contained confidentiality provisions, although the contract of Mr Chen was on relevantly different terms. There was evidence, albeit partly secondary in form, as to the terms of these Employment Contracts. There was also evidence that all employees (other than Ms Jiang) entered into some form of further agreement with Crown (Finalisation Deeds). The confidentiality provisions in the common Employment Contracts (including Ms Jiang) relevantly provided:

12    Confidential information

You must not, without the prior written consent of [Crown], either during your employment with [Crown] or at any time after the termination of it:

(a)    divulge to any person other than any member of the Crown Limited group of companies (Group), or their respective officers and employees; or

(b)    use for your own benefit or the benefit of any person other than any member of the Group,

any confidential information about [Crown] or any Group Company or their respective businesses or affairs acquired during your employment….

For the purposes of this clause, confidential information shall not include any information:

(a)    which has become publicly known through no wrongful act by you or any third party;

(b)    which you have developed independently, as evidenced by appropriate documentation; and/or

(c)    which you are required to disclose by law or judicial process, provided that you shall notify [Crown] immediately of the same so as to provide or afford [Crown] the opportunity to obtain such protecting orders or other relief as the compelling court or other entity may grant and shall use your best efforts to assist [Crown] in seeking such protecting orders or other relief.

(emphasis added)

73    Similarly, to the extent they were revealed in the evidence, the confidentiality provisions of the Finalisation Deeds executed by the employees (but not Ms Jiang) provided:

4    Obligations of confidentiality

(a)    Each party must keep absolutely confidential the terms of this Deed and the discussions and negotiation of the terms of this Deed, except:

(i)    as required by law;

(ii)    with the express consent of the other party;

(iii)    for the purpose of obtaining confidential accounting or legal advice;

(iv)    for the purpose of enforcing this Deed; or

(v)    in the case of Crown, for Group reporting or disclosure purposes (including reporting within the Group or disclosure to a regulator of gaming or other operations of any member of the Group).

(emphasis added)

74    In any event, returning to the pre-hearing communications between Zantran’s solicitors and Mr Sikkema, notwithstanding a lack of knowledge as to the express terms of any relevant legal obligations of confidence, the solicitors for Zantran informed Mr Sikkema that the solicitors had:

…recently filed an application in [the class action] seeking a Court order that would relieve your wife, and other former Crown employees, of their obligations of confidence to Crown, to the extent necessary to allow our firm to confer with them. We expect a hearing for our application in November 2018.

B.2     The Interlocutory Application Made

75    The terms of the order sought by Zantran have already been described. The arguments alleging error in the making of the Order will be dealt with in detail below, but it is useful to make three preliminary observations about the relief sought by Zantran.

76    The first is that it was made by way of interlocutory application and it was said that relief was available by reference, inter alia, to s 21 of the Act, which allows the Court to make declarations of right. If what was being sought was an interlocutory order (a position maintained by Zantran on appeal), this created a logical difficulty, because it is fundamental that an interlocutory or “interim” declaration should not be made: this is because an “interim” declaration is inimical to the very nature of declaratory relief, which is to determine, on a final basis, the whole or part of a justiciable controversy: although, for reasons I explained in Dillon v RBS Group (Australia) Pty Limited [2017] FCA 896; (2017) 252 FCR 150 at 156-157 [27]-[29], declarations can be made other than at a final hearing in the special case where the declaration determines on a final basis an aspect of the matter in dispute. Crown contended that the Order was to this effect. For reasons I will explain, however, if the characterisation of the Order as being final relief is correct, the action of Zantran in invoking s 21 of the Act was inapt for another reason: the purpose of declaratory relief in the contractual context is not to alter the rights of parties, but rather, following consideration of those rights by reference to legal or equitable principles, to identify, in a definitive way, their nature.

77    This leads to the second preliminary matter related to the unusual nature of the relief sought. It was framed in terms that statutory relief was sought against subsisting legal obligations between contracting parties. This necessarily rested on the premise that the relevant legal obligations of confidence existed and that they could be enforced, absent statutory intervention. This is an important point to which it will be necessary to return below.

78    Thirdly, although as I will explain there were other ways that the issue that presented itself could have been resolved, it is understandable why Zantran adopted the course it did; and it is also, with respect, understandable why the primary judge acceded to the application as the relief was in relevantly identical terms to that granted in not dissimilar circumstances by J Forrest J in AS v Minister for Immigration and Border Protection (Ruling No 6) [2016] VSC 774; (2016) 53 VR 631.

B.3    Why Zantran Sought Relief

79    In summary, Zantran alleges that Crown breached its continuous disclosure obligations and engaged in misleading or deceptive conduct relating to criminal conduct by the employees working in the People’s Republic of China, who engaged in promotional activities directed at recruiting Chinese “high roller” gamblers. Zantran further alleges that the significant revenue Crown received through these gamblers was at risk because the conduct promoting gambling was illicit under Chinse domestic law; which risk was allegedly realised when the employees engaged in promotional activities, were detained by Chinese authorities and charged with criminal offences. Central to the allegations is what Crown officers knew of what his Honour defined in the judgment below (J) at [11] as “Crown’s China Operations” and when they knew of those operations. It is useful to pause to note that although different Crown entities are involved in this controversy, the proceeding below and the appeal were conducted on the basis that there was no relevant difference between any of the Crown entities and hence it is convenient to use the term “Crown” generally.

80    It will be necessary to descend into the detail later, but in summary, the submission of Zantran, accepted by the primary judge, was that there is a public interest in the just resolution of disputes as quickly, inexpensively and efficiently as possible and that if the orders sought were not made, the result would be inimical to the administration of justice. That disruption would result from the relevant information about Crown’s China Operations and the knowledge of officers of Crown being disclosed at the first time during the initial trial, likely resulting in an adjournment, and undermining the prospects of settlement.

B.4    Alternative Options Available

I    Disclosure by Legal Obligation

81    Once the nature of the information sought by Zantran is understood, and the perceived rationale of Zantran obtaining the information in advance of the initial trial is appreciated, it becomes apparent that options, which did not involve consideration as to whether the obligations of confidence were valid and enforceable, were available.

82    As is evident from both fundamental principle and the emphasised words of the relevant confidentiality provisions (see [72] and [73] above), nothing about the express obligations could prevent the Court, on application, invoking its compulsory power to compel disclosure by Crown or the employees of information relevant to Crown’s China Operations if it was otherwise thought to be necessary or appropriate. For example, Zantran may have been entitled to an order that Crown be required to provide written and verified answers to interrogatories under Pt 21 of the Federal Court Rules 2011 (Cth) relevant to Crown’s China Operations. Moreover, there was nothing preventing Zantran seeking an order under ss 33ZF or 37P(2) of the Act on the basis that it was appropriate in the interests of justice that an order be made requiring (or, perhaps more appropriately in the circumstances, allowing) some or all of the employees to attend the Court for the purposes of being examined in advance of the initial trial by adopting a form of deposition procedure before a Registrar or the docket judge. The possibility that such an order for pre-trial oral discovery directed to a third party could be made was adverted to by the Full Court (Gilmour, Foster and Beach JJ) in Jones v Treasury Wine Estates Limited [2016] FCAFC 59; (2016) 241 FCR 111 at 115 [24] after the Court referred to the “dramatic transformation” wrought by the introduction of Pt VB into the Act. This is not surprising, and the prospect of oral discovery is not new nor wholly unprecedented. It was discussed favourably in Chapter 10 of the Australian Law Reform Commission’s Report, Managing Discovery: Discovery of Documents in Federal Courts (Report No 115, March 2011). It might also be thought to have historical antecedents in the interrogating part of the equity bill for relief or bill of discovery developed by the Court of Chancery: see Pomeroy, N J, Equity Jurisprudence (3rd ed, 1905) at [83], [193] and [209]. If any such application had been made, it would be determined in accordance with the dictates of s 37M(3) of the Act which requires practice and procedure discretions to be exercised in a way which best promotes the overarching purpose: for a recent example see Australian Securities and Investments Commission v Australia and New Zealand Banking Group Limited [2019] FCA 1284 (Allsop CJ), where oral examination or oral discovery under the control of the Court was regarded as potentially appropriate.

II    Options which involved consideration of the enforceability of the Provisions

83    Additionally, even if the above interlocutory options were not embraced, there were other options open which would have involved consideration of the validity and enforceability of the confidentiality provisions in an orthodox way.

84    Issue could have been joined by the solicitors for Zantran sending a letter to Crown’s solicitors apprising them of the intention of Zantran’s solicitors to discuss with the employees information relating to Crown’s China Operations, explaining why they considered it was open for them to do so, and noting that they would do so after a specified date unless enjoined. It would then have been for Crown to consider whether it should seek an injunction in equity’s auxiliary jurisdiction to prevent its employees from breaching its contractual obligations of confidence or to prevent Zantran or its solicitors seeking to procure such a breach. Apart from anything else, it would have been necessary for Crown to prove its legal rights with admissible evidence including, no doubt, placing the documents which were said to give rise to those rights into evidence. It would also have been necessary for Crown, in framing relief, to be able to identify with specificity, and not merely in global terms, the precise information it contended was unable to be discussed: see Saltman Engineering Co Ltd v Campbell Engineering Co (1948) 65 RPC 203 at 215; Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 14 FCR 434 at 443 (Gummow J); Rosewood Advertising Pty Ltd v Hannah Marketing Pty Ltd [2000] NSWSC 1034. As Brereton J explained in Cactus Imaging Pty Ltd v Peters [2006] NSWSC 717; (2006) 71 NSWLR 9 at 15 [14], although the three cases mentioned above were concerned with the circumstances in which equity imposed an obligation of confidence, the requirement for specificity is no less where a contractual obligation is sought to be enforced. One reason for this is that an injunction in general terms restraining a former employee from using the employer’s “confidential information”, would inappropriately leave, “to an application for contempt, determination of whether particular information was or was not confidential”. Hence there would have been specificity in what the employees could and could not disclose relevant to Crown’s China Operations, even where a prohibitory injunction was granted.

85    Alternatively, rather than waiting for Crown to bring a proceeding, Zantran could have sought declaratory relief by originating application (joining all necessary and proper parties) seeking to vindicate what Zantran contended to be its right to confer.

86    Either way, these applications would have been for final relief, equitable in nature: injunctive or declaratory (in noting declaratory relief is equitable in nature I am aware of the criticism of describing a declaration as an equitable remedy: AWB Ltd v Cole (No 2) [2006] FCA 913; (2006) 253 FCR 288 at 299 [45]; Tito v Waddell (No 2) [1977] Ch 106 at 259). In any event, what matters is that if one of these conventional courses had been adopted, there would have been detailed consideration as to whether, as explained further below, the relevant obligations (to the extent they prevented discussion of information relating to Crown’s China Operations) were void at law. Further, if the legal obligations were enforceable at law, there would have been consideration of the logically subsequent question as to whether equity, in its auxiliary jurisdiction, would grant or decline relief by way of injunction in aid of this established legal right (or framed in terms of a declaration, whether the alleged rights asserted by Crown were, in all the circumstances, enforceable).

87    During the course of oral argument on the appeal, leave was sought by Zantran to rely on a notice of contention by which final relief in a more orthodox form was sought. The difficulty with adopting this course on appeal, given what happened below, is addressed in Section G below.

B.5    Why the Procedure Adopted Matters

88    During the course of oral submissions, Senior Counsel for Zantran made two points about the alternative options which were available to Zantran.

89    The first was that it was inconsistent with the overarching purpose to have acted in a way which may have involved Crown commencing a satellite proceeding in the Supreme Court (such as happened in AG Australia Holdings Ltd v Burton [2002] NSWSC 170; (2002) 58 NSWLR 464). Of course, given the issue arose out of the same factual substratum as the class action, any application for an injunction or declaration was part of the same “matter” (to use that word in its constitutional sense) and the Federal Court (as a court of law and equity pursuant to s 5(2) of the Act) had jurisdiction to deal with any relevant application for final relief. The same “matter” can be litigated in more than one proceeding. One would have hoped that any respondent in these circumstances would have seen the sense of not bifurcating the “matter” across two courts exercising federal jurisdiction by filing an application for final relief elsewhere but, in any event, this potential difficulty would not have arisen in this case if Zantran had filed an originating application seeking declaratory relief in this Court.

90    The second response of Zantran was the submission that the ultimate result should not be determined by these differences in the form of relief sought. This submission must be rejected.

91    Where there is said to be an issue that arises in relation to the validity or enforceability of an express or implied contractual (and hence legal) obligation not to disclose specified information, both law and equity have developed a body of principles explaining when alleged legal restraints are enforceable at law and when relief will be granted by way of declaration or an injunction. Although Zantran’s forensic decision to seek the relief granted by J Forrest J in AS is understandable given the existence of that judgment, statutory intervention of the type sought was not an orthodox declaration of right; moreover, importantly, it implicitly accepted that the obligations, absent statutory intervention, could be enforced.

C    THE RELEVANT LEGAL AND EQUITABLE PRINCIPLES     

92    Before coming to the primary judge’s reasons for making the Order, it is useful to summarise the relevant legal and equitable principles.

93    Obviously enough, relevant obligations of confidence owed by a third party to a party to litigation may be legal or equitable. The orthodox remedial response to any wrongful disclosure will likely not be compensatory (that is, in the case of a breach of contract, an action for common law damages, or in the case of an equitable obligation of confidence, a suit seeking some form of equitable compensatory order in equity’s exclusive jurisdiction – compensatory rights which may, in certain circumstances, co-exist: see the Hon Justice M Leeming, A response to Peter Turner, “Equitable Compensation for Breach of Confidence”, Seminar paper, 30 March 2017). Rather, a party responding to actual or anticipated breach will seek to enforce such rights as it has to prevent disclosure. Where there is an express or implied contractual (and hence legal) obligation not to disclose specified information, this will usually mean invoking equity’s auxiliary jurisdiction to enjoin breach; alternatively, where the obligations of confidence arise in equity, the exclusive equitable jurisdiction will be invoked to enjoin the use of confidential information, arising from the circumstances in or through which confidential information was obtained or communicated: Seven Network Limited v News Limited [2007] FCA 1062 at [2949].

94    Here, of course, the obligation was legal. A useful starting point, when it is suggested a provision giving rise to a legal obligation of confidence is contrary to public policy because of an interference with the administration of justice, is the dissenting judgment of Gummow J in Corrs Pavey at 452-453, 455-456, although it was not a case about enforcing a legal obligation of confidence.

95    The discussion of Gummow J was in the context of giving consideration as to whether a section of the Freedom of Information Act 1982 (Cth), which conferred exempt status on a document “if its disclosure under [the] act would constitute a breach of confidence”, was to have regard to those considerations of public policy which courts take into account in determining whether to grant or withhold remedies for breach of confidence in the exercise of common law or equitable jurisdiction. The majority (Sweeney J at 435 and Jenkinson J at 438) held that the statutory expression “breach of confidence” was not used in its technical sense, so that the sub-section was wide enough to confer:

… exempt status on a document which contains confidential information received under circumstances imposing an obligation of confidence, without regard to those considerations of public policy to which courts have allowed an influence in determining whether to grant or withhold remedies for breach of confidence in its technical sense.

96    Whereas Gummow J found that the term “breach of confidence” was used in its technical sense such that a document was exempt from disclosure only if its disclosure would be actionable at general law: at 447. In the course of his dissent, Gummow J observed that there is not in Australian law any “public interest defence” to actions to restrain breaches of confidence (as suggested by English authorities) but that it was necessary to consider whether the information in question (being information as to the commission of a civil wrong of public importance) would not be protected in equity either because there would be the defence of unclean hands available; and further, or in the alternative, because the information did not have the necessary quality of confidence. In doing so, his Honour examined, in detail, the rule that there is no confidence as to the disclosure of an iniquity as originally formulated by Wood V-C in his seminal ex tempore judgment in Gartside v Outram (1856) 26 LJ Ch (NS) 113 at 114:

The true doctrine is, that there is no confidence as to the disclosure of an iniquity. You cannot make me the confidant of a crime or fraud, and be entitled to close up my lips upon any secret which you have the audacity to disclose to me relating to any fraudulent intention on your part…

97    Gartside was not an exclusive jurisdiction case: an injunction was sought as final relief in aid of contractual rights: see Heydon, J D, Leeming, M J and Turner, P G, Meagher, Gummow & Lehane’s Equity Doctrines and Remedies (5th ed, Butterworths, 2015) at [42-160]. As is well known, the principles explained in Gartside have come to be developed in England as an independent “public interest” defence to justify publication of an otherwise confidential publication: see, for example, Initial Services Ltd v Putterill [1968] 1 QB 396 at 405-406; Attorney-General v Guardian Newspapers (No 2) [1990] 1 AC 109 at 268-269. But as Gummow J explained in Corrs Pavey at 455-456:

… if there be some other principle of general application inspired by Gartside v Outram, it is in my view of narrower application than the “public interest defence” expressed in the English cases. … That principle, in my view, is no wider than one that information will lack the necessary attribute of confidence if the subject-matter is the existence or real likelihood of the existence of an iniquity in the sense of a crime, civil wrong or serious misdeed of public importance, and the confidence is relied upon to prevent disclosure to a third party with a real and direct interest in redressing such crime, wrong or misdeed.

98    Both prior to and following on from Corrs Pavey there have been a number of cases where issues similar to the present have been discussed. As the primary judge recognised at J[70], these include A v Hayden (1984) 156 CLR 532; AG Australia Holdings Ltd v Burton [2002] NSWSC 170; (2002) 58 NSWLR 464 (Campbell J); Richards v Kadian [2005] NSWCA 328; (2005) 64 NSWLR 204 (Beazley JA, Hodgson JA and Stein AJA); Johnson v AED Oil Ltd [2011] VSC 94 (Sifris J); (2016) 53 VR 631 and Commonwealth v Sanofi (formerly Sanofi-Aventis) [2017] FCA 382 (Nicholas J).

99    It is necessary to make some observations about the principles that emerge from these cases (I have left to one side for present purposes J Forrest J’s decision in AS, which I will deal with in Section F.1 below).

100    It is well established that a contract, or part of a contract, may be held void or unenforceable as contrary to public policy to the extent that it adversely interferes with the administration of justice (see A v Hayden at 545–546 (Gibbs CJ); 557 (Mason J)). The notion of interference with the administration of justice is, however, to be approached with a deal of rigour, given the foundational notion that a contract, or a provision of it, is not to be regarded as being unenforceable at law unless grounds for unenforceability, either under the common law or statute, have been established. As can be seen by the survey of the cases in Heydon on Contract (Thomson Reuters, 2019) at [20.650], the line to be drawn where contractual interference with the administration of justice is established, thus rendering a contract or provision unenforceable, involves an objective assessment or evaluation of the circumstances of individual contracts and their effect. It is, in this sense, a fact dependent task. Moreover, it is important to appreciate the nature of the role the court is performing in this regard.

101    As is evident from A v Hayden, the relevant inquiry at law is whether enforcement of the obligation would be clearly inconsistent with some identified head of public policy. Consideration of public policy is not, however, linear, and the judgment to be formed may involve consideration of a competing head of public policy (see A v Hayden at 559–560 per Mason J; but cf at 576-577 per Wilson and Dawson JJ). In such a case, this will involve weighing public policy considerations, which might appear to point in different directions.

102    But the evaluation called for in reaching a judgment on whether there is, in the circumstances of an individual case, a contractual interference with the administration of justice, is not a discretionary decision. In particular, it is not a task of weighing up all the relevant circumstances to form a view as to whether it is better to override or to allow enforcement of the obligation of confidentiality at law.

103    As Spigelman CJ explained in a different context in Perpetual Trustee Company Ltd v Khoshaba [2006] NSWCA 41; (2006) 14 BPR 26,639, it is sometimes suggested that any decisions involving a value judgment on which reasonable minds may differ is a discretionary judgment, but the distinction between evaluative judgments and a balancing process which involves the exercise of a discretion is important. Of course, this distinction between a ‘discretion’ strictly so called and an evaluative judgment (where an objective assessment or evaluation of the facts is required and although some balancing may be undertaken, there is in theory only one correct answer, even where rational minds might arrive at different answers) is often seen in the administrative law context: see Edmonds, C, “Appeals from Discretions, Satisfactions and Value Judgments: Reviewing the House Rules” (2017) 41(2) Melbourne University Law Review 647.

104    The nature of any relevant ‘balancing’ was the subject of attention in the decision of the New South Wales Court of Appeal in Kadian. The leading judgment was written by Beazley JA, with Hodgson JA agreeing substantially, and Stein AJA agreeing. In that case, all the judges of the Court agreed that an obligation of confidentiality will not be enforced, or will be treated as void at law, only if it interferes adversely with the administration of justice, both in criminal and civil cases, provided that some identifiable public interest relevant to the administration of justice, that goes beyond the private civil rights of the parties to the obligation, is affected by such interference: Beazley JA at 216 [46], 220-221 [66], 224-225 [84]; Hodgson JA at 241 [160]; Stein AJA at 243 [172]. In the manner explained above, it was recognised that in making this evaluative judgment, the court may be required to weigh up or balance competing considerations, that is, public interest considerations, which point in different directions. As Beazley JA accepted at 225 [87], there may be a balancing exercise, depending upon the nature of the confidential information, the public interest allegedly affected and any other public interest consideration. Hence the “balancing” is directed to the issue as to whether, having regard to public interest considerations, including competing considerations (such as the desirability of holding people to their bargains, which would be furthered by enforcing the contract), the obligation interferes adversely with the administration of justice. This is to be contrasted with some form of freestanding discretionary judgment (informed by all the circumstances of the case) as to whether the obligation ought to be overridden to achieve an end perceived as being desirable.

105    These evaluative judgments made in different circumstances can be seen in a number of cases. In Kadian, Beazley JA at 222-224 [75]-[83] had regard to a case bearing a close similarity to the present circumstances of a confidentiality agreement preventing a former employee from disclosing information to a solicitor wishing to use it for the purpose of advancing the applicant’s case in a class action: AG Australia at 470 [12]; 512 [170] (Campbell J). In that case, Campbell J held that the mere fact that confidential information might be of use to a party in civil litigation was not enough to render the obligation void.

106    Similarly, in Johnson v AED Oil Ltd, some defendants sought declarations that a settlement deed did not prevent them from participating in a pre-trial conference with solicitors acting for another defendant who had been excluded from the settlement, in order to prepare a witness statement. Justice Sifris held that while there would be some disruption to the conduct of the trial, because witnesses bound by a confidentiality obligation would have to give evidence “cold”, such an obligation could not be regarded as having an adverse effect on the administration of justice.

107    The argument of Crown on appeal is that by way of contrast with these cases, the decision of J Forrest J in AS took a wrong turn by transforming an inquiry as to contractual validity or enforceability into a discretionary exercise in which the question becomes whether the relevant litigation would run more smoothly if obligations of contractual confidentiality were rendered unenforceable.

108    Before dealing with the merits of this argument, a further point should be made before leaving this review of the applicable principles. In the course of oral submissions, Senior Counsel for Crown submitted that where the relevant obligation of confidence has been found to be enforceable by the application of these established principles, and is an express “contractual obligation, there is no scope then for equity to add a further layer of analysis”. This submission should be rejected.

109    Although the argument, as framed by the parties, took place without reference to the settled principles which would inform a determination as to whether obligations, valid at law, would be enforceable in equity, the notion that equitable defences and the discretionary nature of equitable relief in its auxillary jurisdiction cannot have any role in cases where a legal confidentiality obligation is sought to be enforced cannot be right.

110    The foundation for this submission is the contention of Crown below that the rule that “there is no confidence as to the disclosure of iniquity” did not have any relevance in the present circumstances where there is an express obligation of confidentiality: J[101]. For this proposition, Crown relied upon two authorities: Corrs Pavey at 452-453, 455-456 (Gummow J) and AG Australia (Campbell J) at [174]-[176], 512-3, [193]. It is important, however, not to decontextualise what Gummow J and Campbell J were saying in this regard.

111    As Gummow J explained in Corrs Pavey (at 452-453), the principle in Gartside has not been regarded as being restricted to an equitable duty of confidence but may also be understood as applicable where there are “valid legal rights” and an employer, seeking to enforce those rights, may be denied “equitable relief, in accordance with general principles, by reason of unclean hands”. This explanation of Gartside has some support in authorities such as: Weld-Blundell v Stephens [1919] I KB 520 at 533-534 (Warrington LJ), 547-548 (Scrutton LJ); Hubbard v Vosper [1972] 2 QB 84 at 99-101 (Megaw LJ); Church of Scientology of California v Kaufman [1973] RPC 635 at 638-639, 658 (Goff J); and finally by Gibbs CJ in A v Hayden at 545. It must be said, however, that whether Gartside rested upon unclean hands as an exception or defence to a suit for breach of confidence, or was more concerned with the extent of an obligation to reveal iniquities in answering interrogatories, is somewhat unclear: see Richardson, M, Bryan, M, Vrankan, M and Barnett, K, Breach of Confidence: Social Origins and Modern Developments (Edward Elgar Publishing, 2012) at 42-43. What presently matters, is that irrespective of how one explains Gartside, the notion that iniquitous conduct could not be relevant in assessing whether a provision is enforceable, is expressed far too broadly.

112    In AG, Campbell J was dealing with a case, like here, in which there was an express term of confidentiality in a contract.  His Honour (at 487 [73]-[75]) contrasted this to a situation where the obligation arises at law by an implied term in a contract or where the obligation is recognised in the exclusive jurisdiction of equity. In doing so, his Honour stressed the importance of recognising which of these three types of obligation is alleged because considerations which are relevant to the questions of validity, and means of enforcement of, an obligation of confidentiality can differ, between these three types. As is evident from [76]-[77], the defence in AG was twofold: first, that the confidentiality provision should not be read in accordance with its literal words, but rather should be “read down” so as to not prohibit the relevant communications; and secondly, and only if the first argument failed, that the confidentiality agreement was, in part, void at law, to the extent that it prohibited the relevant communications. It was not a case where any distinct equitable defences to the auxillary equitable relief claimed by the moving party were pleaded and relied upon.

113    It may very well be the case that the legal analysis as to whether a relevant provision was void or enforceable at law would, in a practical sense, determine the logically subsequent question as to whether a party with the benefit of a legal right would be entitled to discretionary equitable relief by way of prohibitory injunction. But this is not to say that this would always or necessarily be the case. The position is that having established the legal right, the equitable remedy of an injunction is prima facie available, subject to any specific countervailing discretionary factors which may exist in the particular circumstances of a case and which are relied upon: see Dalgety Wine Estates Proprietary Limited v Rizzon (1979) 141 CLR 552 at 575-576 (Mason J); and Heydon on Contract at [28.100]. Although it may be said that the notion there is no confidence in an iniquity is not “directly relevant” at the stage of determining whether a contractual provision is valid at law (see J[71]), it cannot be said, that when it comes to discretionary relief in equity, when an equitable defence is pleaded, iniquitous conduct or other matters with a sufficient nexus affecting clean hands are irrelevant or could not “add a further layer of analysis”.

114    As noted above, Crown’s principal contention is that the law took a wrong turning in AS. I will examine the merits of this proposition, after identifying how the primary judge approached the resolution of the application and the nature of the errors alleged by Crown.

D    THE REASONING OF THE PRIMARY JUDGE

115    In reaching the conclusion the Order should be made, the primary judge at J[110] identified the question as whether it is appropriate to relieve the employees of their contractual confidentiality obligations for the limited purpose of allowing them to provide witness statements prior to the initial trial and to provide relevant documents. This resulted in his Honour, unsurprisingly in the circumstances, identifying at J[112]-[113], that the applicable principles were as summarised in AS (at [16]), being:

(a)    an obligation of confidentiality (whether contractual or equitable) will not be enforced by a court, or will be treated by a court as void, if it has an adverse effect on the administration of justice;

(b)    this principle is applicable to both criminal and civil proceedings;

(c)    for the protection of a confidence to be lost there must be some ‘public element’ relevant to the administration of justice that is affected;

(d)    determining whether the protection of a confidence should be removed depends on the circumstances, including the following:

(i)    what information is sought to be protected;

(ii)    the extent of the protection said to be afforded by the agreement;

(iii)    whether the rights of third parties are affected; and

(iv)    whether there are any wider public policies involved;

(e)    A court will not usually interfere with a party’s preparation of a case for trial and, in particular how it lawfully obtains evidence to support the case.

116    It followed, again as explained in AS (at [26]), that as gleaned from the cases which have addressed the question of disclosure of confidential information in the context of pre-trial preparation, the principles are that: (a) courts are reluctant to relieve a witness of a confidentiality obligation in the pre-trial phase of litigation; (b) each case turns upon the nature of the confidential relationship, any relevant legislation and whether there is a real prospect of an adverse effect upon the administration of justice which outweighs the public interest in protecting the confidence; and (c) the balancing exercise requires consideration of the various matters set out in (d)(i)-(iv) in the quote from AS reproduced above.

117    As the primary judge then explained at J[113], in following this approach:

…in a particular case the Court must weigh any competing factors and determine whether the public interest is better served by enforcing, or not enforcing, the obligation of confidentiality: Sanofi at [53]; AG Australia at [177].

118    Guided by this approach, the primary judge’s reasons for making the Order were tenfold.

119    First, his Honour considered that the Order promoted the overarching purpose and went on to expressly endorse the observations of J Forrest J in AS at 640 [32], that:

Whilst there are many limitations to the disclosure of confidential information in pre-trial processes (such as those identified by Campbell J [in AG Australia]), the other side of the coin, now recognised in the [Civil Procedure Act 2010 (Vic)], is that Parliament requires the efficient conduct of litigation with concomitant effective use of judicial resources. The ultimate aim should be ensuring that justice is done between the parties as efficiently and inexpensively as possible.

120    Secondly, the primary judge accepted that the evidence demonstrated that Ms Jiang and the other employees (or at least some of them) were willing to give evidence and to cooperate by providing information relevant to the facts in issue in the class action.

121    Thirdly, the primary judge rejected Crown’s contentions that the application was premature given that discovery was likely to produce documents going to the promotional activities of the employees and that the evidence did not establish that it was necessary to confer with the employees.

122    Fourthly, considered in the context of the class action, the primary judge concluded that the administration of justice would be adversely affected if the Order was not made. His Honour found that the promotional activities of the employees, were activities “illegal under Chinese criminal law or possessed characteristics which were a target of the Chinese government crackdown” and (given the likelihood discovery will not reveal the details of what occurred) the employees are likely to, or at least may be able to, give evidence that may be highly probative in relation to (at J[136]):

Zantran’s allegations that during the relevant period Crown knew or ought to have known that the promotional activities in which its employees were engaged were in breach of Chinese criminal law or had characteristics which were a target of the Chinese government crackdown, and that there existed a material risk that it would be forced to stop recruiting Chinese VIP gamblers to gamble at its casinos overseas. Their evidence may also be relevant to the “event study” experts’ evidence as to the timing and extent of any risk and therefore upon their estimates of any inflation in the share price through non-disclosure at different points in the relevant period.

123    This probative material is particularly relevant in the context of a class action where findings made by the Court on the common factual and legal issues will bind a large number of non-parties.

124    Fifthly, if Zantran’s solicitors are not permitted to confer with the employees prior to the initial trial, then Zantran “must call them cold” and it will not be able to provide details to the expert witnesses it has engaged. This would almost inevitably result in applications to adjourn or delay the initial trial and, if an adjournment was granted, it would likely be for a substantial period and cause a significant delay and serious wastage of both the Court’s and the parties’ resources. Further, if it eventuates that the employees (or some of them) cannot provide probative evidence, then the primary judge expected that they would not be called, and the potential for an adjournment would have been avoided.

125    Sixthly, obtaining the relevant information now will assist in facilitating an early resolution of the case; including apprising Zantran’s legal representatives with critical information relevant to assessing whether a proposed settlement is fair and reasonable having regard to the interests of class members (who would be bound by it, if any s 33V settlement was approved).

126    Seventhly, contrary to Crown’s submissions, the primary judge considered it plain that a “public element”, transcending the private rights of the parties, can be seen in the circumstances of the present case. That public element “is found in facilitating the just resolution of the dispute between Zantran and Crown according to law and as quickly, inexpensively and efficiently as possible: see AS at [42]”: J[150].

127    Eighthly, the Court should engage in a balancing exercise and the necessary balancing exercise includes weighing up what information is sought to be protected, whether the rights of third parties are affected (in this case the employees), and whether there are any wider public policies or interests involved. In dealing with the balancing exercise, the primary judge found: (a) that the interests of employees will not be adversely affected by making the orders (which provide for a voluntary process); and (b) that although there is a public interest in upholding contractual bargains, including as to confidence, “that interest is outweighed by the public interest in the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible”: J[154].

128    Ninthly, and related to the “balancing exercise”, the primary judge found a further consideration to be taken into account is that if the Order was not made, the employees would be prevented from making a witness statement which may disclose “their (admitted) criminal conduct, and may disclose that Crown knew or ought to have known that such conduct was in breach of Chinese criminal law” and that this “information should not be protected from disclosure, at least for the limited purpose and in the limited way the orders contemplate”.

129    Tenthly, the primary judge saw little merit in Crown’s contention that the proposed orders are inappropriate because there is a risk that its former employees may reveal privileged information to Zantran’s legal representatives.

E    THE GROUNDS OF APPEAL    

130    Eight overlapping grounds are identified in the notice of appeal. They are that the primary judge erred:

(1)    in holding (at J[149]) that relieving the employees of any contractual obligations of confidence for the limited purposes specified in the Order was: (a) within the power conferred by s 33ZF of the Act; or (b) otherwise supported by s 33ZF; and/or (c) appropriate or necessary to ensure that justice is done in the proceeding;

(2)    in holding (at J[150]-[152] and J[159(a)]) that: (a) the Order was within the power conferred by s 37M of the Act; or (b) otherwise supported by s 37M; and/or (c) that the circumstances identified at J[150]-[152] constituted a public interest which justified the making of the Order;

(3)    in holding (at J[7]) that: (a) the Order was within the power conferred by ss 21, 23 and 37P of the Act; or (b) was otherwise supported by ss 21, 23 and 37P;

(4)    in making the Order because it was not, and could not be, supported by a finding under the applicable principles of the general law, including the law of contract, that the obligations of confidence that the former Crown employees owed to Crown were invalid, or that their enforcement was or would be contrary to public policy;

(5)    because he ought to have held that Zantran had not established that the obligations of confidence owed by Crown employees were contrary to public policy or inimical to the public interest;

(6)    in holding (at J[113] and J[150]) that the making of the Order was justified or authorised by a balancing process in which the Court weighed any competing factors and determined whether the public interest is better served by enforcing, or not enforcing, the obligation of confidentiality;

(7)    in holding that the administration of justice would be seriously adversely affected if the Order were not made, by reason that: (a) Zantran could call the employees to give evidence but they would have to be called “cold” (at J[137] and J[139]); (b) relieving the employees of their contractual obligations of confidence would permit Zantran’s legal representatives to confer with the employees who wished to do so, thereby avoiding potential adjournments or delays in the course of the trial (at J[138], J[141] and J[151]); (c) the Order would facilitate Zantran’s ability to achieve an early resolution of the case through settlement (at J[143], J[146] and J[147]); (d) the proceeding brought by Zantran is a class action (at J[145]); and/or (e) it would prevent the employees from making a witness statement in an Australian legal proceeding which may disclose their (admitted) criminal conduct and may disclose that Crown knew or ought to have known that such conduct was in breach of Chinese criminal law, and such information should not be protected from disclosure (at J[158]) as those matters, and other matters to which the primary judge referred (at J[114]-[150]), were incapable of establishing a serious and adverse effect on the administration of justice;

(8)    in holding (at J[124]-[130]) that if the Order was made, the employees would be willing to give evidence and to cooperate by providing information to Zantran's legal representatives, when those matters were not established on the evidence.

131    As argument developed, it was possible to simplify these appeal grounds significantly. Crown’s primary argument was that the balancing or weighing exercise approach evident from the reasons of the primary judge was erroneous and it is convenient to deal with this attack on the Order compendiously (Alleged “Balancing” Error). It will then be necessary to deal with the grounds that focus on the operation or form of the Order (Form of Order Error) and then to deal briefly with ground 8 (Alleged Evidentiary Error).

F    CONSIDERATION OF CROWN’S ARGUMENTS

F.1    Alleged “Balancing” Error

I    Was AS a Wrong Turning?

132    Given that the decision below was, in effect, an application of the approach taken in AS, it is necessary to revisit the circumstances of that case; those circumstances were, as the primary judge observed, similar to those that arose before his Honour. The plaintiff brought a class action against the Minister for Immigration and Border Protection and Serco Australia Pty Ltd, a company contracted by the Commonwealth to provide services where AS was detained. The plaintiff’s solicitors wished to interview a former Serco employee bound by legal confidentiality obligations. The plaintiff applied to the Court for orders in terms relevantly identical to those sought in the present case by Zantran: that the employee be relieved of any obligations of confidence he owed insofar as those obligations would otherwise be breached by communication of any confidential information to the plaintiff’s solicitors or to the Court.

133    Like s 37P(2) of the Act, s 48 of the Civil Procedure Act 2010 (Vic) allowed the Court to make any order it considered appropriate in relation to pre-trial procedures in order to further the overarching purpose of the just, efficient, timely and cost effective resolution of the real issues. J Forrest J considered he was authorised by this statutory power to grant the relief sought by the plaintiff. More particularly, his Honour held:

(1)    that in order for the protection of a confidence to be lost, there must be some public element relevant to the administration of justice that was affected and that this required a balancing of the public interest in the administration of justice against the public interest in protecting confidentiality obligations 636 [16], 637 [20], 639 [26];

(2)    where there was an inference that could be drawn on available material that the former employee could give relevant and detailed evidence and in circumstances where any other available evidence was likely to be limited, the efficient and expeditious administration of justice was a real and identifiable public element and one that outweighed any public interest in maintaining contractual confidentiality and, in this regard, the overarching purpose provisions play “an important role in determining where the public interest lies” 639 [29], 643 [41]-[42], 644 [47].

134    At J[113], the primary judge noted, with respect correctly, that J Forrest J’s analysis of the cases led him to the conclusion that: (a) each case turns upon the nature of the confidential relationship, any relevant legislation and whether there is a real prospect of an adverse effect upon the administration of justice which outweighs the public interest in protecting the confidence; and (b) that this “balancing exercise” requires consideration of the various issues described in AS at 636 [16(d)] (extracted at [115] above).

135    In my view, this is where the error in AS is revealed. As explained above, the “balancing exercise” is not as described in AS; rather the relevant legal task is forming an evaluative judgment as to whether, having regard to public interest considerations, including competing considerations, the obligation actually interferes adversely with the administration of justice so as to render the obligation void or unenforceable at law. The difficulty with AS, is that it perceived the task as a discretionary decision as to whether the obligation should be set to one side so as to achieve efficiencies in litigation.

II    The Judgment Below and Balancing

136    As noted at [117] above, consistently with AS, at J[113], the primary judge noted the Court “must weigh any competing factors and determine whether the public interest is better served by enforcing, or not enforcing, the obligation of confidentiality”. Consistently with AS, in support of this proposition, Sanofi at [53] and AG Australia at 513-514 [177] were cited. It is worth focussing on these two citations. Dealing first with AG at 513-514 [177], Campbell J observed:

The present status of a “public interest” defence in Australia in an action for breach of confidence in equity’s exclusive jurisdiction is not clear. Both before, and after, the decision of Gummow J in Corrs Pavey there was some (though not universal) acceptance of the line of cases developed in England, in part on the basis of Gartside v Outram, whereby there was a “public interest defence” to actions for breach of confidence in equity’s exclusive jurisdiction. By a “public interest defence” I mean a defence whereby it is the task of the individual trial judge to decide whether, in the circumstances of the individual case before him or her, the public interest is better served by enforcing, or not enforcing, an obligation of confidence.

(Emphasis added)

137    Hence what Campbell J was making reference to was the English development of a public interest defence in the context of a breach of confidence in equity’s exclusive jurisdiction.

138    As to the second citation, in Sanofi at [53], following an analysis of Hayden and Kadian, Nicholas J noted that those authorities stood for a number of propositions including:

…it may be necessary for the Court to weigh competing public policy considerations when determining whether or not to decline to enforce a contract on the ground that it has a tendency to interfere adversely with the administration of justice. This is because the contract may be beneficial to the administration of justice in some respects but adverse to it in others. There is a public interest in upholding contractual bargains and in encouraging the settlement of legal proceedings. But these considerations may need to be weighed against other considerations relevant to the proper administration of justice.

139    What Nicholas J was making reference to was the balancing that takes place in determining whether the obligation interferes with the administration of justice in the relevant sense. With respect, contrary to AS, these citations do not support the proposition that the court exercises a broad ranging discretion as to whether the public interest is better served by enforcing, or not enforcing, the relevant obligation.

140    It follows that Crown’s submissions that error is established must be accepted.

F.2    Form of Order Error

141    No reliance is now placed by Zantran on s 33ZF of the Act. Unlike in AS where the cognate of s 37P(2) was relied upon, here only ss 21 or 23 of the Act were said on the appeal to justify the Order. I have already referred to the fact that the power to grant declarations of right (s 21) was inapt to ground the relief sought (which was a prayer for relief seeking variation of those rights). As to s 23 of the Act, although expressed in broad terms, the power to make orders is limited to making the “kinds” of orders, final or interlocutory, which are capable of properly being seen as “appropriate” to be made by the Court in the exercise of its jurisdiction: see Jackson v Sterling Industries Limited (1987) 162 CLR 612 at 622 (Deane J).

142    The Order altered legal rights by statutory intervention. Although the rights of parties can change upon orders being made (for example, by merger or the creation of estoppels), generally speaking, s 23 does not provide a mechanism by which legal or equitable rights are created or persons are deprived of substantive legal rights.

143    The form of the Order recognised the existence of legal rights but discharged contractual obligations owed by the employees. To discharge contractual obligations by statutory intervention when they were not found to be void or otherwise unenforceable, necessarily takes away the correlative rights to performance of those obligations.

144    It is understandable that the primary judge followed AS being a recent decision of the Supreme Court of Victoria in similar circumstances. Unfortunately, this meant the Order did not have a secure foundation.

F.3    Alleged Evidentiary Error

145    The primary judge made a finding that the employees (or at least some of them) are willing to give evidence and to cooperate by providing information: see J[124]-[130].

146    Crown contends that “the only evidence possibly supporting the finding was … double hearsay” and that there was no recent, compelling evidence that any former employee would be willing to communicate with or assist Zantran in this proceeding; and certainly none going beyond Ms Jiang.

147    Further evidence was adduced on appeal which supplements the evidence before the primary judge and goes to demonstrating that Ms Jiang is willing to co-operate with Zantran’s solicitors and has spoken to the media; although Crown asserts this evidence says nothing about the willingness of any of the other employees to cooperate and give evidence.

148    It is neither necessary nor useful to canvass in any detail the evidence that was before the primary judge. The Order is to be set aside and, as explained below, it may be that an application for differently framed discretionary interlocutory relief will be made. Having said this, I do not consider there is substance in this complaint of Crown. Given that no objection was taken to the double hearsay evidence which suggested that Mr Sikkema represented the other employees in his communications, it is difficult to understand how it could be said that his Honour fell into error by accepting the truth of this representation in the absence of any limitation on its use or any countervailing evidence.

G    THE PROPOSED NOTICE OF CONTENTION

149    As noted above, at the conclusion of oral submissions, Zantran was ordered to serve and provide to the Court any draft notice of contention. A draft notice was provided and it contended that the “judgment of the Federal Court should be affirmed on grounds other than those relied on by the Court” in that:

1.    Having found at J[114] and J[165] that the enforcement of the former Crown     employees’ contractual obligations of confidence in respect of:

(a)    conferring with the respondent's legal representative and providing an outline of evidence or affidavit in proceeding; and/or

(b)    providing to the respondent's legal representatives any document produced by the prosecution or the Baoshan District Court in connection with their criminal     prosecution and conviction in China,

is likely to have a seriously adverse effect on the administration of justice, the primary judge ought to have made the following declaration in reliance on s 21 and s 23 of the [Act]:

The confidentiality clauses in the employment contracts and the finalisation deeds are unenforceable against the former employees insofar as the clauses prevent the former employees from:

(i)    conferring with the respondent’s legal representative and providing a witness statement or outline of evidence in the proceeding; and/or

(ii)    providing to the respondent’s legal representatives any document produced by the prosecution or the Baoshan District Court in connection with the criminal prosecution and conviction in China of the former employees.

150    It was submitted that at J[114] and J[165], the primary judge concluded that allowing enforcement of the employees’ obligations of confidence was likely to be inimical to the administration of justice. In the alternative to Zantran’s primary argument, it contends that the primary judge ought to have found that the confidentiality clauses are unenforceable, to the extent that they have a tendency to interfere adversely with the proper administration of justice (see Sanofi at [53]–[54]). And, having made that finding, the primary judge ought to have granted declaratory relief in terms similar to that made in Sanofi at [42]–[55]; [69]; [80]–[82]. That is, in summary, a declaration that the relevant confidentiality clauses in the employees’ Employment Contracts and Finalisation Deeds are unenforceable, in so far as they prevent the conduct the subject of the primary judge’s Order.

151    The proposed notice of contention is misconceived. As Branson J (with French J agreeing) explained in Cooper v Universal Music Australia Pty Ltd [2006] FCAFC 187; (2006) 156 FCR 380 at 394 [76]:

... the purpose of a notice of contention is to place the appellant and the Court on notice that the respondent contends that the judgment below (ie the orders made below) can be supported on grounds other than those which the court below relied on when pronouncing the judgment. That is, that even if a ground of appeal is made out, it may not lead to the order the subject of the appeal being set aside or varied. The filing of a notice of contention is not a mechanism for challenging any order made below or for challenging the failure of the court below to make an order to which a party below claimed to be entitled.

152    Further, notices of contention are not a mechanism for seeking an order which was not sought before the primary judge. As explained above, the order now sought properly directs enquiry as to whether the obligations are contrary to public policy and are at law void, or otherwise unenforceable. This is not the approach to relief adopted by Zantran below, which had, as its point of departure, an acceptance of the existence of an enforceable obligation which needed to be “relieved”. The case was presented below on the basis that AS was correct, and the approach urged upon the primary judge was to have regard to a range of matters and determine whether it was better to relieve, or not to relieve, the obligations of confidentiality.

153    This different relief now sought should not be determined by a Full Court. The evidentiary record is not complete. A recent communication sent, by consent, to the Court by Zantran’s solicitors suggests that new evidence may be relevant to the fashioning of any precise relief. Additionally, and more importantly, unlike Nicholas J in Sanofi at [69] and [81], given the way argument was framed below, the primary judge was not called upon to make a finding about the purpose of the confidentiality clauses in the relevant agreements. Indeed, curiously, evidence was not even adduced by Crown as to the whole of the terms of the Finalisation Deeds – an eventuality which would not have occurred if Zantran had sought orthodox relief (in this circumstance, Crown would have had the evidentiary onus of establishing its alleged legal rights and, to discharge that onus, as a matter of practicality, would have been required to tender the Finalisation Deeds). As it happened, no objection was ultimately maintained by Zantran to the tender by Crown of only a part of the Finalisation Deeds before the primary judge. If evidence as to the complete terms, circumstances and purpose of entry into the Finalisation Deeds was the subject of examination, a properly informed inquiry as to whether the confidentiality provisions of the Finalisation Deeds were enforceable (at law or in equity) could conceivably produce a different result than a similar inquiry in relation to the relevant provisions of the Employment Deeds. Given the forensic decisions made below by both parties, we do not know. As explained above, the relevant task involves an objective assessment or evaluation of the facts of the circumstances of each of the individual contracts. The Full Court is not in a position to undertake a proper inquiry, which the primary judge himself was not asked to perform.

154    As explained in B.4 above, if Zantran wishes to procure relevant information as to Crown’s China Operations in advance of the initial trial, there are a variety of options available to it; some of which, such as those identified at [82] above, might be thought to be simpler and more straightforward than others. If Zantran eschews an application for discretionary interlocutory relief of this type, and an application is to be made seeking relief as identified in the proposed notice of contention, it should be properly framed as final relief and made by way of originating application and joining all necessary and proper parties. Leave to file and rely upon the proposed notice of contention should be refused.

H    CONCLUSION AND ORDERS    

155    For the reasons set out above, it is necessary to allow the appeal, set aside the Order and, in lieu thereof, order that Zantran’s interlocutory application be dismissed.

156    Both parties should be given seven days to file an outline of submissions, limited to two pages, setting out the nature of the order as to costs for which they would contend on the application for leave to appeal and the appeal.

Associate:

Dated:    22 January 2020