Federal Court of Australia

The Epoch Holding Group Pty Ltd v Carrodus [2022] FCA 947

REASONS FOR JUDGMENT

CHEESEMAN J:

introduction

1    This decision relates to a continuation of non-publication orders under s 37AF of the Federal Court of Australia Act 1976 (Cth) (FCA Act) with respect to certain evidence relied upon in the proceedings.

2    I am satisfied that it is appropriate for the operation of the non-publication orders previously made to continue for the following reasons.

background

3    On 13 July 2022, in an urgent application before the duty judge, the applicants (collectively, Epoch Group), obtained ex parte orders against Mr Toby Carrodus, an employee of the second applicant, Epoch Capital Pty Ltd, including interlocutory orders in respect of search, disclosure and inspection (13 July Orders). The substantive relief sought by Epoch Group pertains to copyright infringement, breaches of confidential information and contravention of s 183 of the Corporations Act 2001 (Cth). The underlying copyright works and confidential information at issue in the proceedings include Epoch Group’s MFT Software and LFT Software, both of which attract the status of being commercial-in-confidence.

4    The 13 July Orders included interim non-publication orders relating to certain annexures to the affidavits relied on by Epoch Group which included confidential trading software source code and financial information.

5    The parties have agreed to an access and review regime with respect to the data obtained in a search of Mr Carrodus’ premises on 14 July 2022 and consent orders have been made to give effect to that regime (12 August Orders). Mr Carrodus has also answered certain questions, verified by affidavit, relating to his use and disclosure of certain Epoch confidential information. As part of that disclosure process, Mr Carrodus has affirmed three affidavits. In two of those affidavits, annexed are communications with third parties that contain “Epoch Confidential Information”. On 12 August 2022, I made interim non-publication orders in respect of parts of Mr Carrodus’ affidavits dated 1 August 2022 and 11 August 2022 and required Epoch Group to file submissions to justify the continuation of those orders.

6    In its submissions, Epoch Group has sought a continuation of order 11 of the 12 August Orders, (non-publication orders). Order 11 provides :

11.     Until further order, pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) that the pages 35 to 54, 70 to 156, and 181 to 195 (inclusive) in Annexure TC2-D to the affidavit of Toby Gavin Carrodus dated 1 August 2022, pages 51 to 66, 68 to 75, 83 to 87, and 90 to 102 (inclusive) in Annexure TC3-B to the Affidavit of Toby Gavin Carrodus dated 11 August 2022, and the information contained within them:

a.    will be disclosed to the following persons only:

i.    any judge, employee or other personnel of this Court;

ii.    the Applicants, including their employees, directors, shareholders and external legal representatives;

iii.    the Respondent and the legal representatives of the Respondent; and

iv.    such other persons authorised by the Applicants or as the Court may order; and

b.    will not be open to public inspection or disclosed in open Court or disclosed in the open part of any Court transcript.

7    Pursuant to order 13 of the 12 August Orders, Epoch Group provided written submissions in support of the continuation of the non-publication orders.

LEGAL principles

8    Section 37AF of the FCA Act relevantly provides that the Court may, by making a suppression order or non-publication order, prohibit or restrict the publication or disclosure of information that relates to a proceeding before the Court and is information that comprises evidence or information about evidence; or information lodged with or filed in the Court.

9    Section 37AG(1)(a) of the FCA Act relevantly provides that the Court may make a suppression or non-publication order on the ground that the order is necessary to prevent prejudice to the proper administration of justice. The non-publication orders which Epoch Group seeks to extend were made on this basis.

10    The relevant principles as to the making of suppression or non-publication orders were summarised by the Full Court in Country Care Group Pty Ltd v DPP (Cth) (No 2) [2020] FCAFC 44; 275 FCR 377 (at [6]-[9]). For present purposes, it is sufficient to note the following summary of the principles by the Full Court:

6     Section 37AE of the FCA Act provides that in deciding whether to make a suppression or non-publication order, the Court must take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice.

7     The relevant principles in relation to the making of suppression or non-publication orders under s 37AF of the FCA Act are fairly well settled.

8    Suppression or non-publication orders should only be made in exceptional circumstances: Rinehart v Welker (2011) 93 NSWLR 311 (Rinehart v Welker) at [27]; Rinehart v Rinehart (2014) 320 ALR 195 (Rinehart v Rinehart) at [23]. That is both because the operative word in s 37AG(1)(a) is “necessary” and because the court must take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice: Rinehart v Welker at [32]; Rinehart v Rinehart at [25]. The paramount consideration is the need to do justice; publication can only be avoided where necessity compels departure from the open justice principle: Rinehart v Welker at [30]; Rinehart v Rinehart at [26].

9     The critical question is whether the making of a suppression or non-publication order is “necessary to prevent prejudice to the proper administration of justice”. The word “necessary” in that context is a “strong word”: Hogan v Australian Crime Commission (2010) 240 CLR 651 (Hogan) at [30]. It is nevertheless not to be given an unduly narrow construction: Fairfax Digital Australia and New Zealand Pty Ltd v Ibrahim (2012) 83 NSWLR 52 (Ibrahim) at [8], citing Hodgson JA in R v Kwok (2005) 64 NSWLR 335 at [13]. The question whether an order is necessary will depend on the particular circumstances of the case. Once the court is satisfied that an order is necessary, it would be an error not to make it: Hogan at [33]. There is no exercise of discretion or balancing exercise involved: Australian Competition and Consumer Commission v Air New Zealand Ltd (No 3) [2012] FCA 1430 at [21].

consideration

11    In support of the continuation of the non-publication orders, Epoch Group relies on an affidavit of Mr Gregory Gordon, the Head of Technology – MFT Desk of the second applicant, Epoch Capital, dated 12 July 2022. Mr Gordon deposes to the confidential nature of the MFT Software, including Epoch Group confidential trading strategies or trading “blocks” that underpin the MFT Software, and of the value of the MFT Software to Epoch Group. Mr Gordon further deposes as to the confidentiality and commercial sensitivity of the LFT Software, which he says is substantially the same as the MFT Software. Mr Gordon’s evidence is that if a competitor obtained the MFT Software source code (or the underlying trading strategies) it would significantly diminish the efficacy of trading undertaken utilising the MFT Software.

12    Epoch Group also relies on the affidavit of Mr Darren Mast, Chief Operating Officer of Epoch Capital, dated 15 August 2022. Mr Mast deposes to there being highly confidential and commercially sensitive information relating to Epoch Group contained in Mr Carrodus’ affidavits that are the subject of the 12 August Orders, and that if that information became publically available, it would unfairly advantage Epoch Group’s competitors in the market.

13    Epoch Group in its submissions relied upon this Court’s decision in Optiver Australia v Tibra Trading [2007] FCA 2065; 247 ALD 199 in which the Court recognised the value of sensitive information, such as that contained in a computer software program, to an arbitrage trading business. The Court observed that “[t]o reveal a successful arbitrageur’s source code could be to reveal a roadmap to its success, and undermine its competitive advantage” (at [36]). Such information may be appropriately protected by confidentiality orders, without which most intellectual property litigation would be unworkable (Optiver Australia Pty Ltd v Tibra Trading Pty Ltd (2008) 169 FCR 435; [2008] FCAFC 133 at [40]). In Objectivision Pty Ltd v Visionsearch Pty Ltd [2014] FCA 1087; 108 IPR 244 at [94], Perry J observed that “it has long been recognised that computer source code is (or can embody or contain) valuable confidential information and that the same may be said of particular information deployed in source code such as algorithms and associated development documents”, citing Ibcos Computers Ltd v Barclays Mercantile Highland Finance [1994] FSR 275; 29 IPR 25 at 59; Admar Computer Pty Ltd v Ezy Systems Pty Ltd (1997) 38 IPR 659 at 668.

14    I am satisfied on the evidence and the submissions made by Epoch Group that non-publication orders are necessary to prevent prejudice to the proper administration of justice. The relevant parts of the documents referred to in order 11 of the 12 August Orders, and the information contained therein, are of such a nature that it is in the public interest to preserve their confidentiality. I accept Epoch Group’s submission that the public interest in preserving the privacy of confidential arrangements and in doing justice as between the parties in these proceedings would be hampered if the confidential information sought to be protected by the proceedings is disclosed in the proceedings thereby leading to a diminution in the efficacy and value of the confidential information.

15    Accordingly, I am satisfied it is appropriate that order 11 of the 12 August Orders continue in operation according to its terms, that is, until further order of the Court. I note that Epoch Group has submitted that it will seek final non-publication orders with respect to all confidential information filed in this proceeding at the conclusion of the substantive proceedings.

Associate:

Dated:    16 August 2022

SCHEDULE OF PARTIES