FEDERAL COURT OF AUSTRALIA

Power Infrastructure Pty Limited v Downer EDI Engineering Power Pty Limited (No. 5) [2012] FCA 233

THE COURT ORDERS THAT:

1.    Until further order, access to the documents to be discovered in Schedule B to the orders made on 9 March 2012, which the parties agree are confidential to the respondent and commercially sensitive, be limited to each of:

(a)    the external legal advisers of the applicant and the second cross-respondent;

(b)    Jason Murray, accounting consultant, upon his executing a confidentiality undertaking in a form agreed between the parties.

2.    Until further order, without the written consent of the respondent, the contents of the documents referred to in order 1 not be disclosed to anyone other than the respondent, its counsel and solicitors, and the Court.

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

REASONS FOR JUDGMENT

1    On 28 February 2012 I delivered judgment on an interlocutory application filed by the applicant (“PI”) for discovery of particular categories of documents: Power Infrastructure Pty Limited v Downer EDI Engineering Power Pty Limited (No. 4) [2012] FCA 143. I directed the parties to bring in orders reflecting the reasons given in the judgment. The parties were agreed upon the orders with one exception. The respondent (“DEE”) asked for a confidentiality order to be made with respect to documents in one subcategory. That subcategory consists of “all transmission business job progress (or management) reports for DEE’s transmission business for June 2010 and June 2011”. DEE seeks an order that access to the documents in that subcategory be limited until further order of the Court to the external advisers of PI and the second cross-respondent, Jason Power, who is PI’s managing director (to whom I shall refer as “the Power interests”); and Jason Murray, an external accounting consultant, upon each executing a confidentiality undertaking in a form agreed by the parties.

2    PI does not dispute that the documents contain confidential information. There is no question that they are commercially sensitive. DEE adduced evidence in the interlocutory application that Mr Power is a direct competitor with DEE in the transmission line industry and is bidding for transmission work in Australia on behalf of a foreign company involved in the construction of transmission lines. The evidence showed that the material caught by this category includes detailed information about specific projects forming part of DEE’s transmission business. That, in turn, includes DEE’s budgeted and actual costs, overheads and revenue, gross margins, projected and realised, and other highly sensitive information. It is material of a kind that would provide a competitor with a real advantage over DEE with respect to future bids for transmission line projects. This evidence was not challenged.

3    Neither does PI quarrel with the requirement for an undertaking from Mr Murray. Its position is that the lawyers should not be required to give express undertakings.

4    I am not persuaded that the order DEE seeks should be made.

5    PI rightly points out that its lawyers are already subject to the implied undertaking to the Court not to use or allow the documents or copies of them to be used for any collateral or ulterior purpose of their own, their clients or anyone else, breach of which is punishable as a contempt of court. This principle was referred to in Harman v Secretary of State for the Home Department [1983] AC 280 and is commonly referred to as the Harman undertaking, although Finkelstein J in Conor Medsystems, Inc v The University of British Columbia (No 4) [2007] FCA 324 (“Conor Medsystems”) described it (at [1]) as a rule, “often but wrongly attributed to [Harman]”. As the High Court pointed out in Hearne v Street (2008) 235 CLR 125 (“Hearne”), lawyers have a substantive obligation not to use documents of this kind for such a purpose, an obligation that arises from the circumstances under which the documents are obtained.

6    DEE submitted that express undertakings are routinely required of both solicitors and counsel in commercial litigation where documents produced under compulsion are particularly commercially sensitive. It referred to the observation of Ryan J in Kirby v Centro Properties Ltd [2009] FCA 695 to that effect. Merely because express undertakings are routinely required does not mean that they are justified in the present case, despite the commercially sensitive nature of the documents in question. There is no reason to doubt the integrity of the legal practitioners for the Power interests and no reason to suppose that they will not abide by a court order or act contrary to their professional obligations. The concerns that might arise in the case of in-house counsel, to which Finkelstein J referred in Conor Medsystems, do not apply here.

7    DEE also submitted that an express undertaking, unlike an implied one, could be enforced by an injunction in the unlikely event that the lawyers breached the undertaking by disclosing the documents. But if the documents contain confidential information, I fail to see why, absent express undertakings, the lawyers could not be restrained in the same way if the unlikely event came to pass.

8    Hayne, Heydon and Crennan JJ said in Hearne (at [116]) that the point of insisting on an express undertaking is to “bring explicitly home to the minds of those giving it how important it is that the documents only be used for the purpose of proceedings”. Their Honours emphasised, however, that the obligation still exists without the need for an express undertaking.

9    In the circumstances of this case it is neither necessary nor even desirable to require the lawyers acting for the Power interests to undertake expressly what they acknowledge they are obliged to do.

10    The obligation not to use the documents for a collateral or ulterior purpose will not, however, preclude the lawyers from discussing their contents with their clients. This, as I perceive it, is DEE’s real concern. The order PI proposes would preclude the Power interests from having access to the documents but, because of the confidential nature of the information in them and their acute commercial sensitivity, it is also necessary to ensure that they do not have access to the information contained in them.

11     I therefore decline to make the order in the terms proposed by either party. Rather, I will order that access to the documents be limited to the external legal advisers of PI and Mr Power, and Mr Murray upon him executing a confidentiality undertaking in a form agreed between the parties. I will also ensure that the order adequately protects the confidentiality of the information in the documents. For more abundant caution, the order will note the parties’ agreement about the nature of the documents.

Associate:

Dated:    15 March 2012