Supreme Court New South Wales Medium Neutral Citation: Australian Leisure and Hospitality Group Pty Ltd & Anor v Dr Judith Stubbs & Anor [2012] NSWSC 215 Hearing dates: 16.02.12, 17.02.12 Decision date: 14 March 2012 Before: Nicholas J Decision: Par 1 Catchwords: INJUNCTIONS - confidential information - expert retained to advise in support of development application which was refused by council - whether the same person should be restrained from acting as an expert witness for council against the development application in Land and Environment Court proceedings - whether a real and sensible possibility of misuse of confidential information Cases Cited: Medic-Care Company Ltd v Hamilton Pharmaceutical Pty Ltd [2009] FCA 1220; (2009) 261 ALR 501 Bolkiah v KPMG [1999] 2 AC 222 Carindale Country Club Estate Pty Ltd v Astill & Ors (1993) 42 FCR 307 Elliott v Ivey [Unreported, NSWSC 23 April 1998] Farrow Mortgage Services Pty Ltd (in liq) v Mendall Properties Pty Ltd [1995] 1 VR 1 H Lundbeck A/S v Sandoz Pty Ltd [2011] NSWSC 1297 Optus Network Pty Ltd v Telstra Corporation Ltd [2010] FCAFC 21; (2010) 265 ALR 281 Protec Pacific Pty Ltd v Cherry [2008] VSC 76 Rapid Metal Developments (Australia) Pty Ltd v Anderson Formrite Pty Ltd [2005] WASC 255 Wimmera Industrial Minerals Pty Ltd v Iluka Mid West Ltd [2002] FCA 653 Category: Interlocutory applications Parties: Australian Leisure and Hospitality Group Pty Ltd - first plaintiff Martin Morris & Jones Pty Ltd - second plaintiff Dr Judith Stubbs - first defendant Shoalhaven City Council - second defendant Representation: Counsel: M J Leeming SC/J K Taylor - plaintiffs M Hall/P M Blackadder - first defendant J Lazarus - second defendant Solicitors: Corrs Chambers Westgarth - plaintiffs No appearance - first defendant Sparke Helmore - second defendant File Number(s): 12/44940 Publication restriction: Judgment 1On 27 February 2012 orders were made restraining the first defendant (Dr Stubbs) from disclosing confidential information of the plaintiffs to the second defendant (the Council) or its representative, and restraining her from assisting the Council as an expert witness in forthcoming proceedings in the Land and Environment Court. These are my reasons for making the orders. 2The first plaintiff (ALH Group) owns and develops liquor stores across Australia which trade under the names BWS and Dan Murphy's. Mr R J M Blair-Holt is the chief operating officer and a director of ALH Group. The second plaintiff (MMJ) is retained by ALH Group as a town planner. From time to time Dan Murphy's stores are co-located on a single site with other liquor stores operated by ALH Group, such as BWS liquor stores. Dr Stubbs is a consultant specialising in social and strategic planning. She has been frequently retained by developers and consent authorities to assess and report on the social impact of proposed development, and has acted as an expert in court proceedings including those in the Land and Environment Court. She is the principal of the firm known as Judith Stubbs & Associates. Background 3In about September 2008 MMJ was retained by ALH Group to provide town planning advice and a development application for the proposed development of a Dan Murphy's liquor store in Nowra. It was proposed that this store would be located on the same site as an existing BWS store. On about 4 May 2009 Mr G J Rollinson, a town planner employed by MMJ, requested Dr Stubbs to prepare a social impact assessment to support the proposed development application to the Council. On 14 May 2009 Dr Stubbs advised him that the approach she would take would: "... seek to identify opportunities to understand any adverse impacts of the existing use within the locality, and to propose positive ways that the existing application may address these impacts through design or management (mitigation)". 4During May and June 2009 MMJ provided information, as requested, to Ms Colleen Lux, a senior researcher associate to Dr Stubbs. Information was also provided to Dr Stubbs or Ms Lux by Mr Blair-Holt regarding the operation of the proposed development and the nature of the businesses conducted by Dan Murphy's and BWS, and in relation to the Dalrymple Hotel, Queensland and the Prince Mark Hotel, Victoria, and also in relation to the commercial impact of co-location of a BWS and Dan Murphy's stores including trading figures before and after co-location. 5On 17 July 2009 a first draft report was provided by Ms Lux to MMJ. 6On 29 July 2009 there was a meeting attended by Dr Stubbs, Mr Rollinson, and Mr Barry Cloke for ALH Group. A critique of the report was presented by Mr Rollinson and Mr Cloke, and was discussed. Amendments to the report were also suggested. 7By letter of 11 August 2009 to MMJ, Dr Stubbs responded to the matters raised at the meeting. The letter included the following: "Nevertheless, on balance we would be forced to conclude that there is likely to be an increase in alcohol related harm in the immediate locality and the LGA from the additional bottle shop. Due to the existing high levels of harm, and greater proportional increase in density in the immediate locality, the impacts are likely to be exacerbated by sitting the premises in this locality. As noted, the impacts are likely to be highly contextual, and no particular study precisely represents the circumstances of this development. A valid method of method of inquiry in these circumstances is a comparative case study approach. For these reasons, we recommend a desktop review of the opening of Dan Murphy's at Dalrymple and Doveton. Such a desktop review, looking at comparative demography, sales data and any increase in assaults and the like associated with the opening, may demonstrate that the impacts based on the literature are overstated, but without conducting the additional research there is no basis to form such a conclusion." 8An attachment included specific responses to matters raised in the critique referable to the relationship between alcohol outlets and alcohol-related crime. It included the following: "The important thing is to identify the characteristics of outlets and locations associated with negative impacts and see if they are found in the locality in question ... ... In this context we draw your attention to our recommendation at 6.4.1, whereby research into the impacts of the opening of similar stores at Doveton, Victoria and Dalrymple, Queensland are proposed. We believe this would provide more definitive data around possible impacts, particularly given the apparent importance of context arising from the literature." 9Subsequently Dr Stubbs was informed by Mr Rollinson that the report would not be used for the development application, and no further work was required of her. 10On 6 October 2009 MMJ lodged the development application (DA 09/2325) with the Council. It was refused on 17 May 2011. 11On 11 November 2011 MMJ commenced proceedings in the Land and Environment Court arising out of the Council's refusal of the development application. In its statement of facts and contentions filed 14 December 2011 the Council contends that the development application should be refused as it will have an unacceptable social impact on the surrounding area which is a disadvantaged locality. Particulars relied upon include assertions that the proposed development would increase the availability of alcohol (i.e. by increasing the number of outlets in close proximity and by decreasing price), and seeks to increase the density of liquor outlets on the site in circumstances where it is asserted that there is a direct relationship between the density of liquor outlets and alcohol-related harm, and between the price of alcohol and alcohol-related harm. 12On 15 December 2011 the plaintiffs' solicitors advised the Council's solicitors of their objection to Dr Stubbs acting as an expert witness in the Land and Environment Court proceedings on the ground that she would have a conflict of interest. 13In December 2011 Dr Stubbs was retained by the Council to act as an expert witness and to report to the Land and Environment Court on questions concerning the social impact of the proposed development. 14On 23 December 2011 the proceedings were fixed for hearing on 15 and 16 March 2012. It was ordered, inter alia: "12 Experts are to ensure that a joint conference is a genuine dialogue between experts in a common effort to reach agreement with the other expert witness about the relevant facts and issues. Any joint report is to be a product of this genuine dialogue and is not to be a mere summary or compilation of the pre-existing positions of the experts." 15By letter of 12 January 2012 to the plaintiffs' solicitors, the Council's solicitors advised of the intention of the Council to rely on Dr Alison Ziller as an expert on social impact issues in general, and on Dr Stubbs as an expert to address the social impact of the provision of an additional outlet for the sale of bulk discount alcohol in an area that is socially disadvantaged and experiences a high rate of alcohol-related crime. 16By letter of 20 January 2012 to the Council's solicitors, the plaintiffs' solicitors objected to the use of two experts. In addition, objection was taken to retaining Dr Stubbs on the ground that whilst engaged by ALH Group she had received confidential information which should not be disclosed. 17By letter of 20 January 2012 to Dr Stubbs, the plaintiffs' solicitors demanded that she cease to act as an expert witness for the Council. It included the assertion that whilst acting for ALH Group she had been provided with instructions and confidential information for the preparation of the social impact assessment following which she had delivered a draft social impact report in June 2009 which was revised in August 2009. It was advised that there was no consent to the use or disclosure of the confidential information, and the fear was expressed that there was a real possibility that she would use, consciously or subconsciously, the information in carrying out her engagement for the Council as an expert witness. 18By letter of 23 January 2012 to the plaintiffs' solicitors, the Council's solicitors confirmed the intention to rely on the evidence of both Dr Ziller and Dr Stubbs. It said Dr Stubbs would address the particular social impact issue relating to the provision of an additional liquor outlet in an area that is socially disadvantaged and experiences a high rate of alcohol-related crime. The existence of a real possibility of disclosure of confidential information by Dr Stubbs was denied. It was asserted that she would be able to carry out her assessment and prepare a report without reference to documents with which she may have been provided in the past. 19On 1 February 2012, on MMJ's application, the Land and Environment Court ordered that the Council be restricted to one social impact expert. 20By letter of 3 February 2012 to the plaintiffs' solicitors, the Council's solicitors advised that the Council would be relying upon the expert evidence of Dr Stubbs. 21On 8 February 2012 the statement of evidence of Mr James Lette was filed by MMJ as its expert evidence on the social impact issue. The statement includes a detailed case study of a similar Dan Murphy's store operating at Ballina for evaluation of the social impact of an operation at a site similar to that proposed at Nowra. 22The plaintiffs claimed relief because they feared there was a real possibility of disclosure of the information provided to Dr Stubbs should she act as an expert witness for the Council on the issue of the social impact of the proposed development. The principles 23The four elements of a claim for breach of confidence in equity were stated in Optus Network Pty Ltd v Telstra Corporation Ltd [2010] FCAFC 21; (2010) 265 ALR 281 to be: "39 ... There are four elements: (a) the information in question must be identified with specificity; (b) it must have the necessary quality of confidence; (c) it must have been received by Telstra in circumstances importing an obligation of confidence, and (d) there must be an actual or threatened misuse of the information without Optus' consent. See Smith Kline & French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health [1989] FCA 384; (1990) 22 FCR 73 at 87." (See also: Medic-Care Company Ltd v Hamilton Pharmaceutical Pty Ltd [2009] FCA 1220; (2009) 261 ALR 501, par 632.) 24It is generally sufficient to impose the equitable obligation if the circumstances are such that a reasonable person would have realised that the information was communicated in confidence, for example, information given to a professional person for the purposes of receiving that person's advice so long as the information was not common or public knowledge ( Rapid Metal Developments (Australia) Pty Ltd v Anderson Formrite Pty Ltd [2005] WASC 255, pars 71, 72; Protec Pacific Pty Ltd v Cherry [2008] VSC 76, par 43). 25The scope of the duty to preserve confidentiality was explained by Lord Millett in Bolkiah v KPMG [1999] 2 AC 222, pp 235-236: "Whether founded on contract or equity, the duty to preserve confidentiality is unqualified. It is a duty to keep the information confidential, not merely to take all reasonable steps to do so. Moreover, it is not merely a duty not to communicate the information to a third party. It is a duty not to misuse it, that is to say, without the consent of the former client to make any use of it or to cause any use to be made of it by others otherwise than for his benefit. The former client cannot be protected completely from accidental or inadvertent disclosure. But he is entitled to prevent his former solicitor from exposing him to any avoidable risk; and this includes the increased risk of the use of the information to his prejudice arising from the acceptance of instructions to act for another client with an adverse interest in a matter to which the information is or may be relevant. ... It is of the highest importance to the administration of justice that a solicitor or other person in possession of confidential and privileged information should not act in any way that might appear to put that information at risk of coming into the hands of someone with an adverse interest." 26A court will intervene to restrain a threatened breach of duty if there is a real and sensible possibility of the misuse of confidential information ( Farrow Mortgage Services Pty Ltd (in liq) v Mendall Properties Pty Ltd [1995] 1 VR 1). The principle is applicable to the relationship of expert witness and client ( Protec Pacific par 62; Elliott v Ivey [Unreported, NSWSC 23 April 1998]). The fact that disclosure may be inadvertent is well recognised. In Carindale Country Club Estate Pty Ltd v Astill & Ors (1993) 42 FCR 307, p 313 Drummond J said: "... It has long been recognised that a solicitor who, with the best will in the world, is determined not to make use of one client's confidential information for the benefit of another client may still subconsciously draw on that information to the disadvantage of the former." 27The risk of disclosure of confidential information extends beyond intentional disclosure to unintended or unconscious disclosure. The degree of risk is measured with regard to the particular circumstances of the case, including the nature of the relationship between the parties, the nature of the information and the circumstances in which it was imparted, and the sufficiency of any proffered undertaking of non-disclosure ( Wimmera Industrial Minerals Pty Ltd v Iluka Mid West Ltd [2002] FCA 653, pars 25, 27, 35; H Lundbeck A/S v Sandoz Pty Ltd [2011] NSWSC 1297, par 16). Determination 28The extent of the information provided to Dr Stubbs was disputed. The information had been provided electronically, but there was no documentary record of it as a result of the theft, on 26 January 2010, of the computer in which it was stored. The evidence depended upon the recollection of each of Mr Blair-Holt and Dr Stubbs. 29Mr Blair-Holt recalled that between May and June 2009 he provided either Dr Stubbs or Ms Lux with information including matter relating to the operations of the co-located BWS and Dan Murphy's stores at the Dalrymple Hotel, Queensland, and the Prince Mark Hotel, Victoria. He said the information would not have been provided had it not been requested by either Dr Stubbs or someone from her office. He said (aff 10.02.12): "15 I recall that the type of confidential information provided to the First Defendant both orally and via correspondence included: a. confidential sales trading figures with no gross margins for; i. The BWS Dalrymple store for the two years prior to 13 November 2006 and for the two years after that date; ii. The Dalrymple Dan Murphy's store for the two years after its opening; iii. The BWS Prince Mark store for the two years prior to 30 October 2008 and for the one year after that date; and iv. The Prince mark Dan Murphy's store for the one year after that date. This data compared BWS turnover from years both prior to and after Dan Murphy's was co-located with the BWS on the relevant site. b. Confidential budget and forecast figures for the Nowra BWS and the proposed Dan Murphy's Nowra store. c. Confidential retail strategies in establishing the First Plaintiff's liquor stores, applying to BWS and Dan Murphy's including: i. The different markets that each store targets; ii. Product pricing including profit margins forecasts; iii. Pricing differentiation; and iv. Business assessments regarding the co-location of BWS and Dan Murphy's." He said that the type of information referred to in sub-par (c)(ii) would have been about the different markets and pricing differentials. 30His evidence was that the information when given in 2009 was, and remains, confidential, commercially sensitive, and of value to a competitor. He said that it would not have been disclosed to a third party unless that party was retained for the purpose of providing advice. 31Under cross-examination, Mr Blair-Holt adhered to his evidence that information of the type described had been provided. He accepted that at the time there was no express communication that it was to be kept confidential. He also accepted that the information was provided for the purpose of the preparation of a social impact assessment which, if included in a report in support of the development application, would be disclosed to the public. However, he said his understanding was that Dr Stubbs would not submit a report to the Council before referring it to him. 32It was accepted that trading figures for the BWS and Dan Murphy's stores at Dalrymple and Prince Mark were provided. 33The effect of Dr Stubbs' affidavit and oral evidence was that she had no recollection of receiving the types of information described in sub-par 15(b) and (c) in Mr Blair-Holt's affidavit. She said that if any such information had been provided, she has no recollection of it, has made no use of it, and last read the documents in 2009. 34In cross-examination, Dr Stubbs was taken to passages of her report of June 2009 on the social impact of the proposed Dan Murphy's store (Ex 5) in which the source for a number of statements was identified in footnotes as "Correspondence with Ross Blair-Holt, Chief Operations Officer, ALH Group, 09 June 2009". In my assessment, the effect of Dr Stubbs' evidence overall, including as to her use of ALH Group's information in Ex 5, was that she did not deny, but could not recall, receiving the information which Mr Blair-Holt said he provided. 35Evaluation of the whole of the evidence on the issue leads to the conclusion that Mr Blair-Holt's evidence should be accepted. It also supports the findings on the probabilities, which I make, that ALH Group provided the information as described to Dr Stubbs and/or Ms Lux, and it was used for the report. 36With regard to the relevant principles, I also find, contrary to the defendants' submissions, that the information was imparted in circumstances of confidentiality, was identified with the requisite precision, and retained its confidentiality to the present time. Mr Blair-Holt's evidence on these matters supports these findings. It was uncontradicted, and I accept it. That Dr Stubbs accepted the information was confidential is indicated by the evidence that she has not disclosed it to any person, and has kept it securely since it was provided. Accordingly, in my opinion, the defendants' submissions on these issues must be rejected. 37The defendants also submitted that, by providing the information to Dr Stubbs for the purpose of a social impact assessment, ALH Group waived any claim that it was confidential. No authority was referred to. Mr Blair-Holt's evidence demonstrated, unsurprisingly, that it was not intended that any use would be made of a report which contained the information without his prior consent and approval. In my opinion, the submission was without evidentiary support, and is also rejected. 38The crucial question is whether there is a real and sensible possibility of the misuse of ALH Group's confidential information if Dr Stubbs was retained as the Council's expert witness in the Land and Environment Court proceedings. 39Under her retainer, she was required to meet MMJ's case on the social impact issue in opposition to the proposed development. Ordinary experience suggests the likelihood of discussion on the matter with Council's representatives, including its solicitors, which would not necessarily be confined to the merits of Mr Lette's conclusions based on the Ballina stores. In my opinion, it is quite possible that Dr Stubbs, as the Council's expert on this issue, would not accept these as the only, or best, comparable operations, and could inadvertently or subconsciously take into account the information concerning the operations of the co-located stores in Queensland and Victoria. Furthermore, although she might not now remember the detail of the other information, Dr Stubbs has already drawn upon it for the purposes of her 2009 report to ALH Group as being relevant to the social impact issue in support of the development application. This circumstance raises the possibility of subconscious or inadvertent disclosure in the pre-trial preparation of her evidence for the Land and Environment Court proceedings, or that she would be influenced, at least to some extent, by the information in the formulation of her opinion to the advantage of the Council. 40It is realistic to recognise, without casting doubt on her bona fides or honesty, that Dr Stubbs might have some practical difficulty in compartmentalising in her mind the various parcels of information, including the confidential information, to be considered in fulfilling her retainer by the Council. 41During the proceedings Dr Stubbs proffered an undertaking to the plaintiffs (Ex 4) to the effect that she would not use or disclose to any person, including the Council's solicitor or other representative, the information which Mr Blair-Holt described in his affidavit to be confidential. Nevertheless, in all the circumstances, I am unpersuaded that, however well intentioned, such an undertaking would be a sufficient safeguard against the risk of inadvertent or subconscious breach by Dr Stubbs of her duty. In my opinion, the appropriate remedy against the risk is an order restraining her from any pre-trial involvement with the Council or its representatives as an expert witness, or otherwise. 42It is for these reasons that the orders of 27 February 2012 were made. 43The question of costs remains outstanding. My prima facie view is that the appropriate order is that the defendants should pay the plaintiffs' costs of these proceedings. However, absent agreement, the parties should have the opportunity to make submissions on the issue, and for this purpose the parties are directed to arrange with my associate by 4pm 23 March 2012 for the matter to be re-listed. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 14 March 2012