Case: Mobil Oil Australia Ltd v Guina Developments Pty Ltd (1995) 33 IPR 82
Outcome: followed
The leading Australian case is Mobil Oil Australia Ltd v Guina Developments Pty Ltd (1995) 33 IPR 82. Roads Corporation, sometimes known as VicRoads, a statutory corporation, had called for expressions of interest for the development of a service centre. Mobil was the successful tenderer. Guina Developments sued VicRoads for a declaration that its choice of Mobil was invalid. The parties were required to make discovery. VicRoads objected to the production of documents that disclosed trade secrets (rates of return) that had been provided to it by Mobil, which was then joined to the action to protect its interests. The judge ordered the documents be disclosed. Mobil successfully appealed. The judgment of the Court of Appeal was delivered by Hayne JA (as he then was). He said first (33 IPR at 87) that merely because documents contained confidential information that did not ordinarily constitute a sufficient reason to deny inspection. In most cases in his opinion the rule that the information could not be used except for the purposes of the litigation was a sufficient measure of protection. But Hayne JA said that disclosure of confidential information to a trade rival fell into a different category. The reason was that "Once the documents are inspected by the principals of the trade rival the information which is revealed is known to the trade rival and cannot be forgotten." (33 IPR at 87). There was also the problem that the party whose information has been disclosed will likely never know when and how the information has been used. Hayne JA went on to say (33 IPR at 88) that the problem facing the court was "one of balancing the needs of a party to the litigation and the legitimate concern of a trade rival to retain secrecy of commercially sensitive information". That would justify distinguishing between a party and its advisers making it permissible, in an appropriate case, to deny inspection to a party but not to its lawyers and experts. He said (33 IPR at 89) that it was not possible to frame a rule that covered all cases but "each case will fall for determination, according to its own facts. In particular the nature and the content of the disputed documents is a matter that will usually, if not invariably, be of great importance in forming a conclusion and, if that is so, it will be appropriate for the judge to inspect the documents concerned." 12 As is apparent from a review of the cases, the problem that confronts the court is the risk of inadvertent or accidental disclosure. The risk is two-fold. First, it involves the unconscious use of confidential information. That is to say, information which once in a person's possession cannot be distinguished from other information in the person's possession. The other kind of inadvertent use is when it is impossible to ignore the confidential information once it is known. That is the kind of inadvertent disclosure, I think, Hayne JA had in mind in Mobil . 13 There is another risk to guard against in the case of disclosure of extremely potent information to in-house counsel, although the risk is not confined to in-house counsel. Providing confidential information to in-house counsel could produce a conflict between his duty of loyalty to his principal and his duty to keep the confidential information to himself. This could place in-house counsel in a position of great difficulty. Proper advice may not be forthcoming. Counsel's hands may be tied in the further conduct of the litigation. It may make it impossible to avoid unwitting disclosure in a prolonged working relationship. These are all dangers that, in some cases, need to be fended against. 14 Returning to the case at hand, it has not been possible for me to do more than examine a few of the respondents' confidential documents. The case was conducted on the basis that this would be sufficient for me to arrive at a decision. My examination of the documents satisfies me that some parts are confidential. What is not clear is how the information might be used by the applicant to disadvantage the respondents. For present purposes, however, I propose to act on the basis that this is a real possibility.