FEDERAL COURT OF AUSTRALIA

Cyclopet Pty Ltd v Australian Nuclear Science and Technology Org [2012] FCA 1326

THE COURT ORDERS THAT:

1.    Pursuant to s 50 of the Federal Court of Australia Act 1976 (Cth), the parts of the following documents specified in the Schedule to the First and Second Respondent’s Amended Interlocutory Application dated 26 October 2012:

(a)    the First and Second Respondents’ response to the Expression of Interest for the supply of fluorodeoxy glucose (FDG) issued by the Health Administration Corporation in April 2010;

(b)    the First and Second Respondents’ response to the Request for Further Quotation or the supply of FDG issued by the Health Administration Corporation in November 2010; and

(c)    the First and Second Respondents’ agreement with the Health Administration Corporation dated June 2011 for the supply of FDG,

being the documents produced in answer to the Applicant’s Notice to Produce dated 7 September 2012, be kept confidential and not be disclosed to anyone other than the Court, the First and Second Respondents and their legal advisers, and the external legal advisers of the Applicant until further order.

2.    Pursuant to s 50 of the Act, paragraphs 20, 21 and 33 of the Further Amended Statement of Claim served by the Applicant on 3 October 2012 (Further Amended Statement of Claim), including the particulars of, and references to, those paragraphs, be redacted from a version of the Further Amended Statement of Claim, and filed in the Registry.

3.    The un-redacted version of the Further Amended Statement of Claim be kept confidential and not disclosed to anyone other than the Court, the First and Second Respondents and their legal advisers and the external legal advisers of the Applicant.

4.    Orders 1, 2 and 3 do not affect any existing confidentiality regime in place in relation to the documents referred to therein.

5.    Liberty to vary or discharge these orders.

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

REASONS FOR JUDGMENT

1    In 2012 the applicant (Cyclopet) brought proceedings against the first and second respondents (the ANSTO respondents) arising out of a tender process conducted by the third respondent (Health Administration Corporation, trading under the name NSW Health) for the supply of fluorodeoxyglucose (FDG) to public hospitals. The substance of the claim is that the second respondent (PETNET) which is a public sector company and therefore bound to comply with competitive neutrality principles failed to do so in submitting its tender to NSW Health. PETNET was the successful tenderer and Cyclopet was an unsuccessful participant in the process.

2    Cyclopet claims damages for alleged loss of opportunity under s 82 of the Trade Practices Act 1974 (Cth) (TPA) and its successor in the Competition and Consumer Act 2010 (Cth), Schedule 2 Australian Consumer Law (ACL) as well as for misuse of market power under s 46 of the TPA and other provisions relating to anti competitive conduct. On 7 September 2012, Cyclopet’s solicitors served a notice to produce on the solicitors for the ANSTO respondents. The notice to produce sought production of three documents that form part of Cyclopet’s claim. The documents are:

    PETNET’s response to the expression of interest issued by NSW Health in April 2010;

    PETNET’s response to the request for further quotation issued by NSW Health in November 2010; and

    the contract between PETNET and NSW Health dated 2 June 2011 for the supply of FDG in New South Wales public hospitals.

3    On or about 14 September 2012, the solicitors for Cyclopet and the ANSTO respondents agreed that the documents would be produced upon the basis that they are strictly confidential and that access would be restricted solely to Cyclopet’s external lawyers pending further agreement between the parties or other order of the court.

4    The solicitors for Cyclopet inadvertently breached the agreement in particular by submitting a further draft statement of claim, which made express reference to the documents.

5    The ANSTO respondents have now moved for interlocutory orders under s 50 of the Federal Court of Australia Act 1976 (Cth) (the Act) that certain identified parts of those documents be kept confidential and not be disclosed to anyone other than the court, the ANSTO respondents and their legal advisors and the external legal advisors for Cyclopet. The ANSTO respondents also seek an order that those parts of the statement of claim that make reference to certain specified matters from the documents be redacted from the version of the statement of claim filed in the Registry.

6    The principles which govern the exercise of the power to make an order under s 50 are well settled. The court must determine whether it is necessary in order to prevent prejudice to the administration of justice to forbid or restrict the publication of particular evidence. If the court reaches the requisite state of satisfaction, there is no residual discretion to refuse to make an order: Hogan v Australian Crime Commission (2010) 240 CLR 651 at [33].

7    A stream of comparatively recent authority in this Court establishes the proposition that the Court will ascribe significance in determining the question of necessity to the fact that the parties are trade rivals and that an order is necessary to prevent disclosure of trade secrets or commercially sensitive information to such a person. See for example: Sportsbet Pty Limited v Racing New South Wales (No 12) [2010] FCA 62 at [3]-[4] (Perram J); Australian Competition and Consumer Commission v Cement Australia Pty Limited (No 2) [2010] FCA 1082 at [13] (Greenwood J). Nevertheless it is evident from all of the authorities that the mere fact of trade rivalry and commercially sensitive information will not of themselves be sufficient.

8    The question of whether the test is satisfied will depend upon the facts of the case. What is involved is a balancing exercise in which matters such as the nature of the information are weighed against the requirement for open justice stated in s 17 of the Act, see Cement Australia at [14]. The authorities also establish that ordinarily a party who seeks protection, as in the present case, additional to that which is given under the implied undertaking in relation to production of documents bears the onus of establishing that the character of the documents is such as to warrant the protection of a court order: see ICAP Australia v Forrest Moebes [2010] NSWSC 738 at [8] (Ball J); see also Forty Two International Pty Limited v Barnes (No 4) [2012] FCA 1059 at [6] (Griffiths J).

9    In ICAP, Ball J said at [11] that a confidentiality regime which limits access to external solicitors and counsel will rarely meet the requirements of reasonableness, because solicitors and counsel must act on instructions of a person who is in a position to give proper instructions. Such a person should be entitled to see all of the documents available to their advisors so that they can give instructions and understand the basis of advice given to them. In making that observation his Honour was addressing the provisions of ss 56 and 57 of the Civil Procedure Act 2005 (NSW).

10    Authorities in this Court tend to view that question through the prism of the ordinary requirements for open justice and any prejudice that may flow to a party in the preparation of conduct of a trial as a consequence of a court order: see Betfair Pty Limited v Racing New South Wales (No 9) [2009] FCA 1349 at [8] (Perram J); Sportsbet Pty Limited v Harness Racing Victoria (No 3) [2010] FCA 1420 at [9] (Mansfield J).

11    In her affidavit of 26 October 2012, Ms Jane Ellis describes the nature of the business of the ANSTO respondents. The first respondent is an agency of the Commonwealth Department of Industry, Innovation, Science, Research and Tertiary Education. PETNET is a wholly owned subsidiary of the first respondent. PETNET manufactures short lived radiopharmaceuticals used in Positron Emission Tomography scanning, which it delivers to customers in and outside of New South Wales.

12    Ms Ellis states on information and belief from the General Manager of commercial operations of the first respondent, Mr Shaun Jenkinson, that PETNET’s facilities are used predominantly to supply FDG to its customers, which include public and private hospitals and clinics. The technology involved in the delivery of this service is very expensive and it can be supplied only to customers who have a special camera capable of utilising the service. There are a very small number of cameras which can make use of the technology.

13    Ms Ellis identifies three categories of confidential information which are to be found in the documents. She does so on information and belief from Mr Jenkinson. The first category is information relating to PETNET’s bidding, contracting and dispatching strategies. The second is information concerning PETNET’s customers and third party service providers. It identifies the number and identity of the customers including their contact details. The third category relates to PETNET’s pricing. Full details of the categories are set out in paragraphs 15 to 20 of Ms Ellis’ affidavit, which also explains the commercial damage, which PETNET fears in the event that the information is disclosed, in particular to its rival, Cyclopet.

14    Ms Ellis then goes on to state, in a detailed manner, the particular parts of each of the documents over which confidentiality is claimed. The grounds of the claim and the category (that is to say 1, 2 or 3) into which it falls.

15    Cyclopet relied upon the affidavit evidence of Mr Croot, a solicitor employed by Cyclopet’s solicitors and an affidavit of Cyclopet’s managing director, Mr Steven McBrayer. Mr Croot says in general terms that Cyclopet’s solicitors will be hampered in acting for their client if they are not able to get instructions from Cyclopet about the full content of the documents. He says the documents are central to Cyclopet’s claims. Mr Croot also says there is a risk of inadvertent disclosure of material if the confidentiality orders are made.

16    Mr McBrayer gives evidence of conversations which took place in about September 2010 with various persons who said that PETNET’s standard pricing was “around $1” per unit. He says that based on this, PETNET’s pricing is “common knowledge” in the FDG market in New South Wales. He refers to other information in July 2011, which puts the price at $1.

17    Cyclopet tendered three documents. The first was a description of the Siemens Eclipse RD Cyclotron taken from the internet. The document describes the benefits of this instrument which is a PET cyclotron for the production of PET radioisotopes. The second document was “supporting documentation” submitted by Mr McBrayer to the Australian Government Competition Neutrality Complaints Office in a complaint made by Cyclopet to that office. The document refers to the FDG market in New South Wales and states the number of patients requiring radiopharmaceutical FDG. It states that there are 11 PET cameras at 10 locations of which seven are public hospitals.

18    The third document was the Competitive Neutrality Complaints Office report of PETNET’s pricing. Reference was made to a statement in the report that PETNET provides FDG to a number of identified hospitals. One other document relating to Cyclopet’s complaints to the Competitive Neutrality Complaints Office was in evidence as an annexure to Mr McBrayer’s evidence. That document does nothing to advance Cyclopet’s argument in the present case.

19    I am satisfied that it is necessary in order to prevent prejudice to the administration of justice to make interim orders generally in the terms proposed by the ANSTO respondents. My reasons can be stated shortly.

20    PETNET and Cyclopet are trade rivals. Ms Ellis’ evidence demonstrates that if the information which she identifies is disclosed to Cyclopet, it will provide commercial advantages to Cyclopet with a corresponding commercial detriment to the ANSTO respondents. It is true that the ANSTO respondents have the benefit of an implied undertaking, but I am satisfied on the evidence given by Ms Ellis that the necessary onus of establishing detriment is satisfied.

21    On the present state of the evidence the importance of the confidential information is such that it is significant to PETNET’s ability to compete with Cyclopet and it would be unrealistic to think that if revealed to Cyclopet the effect of the information could be quarantined from the main stream of decision making: see Betfair (No 9) at [10]. The information, whilst not constituting a trade secret, seems to me to be highly sensitive, confidential information, which would be advantageous to Cyclopet or PETNET’s other trade rivals.

22    I am satisfied on the present evidence that the information is not in the public domain. It is true that the market is small and the participants are likely to have some idea of the identity of customers and probably rough ideas about pricing, however, the information identified by Ms Ellis goes beyond that and is specific in its detail. Whilst the pricing information is now approximately two years old, it forms the basis of a current contract. It is or appears to be sufficiently related to current operations to warrant protection.

23    Of particular importance in the weighing exercise is the fact that Ms Ellis has identified specific items of information. The claims for protection are therefore narrowly drawn. It is true that the documents as a whole are important to Cyclopet’s claims. I have weighed this in the balance but I do not consider on the basis of the general evidence given by Mr Croot that the preparation for trial will be impeded or that there is any unfairness in making the orders which are sought. However if the position alters in the course of preparation for the hearing, it will be open to Cyclopet to invoke liberty to apply.

24    It is unusual to make an order redacting portions of a statement of claim, however, the material that is to be redacted was added by Cyclopet as a result of a breach of the express arrangement between the parties when the documents were produced. The effect of the order is therefore only to restore the status quo.

25    No point was taken that s 50 does not apply to documents produced in answer to a notice to produce or as to whether it applies to the order for redaction of the statement of claim. In any event, I would have power to make the orders under s 23 of the Act. For those reasons, I propose to make the orders.

Associate:

Dated:    23 November 2012