FEDERAL COURT OF AUSTRALIA

Dale v Veda Advantage Information Services and Solutions Limited

[2007] FCA 1603

PRACTICE AND PROCEDURE – proceeding one of nine brought by individuals against credit reporting agency alleging it had provided incorrect information concerning their creditworthiness – causes of action in defamation and negligence – respondent served affidavit pursuant to usual direction of Court – respondent did not serve certain exhibits to the affidavit claiming that they were commercially confidential – respondent moved for orders that access to those exhibits be limited to legal representatives of the respective applicants and that they be required to give written undertakings to Court to use the copy exhibits and information in them only for purposes of the proceeding, and to destroy the copies at conclusion of proceeding – exhibits in question were business records showing internal procedures followed by respondent directed to ensuring that Privacy Act 1988 (Cth) and Credit Reporting Code of Conduct complied with – applicants assisted by a company whose role not clear on the evidence. 

Held:  (1)  affidavit and copy exhibits were served pursuant to “compulsion of law”;  (2) access not denied to applicants;  (3) written undertakings not required of applicants and their lawyers;  (4) position of applicants and their lawyers left to be governed by their implied undertaking to the Court;  (5) applicants and their lawyers would not be justified on the evidence in disclosing content of the exhibits to company assisting applicants.

Privacy Act 1988 (Cth) ss 18J, 18K

Akins v Abigroup Ltd (1998) 43 NSWLR 539 cited

Cadence Asset Management Pty Ltd v Concept Sports Ltd [2006] FCA 711 distinguished

Commonwealth v Northern Land Council (1992) 176 CLR 604 cited

Harman v Secretary of State for the Home Department [1983] 1 AC 280 cited

SHANE DALE v VEDA ADVANTAGE INFORMATION SERVICES AND SOLUTIONS LIMITED (FORMERLY CALLED BAYCORP ADVANTAGE BUSINESS INFORMATION SERVICES LIMITED) AND ATTORNEY GENERAL IN AND FOR THE STATE OF NEW SOUTH WALES

NSD 1994 OF 2006

LINDGREN J

22 OCTOBER 2007

SYDNEY

THE COURT ORDERS THAT:

1.         The proceeding be listed at 9.30 am on 24 October 2007 for the making of orders, including orders as to costs of the first respondent’s motion brought by Notice of Motion filed on 28 September 2007 relating to the confidentiality of exhibits.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT
(Confidentiality of exhibits to affidavit)

INTRODUCTION

1                     By motion brought by notice of motion filed on 28 September 2007 the respondent (Veda) seeks orders restricting access to certain exhibits to an affidavit of Rebecca Ann Barbour sworn 30 July 2007.  Ms Barbour is employed by Veda as its “Head of Call Centres”.  For the purposes of the Privacy Act 1988 (Cth) (Privacy Act), Veda is a “credit reporting agency” and carries on a “credit reporting business”.

2                     The present proceeding is one of nine proceedings, each brought by an individual alleging the same causes of action against Veda.  The applicants in all nine proceedings are identified at [6] below.  Each applicant complains that Veda furnished to one or more credit providers incorrect information relevant to that applicant’s creditworthiness.  The causes of action pleaded are in defamation and negligence.

3                     The orders to be made on the present motion will also have implications for the other eight proceedings.

4                     The motion falls into two parts.  In the first part, Veda seeks to restrict access to exhibits RAB1, RAB2, RAB3 and RAB8 to Ms Barbour’s affidavit on the ground that those exhibits would disclose information that is confidential to Veda, and which, if disclosed, would be apt to damage Veda’s business interests.  Veda seeks an order that access be restricted to counsel and solicitors retained by Mr Dale, provided they have signed an undertaking to the Court in a form annexed to the notice of motion.  By that undertaking, each solicitor and counsel would undertake to the Court:

(1)        not to disclose the contents of the four exhibits to any person other than the Court and solicitors and counsel retained by the parties;

(2)        not to make any use of the exhibits, or of information or knowledge obtained by virtue of the access to them, other than for the purposes of the proceeding; and

(3)        immediately upon the conclusion of the proceeding to cause to be destroyed any copies of the exhibits or any part of them and any notes made by the solicitor or counsel in relation to them.

5                     Veda also seeks an order that upon the conclusion of the proceeding, the applicant’s counsel and solicitors must destroy all copies of the said exhibits and any notes made or received in relation to the exhibits or any part of them.

6                     The other part of the motion seeks to restrict access to nine exhibits to Ms Barbour’s affidavit that relate to the respective nine applicants, as follows:

                        Applicant to whom                  Applicant in

Exhibit            Exhibit relates                        proceeding

RAB13            Cindy Jayne Adams                  NSD 2006/2006

RAB14            Shane Martin Dale                    NSD 1994/2006

RAB15            Dianne Maureen Shields           NSD 2001/2006

RAB16            Eddie Fisher                             NSD 2003/2006

RAB17            Jye Peter Marker                      NSD 1996/2006

RAB18            Timothy James McGary            NSD 2007/2006

RAB19            Robert John Strange                 NSD 2000/2006

RAB20            Trevor Stephen Taylor  NSD 2002/2006

RAB21            Aaron Gerrard Tyndal  l           NSD 2004/2006

The notice of motion excepts from the order sought an exhibit where the applicant concerned consents to access to the exhibit being extended to the other eight applicants in the related proceedings.

The commercial confidentiality part of Veda’s motion

The nature of exhibits RAB1, RAB2, RAB3 and RAB8

7                     I turn now to the first part of Veda’s motion, the commercial confidentiality part.

8                     Two points may be made at the outset.  First, it is not obvious why Veda seeks both an order for destruction and the third undertaking referred to at [4]:  they are in almost identical terms.  Second, since the same solicitors and counsel are representing all nine applicants, it would not be appropriate for them to undertake to use exhibits RAB1, RAB2, RAB3 and RAB4 and the information gained from them for the purposes of one proceeding, Mr Dale’s proceeding, alone.

9                     Veda relies on affidavit evidence of Rebecca Ann Barbour, Veda’s “Head of Call Centres” showing, in general terms, the nature of the contents of exhibits RAB1, RAB2, RAB3 and RAB8. 

10                  Veda has devised procedures according to which its Call Centre in North Sydney responds to queries and requests from “consumers”, that is to say, individuals in relation to whom Veda holds or may hold a credit information file. 

11                  In order to comply with the Privacy Act and the Credit Reporting Code of Conduct issued by the Privacy Commissioner under s 18A of that Act (the Code), Veda has produced “Business Process Documents” specifying procedures with which Call Centre staff are required to comply.  These documents constitute exhibits RAB1, RAB2 and RAB3.  Ms Barbour labels exhibit RAB1 “Investigations”, exhibit RAB2 “File processing”, and RAB3 “Complaints”.

12                  The Business Process Documents were prepared by Scott Jamieson, legal counsel employed by Veda, over a period of two months in December 2006 and January 2007 with the assistance of Call Centre staff.  The Business Process Documents reflect procedures which have been developed and observed at the Call Centre with only minor variations over the last ten years (prior to 1997 each state handled its own telephone queries from subscribers and consumers, and Veda established the Australian Call Centre in 1997 to centralise this activity).

13                  Section 18J of the Privacy Act and cll 3.8–3.15 of the Code require that Veda investigate any request made by a consumer for amendments to personal information included in his or her credit information file.  The procedure which Veda follows is set out in the Business Process Document that is exhibit RAB1.

14                  All requests for amendment and complaints are recorded on Veda’s “Public Access System”.  The original hardcopy of a request for amendment is kept by Veda for 12 months, after which it is shredded.

15                  If a consumer persists in a request, notwithstanding notification by Veda that it refuses to make the amendment requested, the request is upgraded to a “complaint” and the complaints procedure set out in exhibit RAB3 applies to it.

16                  Veda allows credit providers or finance brokers who have subscribed to Veda’s database to access that database to make inquiries and post reports.  Subscribers accessing consumer credit information in this way are able to take advantage of training provided free of charge by Veda which specifies the subscriber’s obligations in relation to accessing and updating data held by Veda.  Exhibit RAB8 is a copy of Veda’s Call Centre Process Document which specifies the processes involved in keeping subscribers informed as to their obligations to correct information and to encourage the flow of information from subscribers about errors in, or the updating of, their credit information files.  In relation to exhibit RAB8, Ms Barbour states:

The document contains information as to Veda’s business procedures which Veda has developed and which Veda wishes to protect for reasons of commercial confidentiality and because Veda asserts rights in the nature of intellectual property over that material.  The document reflects Veda’s practice and procedure in dealing with subscriber enquiries over the period 2000 to 2005.

17                  Mr Jamieson worked on devising the Business Process Documents full time for a period of two months, during which he sat with the people undertaking the various roles within the Call Centre so that he could observe, discuss and record their activities.  Ms Barbour states:

8.                  The business process documents are of great value to Veda’s business.  They are integral to Veda’s daily operations and particularly to ensuring compliance with laws and regulations.  Veda’s internal audit processes rely upon those documents in order to confirm compliance and the documents constitute the mechanism by which Veda ensures adherence to internal procedures and can demonstrate to regulators (such as the ACCC, Privacy Commissioner and Ombudsmen), Veda’s compliance with legal requirements.  The documents also enable Veda to work efficiently, and therefore cost-effectively, by being consistent in our processes.  Further, by ensuring compliance with legal requirements, the documents play a role in reducing the risk of legal action and assisting the business to operate profitably.

9.                  The way a credit reporting business such as Veda deals with subscribers and consumers and carries out its obligations to subscribers and consumers is fundamental to the business.  The documents that outline the procedures that govern those activities are documents Veda does not want its competitors to have access to.  I am concerned that if the documents were put into the public domain, Veda’s competitors may be able to obtain the benefit of the considerable work Veda has undertaken in developing efficient and cost effective procedures over many years and, accordingly, replicate those procedures and gain a competitive and advantage by adopting Veda’s own compliance procedures.  Veda’s main competitor is Dunn & Bradstreet [sic – Dun & Bradstreet] which carries on business as a credit reporting agency throughout Australia.

10.              Further, I am concerned that if the confidentiality of these documents was compromised and if they were placed into the public arena, there may be a risk of Veda’s security procedures being comprised.  The Business Process Documents contain very close detail about Veda’s security procedures, that is, procedures aimed at protecting an individual’s private information including containing details of how Veda ascertains whether an individual making a request is in fact the individual to whom the file relates.  I am concerned that if those procedures were made public it could affect the ability of members of the public to fraudulently access private information of other people and thus compromise the security and privacy of that information.  The processes Veda has to establish those security procedures have taken many years to identify and develop.

18                  Senior counsel for Mr Dale objected to some of the expressions in this passage, such as “great value”, “integral”, “fundamental to the business”, “may be able to obtain the benefit”, and “may be a risk of …”.  I agree that these expressions are very general, but I admitted the paragraphs on the basis that their generality goes to weight.  To some extent, the problem has been overcome by the agreement of both parties that I should be at liberty to examine exhibits RAB1, RAB2, RAB3 and RAB8, and I have done so.

19                  Having read exhibits RAB1, RAB2, RAB3 and RAB8, I note that, as Ms Barbour implies in her affidavit, they record in detail procedures which Veda employees are required to follow in given situations.  I accept that Veda has a legitimate interest in ensuring that they are not disclosed to a competitor.  A competitor would or might be interested to take ideas from the exhibits for the purpose of improving its own procedures.

20                  However, I do not need to decide for the purpose of the present motion whether the documents constituting the four exhibits are to be characterised differently from the internal procedures manuals and instructions of many businesses.  A business proprietor has a legitimate interest in preventing disclosure of such documents that have not entered the public domain, and use of them against the proprietor’s interests.

DR Capital Pty Ltd and Credit Repair Australia Pty Ltd

21                  Ms Barbour also sought to support Veda’s application by reference to the role of DR Capital Pty Ltd (DR Capital) and its subsidiary, Credit Repair Australia Pty Ltd (CRA) in this, and related, proceedings.  Unlike Dun & Bradstreet, DR Capital and CRA are not trade rivals of Veda: they are not credit reference agencies.

22                  It appears that DR Capital has been assisting, in ways not made entirely clear by the evidence, Mr Dale and the other eight applicants in the bringing and conduct of the nine proceedings.  Indeed, DR Capital introduced the nine applicants or some of them to the firm of solicitors that has instituted the proceedings. 

23                  According to an Australian Securities and Investments Commission (ASIC) search, CRA has one shareholder and director – DR Capital and Richard George Symes respectively.  DR Capital has two directors, Mr Symes and David Colin McGrath, and two shareholders, Leah Symes and Karen Merle McGrath.  According to the ASIC search, Mr and Ms McGrath are of the same address and Mr and Ms Symes are of the same address. 

24                  I infer that the solicitors for Mr Dale and the other applicants would feel free to show exhibits RAB1, RAB2, RAB3 and RAB8 or communicate their contents, to representatives of DR Capital or CRA in the course of representing the interests of Mr Dale and the other applicants, unless I were to decide that they are not at liberty to do so.

25                  Mr Dale has not led evidence as to the role of DR Capital and CRA.

26                  The evidence led by Veda, however, shows that CRA’s business is that of assisting individuals in remedying allegedly erroneous credit ratings in respect of them.  On its website, CRA states that it is “a credit repair company who have [sic] assisted thousands to restore their credit ratings, assisting with both past and current credit problems.”  DR Capital’s website redirects the reader to CRA’s website. 

27                  Ms Barbour states that she is aware that DR Capital is paid fees for assisting consumers in making complaints to Veda or in requesting that Veda investigate the data on an individual’s credit information file.  She states that people who identify themselves as being employed by DR Capital regularly telephone Veda’s Call Centre or send correspondence to Veda, and that she has spoken to such callers herself.

28                  According to Ms Barbour’s affidavit, a Google search of “Veda Advantage” results in a page displaying a sponsored link by CRA stating “Credit Repair Australia – Explore Your Options! Call 1300 FIX CREDIT www.creditrepairaustralia.com.au” and “Got Bad Credit? Find out how you can repair your credit with a free consultation.  www.foxsymes.com.au”.

29                  As noted above at [16], credit providers or finance brokers who subscribe to Veda’s database are able to access it electronically to view a consumer’s credit file in connection with an application for credit.  DR Capital is a subscriber to Veda’s database and frequently accesses it.  Ms Barbour states that DR Capital’s status as a subscriber is in its capacity as an “authorised agent”.  She states that this characterisation refers to entities who act in a “broker type role in assisting an individual to obtain credit”.  A search of access statistics for DR Capital reveals that between 1 October 2006 and 30 September 2007, DR Capital made a total of 7,406 inquiries of credit information files on Veda’s database. 

30                  Ms Barbour states that DR Capital’s accesses to the database are typically recorded on the consumer’s credit file as being an inquiry regarding a term account for a zero monetary amount.  She observes that this is unusual for access by subscribers who are credit providers or brokers assisting individuals to obtain credit, because in either of these cases the particular class of the application and the amount of credit being applied for are specified when a person’s credit information file is accessed.  Ms Barbour suggests that DR Capital must be accessing credit information files for reasons other than assessing an application for credit by the person whose file is accessed, and that DR Capital is probably investigating some grievance or complaint by that person. 

31                  Ms Barbour summarises her concerns as follows:

I am concerned that if Veda’s confidential documents become available to DR Capital they are likely to be used for purposes other than this litigation, or disseminated in such a way that they are made publicly available or accessible to Veda’s competitors, or made available to persons whose interests are adverse to Veda, unless DR Capital is required to give an undertaking that it will not use the documents for any purpose collateral to this litigation, and will return and/or destroy the documents once the litigation is completed.

32                  In this paragraph Ms Barbour suggests that the position of DR Capital may be accommodated if it is required to give an appropriate undertaking. 

33                  No doubt it is in the interests of Veda and its subscribers that Veda’s credit information files be accurate.  It is not in the interests of either that an individual’s credit rating be recorded as worse or better than it is.  If it is recorded as worse than it is, the subscriber may refuse to grant the individual credit, thereby missing out on a profit it would otherwise have made.  If it is recorded as better than it is, the subscriber may grant the individual credit and suffer loss in consequence of his or her default.  It follows that insofar as DR Capital is able to disclose to Veda any errors in Veda’s credit information files, it is serving Veda’s interests, as well as those of the individuals who are its clients.

Consideration

34                  It is not disputed that Veda’s business systems are or may be relevant to whether Veda breached a duty of care to Mr Dale, and whether it enjoys the defence of qualified privilege to the defamation claim, which will be at issue on the final hearing.

35                  Some preliminary matters must be noted.

36                  First, neither Ms Barbour’s affidavit to which the documents were exhibited nor the four exhibits themselves may become part of the evidence on the final hearing.  Even if they do, an order could be sought and made under s 50 of the Federal Court of Australia Act 1976 (Cth) forbidding or restricting publication of them, although it would be premature to consider at this stage the possible or likely fate of an application for such an order.  It suffices to say that the present motion cannot be considered on the basis that the exhibits will inevitably become available to the public.

37                  Second, Veda has not served the four exhibits in question and there is therefore no question of Veda’s having waived, foregone or abandoned any claim to keep them confidential.

38                  Third, the exhibits were filed pursuant to a direction of the Court for Veda to ‘file and serve any ... affidavits”.  Veda is to be regarded as acting under compulsion of law by reason of the direction (see Akins v Abigroup Ltd (1998) 43 NSWLR 539) just as it would be doing if it had been required to give discovery of the documents or to produce them in compliance with a subpoena or notice to produce.  Whatever the position may be when a party simply leads evidence on the final hearing without having been required to file and serve its affidavits in advance, that is not the case here.  Veda would not have filed and served its affidavits and their exhibits if it had not been directed by the Court to do so.

39                  Fourth, the principles of Harman v Secretary of State for the Home Department [1983] 1 AC 280 (Harman) signify that Mr Dale and the other applicants, and counsel and solicitors representing them in the proceedings, impliedly undertake to the Court not to use the exhibits or the information contained in them for any other purpose than that of the present proceedings.  The implied undertaking is reflected in para (2) of the undertaking proposed by Veda, set out at [4] above.  No doubt solicitors and counsel will draw the implied undertaking to the attention of Mr Dale and the other eight applicants if they have not already done so.  The implied undertaking also applies, of course, to all the affidavits and exhibits that have already been served.  It would be a punishable contempt of court if any of the applicants or any of their legal advisers were to make use of, or to disclose the content of, any of the affidavits or exhibits (including, but not limited to, the four in dispute) to anyone for any other purpose.

40                  Fifth, O 46 r 6(3) of the Federal Court Rules provides that except with the leave of the Court or a Judge, a non party must not inspect, relevantly, an affidavit in a proceeding.  I treat the reference to “affidavit” in the rule as embracing exhibits to the affidavit (in any event subr (4) of O 46 r 6 provides that except with the leave of the Court or a Judge, or with the permission of the Registrar, a non party must not inspect any document in any proceedings that is not referred to in subr (2) or (3)).  Although those rules are concerned with inspection of documents on the Court’s files, it is noteworthy that Dun & Bradstreet, DR Capital and CRA and their employees would not be entitled to inspect the exhibits in the Registry without leave.

41                  Sixth, I accept that exhibits RAB1, RAB2, RAB3 and RAB8 are confidential to Veda, but, as noted above, I do not find it necessary to determine whether they are confidential in any way or to any extent different from the internal procedural records and instructions maintained by any business.

42                  Seventh, in Cadence Asset Management Pty Ltd v Concept Sports Limited [2006] FCA 711, which concerned discovered documents, Finkelstein J held that disclosure to a litigation funder was not caught by the implied undertaking.  His Honour’s reason was that a litigation funder, although not a party, was not a stranger to the proceeding and had a sufficient interest to be provided with the documents, or at least to those documents it needed in order to assess the merits of the action.

43                  Neither DR Capital nor CRA is a litigation funder.  Nor are they expert witnesses.  On the present state of the evidence, it is not clear to me that they have any proper role in relation to the prosecution of these proceedings.  The evidence shows only that DR Capital and CRA:

·         assist individuals to have their credit information files corrected;

·         have acted as some kind of intermediary between the applicants and a proposed litigation funder; and

·         introduced the nine applicants or some of them to their present solicitors.

44                  The conclusion I have reached is that the position of Mr Dale’s legal representatives and Mr Dale (and the other eight applicants) should be left to be governed by the implied undertaking in accordance with Harman [1983] 1 AC 280.  I accept a submission of senior counsel for Mr Dale that his legal advisers should be at liberty to explain to their client, if and as and when they think appropriate, what the exhibits reveal, and to show the exhibits to him for that purpose, subject, of course, to their also explaining to him the implied undertaking he gives to the Court and the potential consequences for him of a breach by, for example, disclosing what he has learned from the exhibits to DR Capital or to CRA.  As Toohey J observed in Commonwealth v Northern Land Council (1992) 176 CLR 604 at 638, an undertaking by a litigant’s legal representatives not to disclose to the litigant can give rise to considerable difficulties.

45                  One reason why I do not require a written undertaking from Mr Dale and his legal representatives is that to do so may be seen to diminish the importance and seriousness of the implied undertaking.  Undertaking number (2), at [4] above, is implied, and breach of it is just as clearly a contempt of court as if it had been given to the Court in writing.  I would not wish to give currency to any notion to the contrary.

46                  Prudence suggests that the legal advisers might well see fit:

·         not to supply Mr Dale and the other eight applicants with copies of the exhibits; and

·         to destroy their own copies after the final hearing and determination of this proceeding and the conclusion of any appeals.

47                  On the present state of the evidence, it is not shown that disclosure to DR Capital and CRA would be for a legitimate purpose of the proceeding. 

48                  It is important to note that the officers of DR Capital and CRA are not legal practitioners owing to the Court the duties of officers of the Court.  There would not be available against them the additional and special sanctions that are available against solicitors and barristers for a breach of the implied undertaking.

49                  It seems sufficient for me to express the concluded view that I have stated above, and to leave the implied undertaking given by Mr Dale and the other eight applicants and their legal representatives in the proceedings to operate so as to preclude disclosure to the DR Capital and CRA.

The Privacy Act part of the motion

50                  The basis of the second part of the motion, regarding the Privacy Act, is s 18K(1) of the Privacy Act which provides, relevantly:

(1)         A credit reporting agency in possession or control of an individual’s credit information file must not disclose personal information contained in the file to a person, body or agency (other than the individual) unless [there follow a number of exceptions, the only one suggested to be relevant, being]:

(m)       the disclosure is required or authorised by or under law.

Mr Dale does not dispute that the respective exhibits RAB13 – RAB21 contain personal information that is recorded in the nine applicants’ respective credit information files.

51                  Veda’s concern is to ensure that it does not itself contravene s 18K(1) by serving the exhibits on the solicitors who act for all applicants and who confer with representatives of DR Capital.  Veda has invited Mr Dale and his legal representatives to propose any means (other than an applicant’s consent) by which it may be lawful for them to disclose personal information contained in, for example, Mr Dale’s credit information file to the other eight applicants and to the representatives of DR Capital.

52                  Mr Dale has not contended that the para (m) exception applies.  Even if it did, (by reason of the fact that there was a direction for the filing and service of affidavits), the fact is that, by consent, affidavits have been filed and served only in the Dale proceeding, and so it is questionable whether the exhibits relating to the other eight applicants would be within the exception.

53                  Mr Dale has not contended that disclosure is required or authorised by law by reason only of the fact that the same solicitors represent all nine applicants.

54                  Mr Dale has not suggested any means by which the exhibits relating to him or to any of the other eight applicants, may be lawfully disclosed to the other applicants or to DR Capital.

55                  In these circumstances, absent the consent of a particular applicant, his or her credit information file must not be disclosed to the other applicants or to any one else.  However, there appears to be no evidence of a threat of such disclosure and in the absence of such evidence, an order would be inappropriate.  The respondent has properly drawn the matter to attention, and the solicitors and counsel representing the applicants, as officers of the Court, will be relied on to observe the prohibition in s 18K(1).

CONCLUSION

56                  I propose to publish these reasons and stand over the motion to a date for the making of any orders, including orders as to costs.  My present thinking is that there should be no order as to costs because both parties had a measure of success on the motion.  In favour of Veda, I have held that at present exhibits RAB1, RAB2, RAB3 and RAB8 should be withheld from DR Capital and CRA, and I have rejected a submission made on behalf of Mr Dale that the exhibits should be treated as if they had become part of the evidence on the final hearing.  In favour of Mr Dale, I have not required that he or the solicitors or barristers representing him in this proceeding sign written undertakings to the Court, and have been content to allow their positions to be governed by the undertaking to the Court that is implied in accordance with the principles of Harman [1983] 1 AC 280.  The Privacy Act part of the motion took virtually no time at all and was not seriously contested by Mr Dale.

Associate:

Dated:           22 October 2007