FEDERAL COURT OF AUSTRALIA

ALDI Stores v Coles Supermarkets Australia Pty Limited
[2010] FCA 563

THE COURT ORDERS THAT:

1.                  Leave be granted to the respondent/cross-claimant to file and serve on or before 4 June 2010 any further affidavit evidence in support of its claim for confidentiality of the contents of paragraph 10 of the affidavit of Diane Marie Shelton, sworn 13 May 2010.

2.                  Upon the respondent/cross-claimant by its senior counsel giving to the court the usual undertaking as to damages, up to and including 4 June 2010, the evidence from the commencement of the third sentence in paragraph 6 to the end of paragraph 17, in the affidavit of Diane Marie Shelton sworn 13 May 2010, not be disclosed to any person other than a person currently able to see those parts under the operation of orders made on 11 March 2010.

3.                  If an affidavit is filed pursuant to order 1 made today on or before 4 June 2010, order 2 continue until further order in respect of paragraph 10 of Ms Shelton’s affidavit.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

(REVISED FROM THE TRANSCRIPT)

1                     These proceedings concern complaints about comparative advertising made by two of the larger supermarket chains in Australia.  ALDI Stores commenced these proceedings claiming that a number of advertisements published by Coles Supermarkets Australia Pty Limited during the period leading up to Christmas 2009 were misleading and deceptive.  After the proceedings were commenced, Coles brought a cross-claim asserting that a number of ALDI’s advertisements in December 2009 and January 2010 suffered from a similar vice.  The proceedings have progressed somewhat.   In the course of the disclosure of evidence, Coles has served affidavits in support of its case that it asserts are confidential or contain confidential information the confidentiality of which is, at the moment, covered by consent confidentiality orders made on 11 March 2010.

2                     ALDI sought to have those restrictions lifted in respect of a number of matters the subject of contest, in order that it may provide copies of the affidavits to its own staff and other persons for the purposes only of the conduct of the litigation, without being bound by an order specifically maintaining the confidentiality of the information contained in those affidavits.

The basis of the claim for confidentiality

3                     The debate has been narrowed today to a number of statements in an affidavit of Diane Shelton sworn on 13 May 2010.  Ms Shelton is the general manager of customer knowledge and insights at Coles.  The basis of the claim for confidentiality was asserted in an affidavit made on information and belief by David Thomas, a solicitor acting for Coles.    He was informed by Ms Shelton that Coles employed a team of 15 people which she headed.  The team was responsible for Coles’ market research.  He said that Coles spent in the vicinity of $6 million a year on market research, of which $5.5 million was of a proprietary nature.  Ms Shelton informed Mr Thomas that Coles, at additional cost, engaged external consultants as well to collect research data.  She said that Coles prepared modelling within Ms Shelton's team to ascertain key drivers of consumer sales, to better inform Coles about those drivers, and how to shape offers it would make to customers so as to generate sales. Coles asserted, through Ms Shelton, that this was an enormous and complex exercise representing a significant investment for it, and that this activity was undertaken by it to derive competitive advantages.

4                     Ms Shelton said that the research methods undertaken by Coles to obtain research data and the analysis were kept private.  She asserted that if such information, including that in the paragraphs which are now pressed as being confidential, were disclosed to a competitor like ALDI, the competitor would obtain a significant benefit to Coles’ disadvantage.  In particular, Ms Shelton was concerned that the disclosure of such confidential information would assist ALDI to understand aspects of Coles’ market research activities and methods, its marketing strategy, its insights into consumer behaviour and perceptions in relation to Coles and its competitors, including ALDI.

The disputed material

5                     Ms Shelton's affidavit dealt with a range of subjects.  During the course of argument today, Coles has pressed for orders maintaining the confidentiality currently in place between the parties in respect of all but the first two sentences of par 6, the whole of par 7, the whole of par 9, the whole of par 10 and the third sentence of par 17.  I had indicated, and ALDI accepted, that a number of other portions of the affidavit should be redacted. In particular, I was prepared to rule that the figures about the number of sessions, that Ms Shelton was discussing, and the identity of three persons and their organisations, that had not been otherwise revealed in the material before me in par 9, should be redacted from what would otherwise be made available.  Coles, however, pressed for the whole of par 9 to be kept confidential.

Principles

6                     In essence, any party who, in the course of Court proceedings, obtains documents or information under a compulsory process from its opponents or third parties is bound by an implied undertaking as to the confidentiality of that material.  The party who obtains the material, or information so disclosed, cannot use it for any purpose other than that for which it was given, without the leave of the Court unless it is received into evidence:  Hearne v Street (2008) 235 CLR 125 at 154-155 [96] per Hayne, Heydon and Crennan JJ.  There will be instances, including in cases between commercial rivals, where it is necessary for a party, in order to seek to advance its case and to obtain justice, or for a person subpoenaed, to disclose material that is of such a confidential nature, that the ordinary implied undertaking as to confidentiality should be supplemented to prevent the material produced being disclosed except to particular persons.

7                     The principles of open justice require that all evidence before a court be open to the public gaze.  This achieves the important objective of transparency in judicial decision making that is fundamental to the proper administration of justice and public confidence in the integrity and independence of the courts in their decisions.  It is an objective which, on occasion, must be balanced against the paramount duty of the court to do justice.  In Scott v Scott [1913] AC 417 at 437-438, Viscount Haldane LC explained those principles, which have been followed and accepted as fundamental in Australia since Dickason v Dickason (1913) 17 CLR 50 at 51 per Barton ACJ, Isaacs, Gavan-Duffy, Powers and Rich JJ.  One of the exceptions to which his Lordship referred was the protection of secret processes and confidential information.  I discussed these principles in Siam Polyethylene Company Limited v Minister of State for Home Affairs (No 3) [2009] FCA 839 at [7]-[8].  That was a case involving the deployment of material in open court during the course of a trial.  Slightly different principles may be apposite in interlocutory proceedings where the parties are preparing for trial and may need to show documents, that may or may not become public by being received into evidence, to persons who would otherwise, because of confidentiality concerns, not be desired by one or more of the parties to have access to them.

The contested matters

8                     One of the critical matters which any person seeking to establish confidentiality must address is what it is about the information sought to be protected that has the attribute of confidentiality.  Coles initially sought today that the whole of Ms Shelton’s affidavit was confidential.  That affidavit is some 14 pages and 43 paragraphs long.  During the course of argument Coles modified its position so that now only some or all of a total of five paragraphs remain the subject of contest.

9                     The only evidence that Coles has put before me to assess its claim for confidentiality in respect of the contentious portions of Ms Shelton’s affidavit is the fairly broad and general description of the nature of the confidentiality contained in Mr Thomas’ affidavit based on information and belief derived from Ms Shelton herself.  I offered Coles an opportunity to supplement that material in respect of what is in par 10 of the affidavit within the next week so that this matter might be given further consideration if such evidence is forthcoming.  However, I must make a determination on the claims based on the evidence currently before me.

10                  The material in pars 6 and 7 is descriptive of what appear to me to be commercially available materials.  That material does do not reveal any connection to particular insights into Coles, its investigative or marketing methodologies or to provide or shed light on data that is not otherwise available to it and its competitors from commercial sources.  Those commercial sources appear to be prepared to sell that information without any confidentiality constraint in respect of Coles.  There is nothing in the evidence to suggest that the material referred to deals with an analysis of Coles by the commercial sources that would not otherwise be made available to other competitors in the market who are willing to pay the supplier of the information for the same data.

11                  Statements in pars 6 and 7 of Ms Shelton’s affidavit are no more than descriptive of the nature of this commercially available material.  For that reason I am not satisfied that this material has character that requires the Court to make an order over and above the protection which Coles is afforded through the implied undertaking as to confidentiality.  I decline to make any such order.

12                  Paragraph 9 describes a particular method of research that Coles adopts, involving members of the public.  There is nothing in the paragraph to suggest that the persons from the public who were involved had been asked to give any undertaking as to confidentiality about the material.  The method appears to me to be one that is obvious, apart from the small portions of the material identified that I consider, and ALDI accepts, ought be redacted.  Indeed, it would have been surprising if an organisation of the sophistication and size of Coles did not undertake it.  The revelation that it in fact does so does not appear to have the necessary attribute of confidentiality that it should be kept from ALDI in the circumstances of this case.  For that reason I decline to make any special order in respect of the balance of par 9, other than the small portions that I have indicated, that are not the subject of contest in any event.

13                  Paragraph 10 is again descriptive of another form of Coles’ collection of data.  Once again, ALDI accepts that the identification of the organisations at the end of the second-last sentence of the paragraph is a matter to which a bona fide claim for commercial confidentiality can be pressed.  The balance of the paragraph deals with a data collection method that again, like that in par 9, involves members of the public who once they had participated are under no particular confidentiality constraint in respect of it.  It deals with what appears to be a method of research that is generally available in this area of the market for analysis of consumer behaviour and which again it would be surprising were an organisation such as Coles not to have undertaken it.  There does not appear to me to be any information other than that which I have identified, that has the necessary quality of confidence to require its being made the subject of a special order in respect of confidentiality.

14                  The last contested matter is in respect of the third sentence of par 17.  In this sentence, Ms Shelton refers to a source that is commercially available to Coles and its competitors and to a particular example taken from that source from which she draws a conclusion.  That material does not appear to me to involve any aspect of confidential information or indeed to be saying anything other than what must be obvious from the material to which she referred, which would be equally available to any person willing to pay the supplier of the source material for that information.  For that reason, I am not satisfied that the claim for confidentiality of that sentence can be made good.

15                  The balance of the affidavit is the subject of agreement between the parties as to the parts that ought be redacted.  That agreement reflected the sensible and efficient way in which such litigation should be conducted:  see also Mobil Oil Australia v Guina Developments Pty Limited [1996] 2 VR 34.

16                  For these reasons I refuse to make the confidentiality orders.

Associate:

Dated:         3 June 2010