“Confidential” Means Confidential

Crown Resorts V Zantran

Clauses requiring parties to keep information confidential are frequently found in contracts. These may typically be contracts of employment, but also many other contracts.

Generally, obligations of confidentiality in contracts have been held by Courts to be effective and enforceable in accordance with their terms. However, in 2016 in a case in the Victorian Supreme Court AS v Minister for Immigration and Border Protection,^[1] it was held that there might be exceptions to the enforceability of confidentiality provisions.

The decision of AS v Minister for Immigration and Border Protection involved an application by solicitors (Maurice Blackburn) on behalf of an asylum seeker on Christmas Island to interview a former employee of Serco in relation to an action against the Minister and Serco and others claiming damages for allegedly failing to take proper steps to protect the asylum seeker from self-harm.

Maurice Blackburn wished to interview the former Serco employee before trial to avoid having to call him as a witness (“cold”) in the proceedings when they came to trial. The Judge, Forest J, held that there were confidentiality provisions in the contract of employment of the former employee which, on their face, required the employee to keep information confidential and which would have precluded any discussion with Maurice Blackburn prior to trial.

However, the Judge found that:

An obligation of confidentiality (whether contractual or equitable) will not be enforced by a Court, or will be treated by a Court as void, if it has an adverse effect on the administration of justice

and that …

This principle is applicable to both criminal and civil proceedings.

The Judge also found that for the protection of a confidence to be lost:

There must be some ‘public element’ relevant to the administration of justice that is affected.

In these circumstances, the Judge found that in his view the public interest in the administration of justice outweighed the maintenance of commercial confidence and that Maurice Blackburn was able to interview the Serco employee prior to trial. He said:

I am conscious of the need to protect contract bargains and accept that this conclusion is a departure from the determinations in other cases but this is a different case in a different legislative paradigm.

Crown Resorts v Zantran

The judgement in AS v Minister for Immigration and Border Protection has recently been reviewed by the Full Federal Court in a judgment on 22 January 2020 in Crown Resorts Limited v Zantran Pty Limited^[2]. That case involved an application, also by Maurice Blackburn, that certain former employees of Crown Resorts should be relieved of obligations of confidence and allowed to confer with Maurice Blackburn in relation to a class action involving security holders of Crown Resorts. The allegations were that Crown had engaged in misleading and deceptive conduct in relation to risks of conducting its business and operations in China. A number of former employees of Crown were convicted in China of gambling offences.

Some of the former employees were said to be willing to speak to Maurice Blackburn. There were, however, obligations of confidence both in employment contracts and Finalisation Deeds entered into on the termination of their employment.

The primary Judge in the trial followed the decision in AS v Minister for Immigration and held that the former employees were relieved of their contractual confidentiality obligations for the limited purpose of conferring with Maurice Blackburn and to provide witness statements prior to the initial trial.

On appeal, the Full Federal Court reversed this decision and held that the approach of Forest J in AS v Minister for Immigration was in error.

The Full Court, Allsop CJ, White and Lee JJ, was unanimous. Judgments were delivered by the Chief Justice (with whom White J agreed) and by Lee J. These judgments indicated that the error in the approach of Forest J, and in the Court at first instance in Crown Resorts v Zantran, was to accept a proposition that a Court possesses a discretionary power to relieve a person of an obligation of confidence. Allsop CJ said:

The error was in applying the approach of J Forest J in AS v Minister for Immigration and Border Protection (Ruling No 6) [2016] VSC 774; 53 VR 631. That approach involved the proposition (reflected in the terms of the relief sought and granted in the proceeding below) that the Court possessed power, discretionary in character, to relieve a person of a subsisting and otherwise enforceable obligation of confidence owed to a party to the litigation if to do so, on balance was in the interests of the more convenient of the litigation and so in the administration of justice.

And, further:

[The] protection or vindication of rights and enforcement of duties and obligations according to principle and by legitimate judicial technique and methods marks out the nature of judicial power. Any proposition that, in aid of more efficient exercise of such power, a Court has authority to set to one side, revoke or suspend a party’s legitimate right to call for confidence or silence in another so as to “relieve” that other from the burden of the obligation calls into question the legitimacy of such authority, and whether it could properly be seen as an incident of judicial power.

Following the Crown Resorts v Zantran decision, parties may feel more comfort in the certainty of enforcement of obligations of confidence in their contracts. Some sympathy may be felt for the circumstances of the asylum seeker in the AS v Minister for Immigration and Border Protection decision, but this may perhaps be regarded as an instance of the old adage that hard cases make bad law.