Seeney, MP and Department of State Development; Berri Limited (Third Party)
(2002 S0105, 29 June 2004)
The applicant (a Member of Parliament and Shadow Treasurer) sought access under the FOI Act to documents relating to an application for financial assistance made by the third party in December 1999 under the Queensland Investment and Incentive Scheme (QIIS).
The QIIS is a financial assistance scheme administered by the respondent under which funds can be obtained by companies undertaking projects or planned investment in Queensland if they meet certain eligibility criteria. The third party applied for, and obtained, financial assistance in connection with the relocation of certain of its operations to the Lytton Industrial Estate. The third party's application did not meet all of the QIIS eligibility criteria, but the third party was awarded a grant of financial assistance under separate funding criteria relating to major/strategic projects. The grant was subject to certain conditions, including the third party committing to the project, and satisfying certain performance criteria including capital expenditure and employment targets.
After concessions from all participants, the matter remaining in issue was categorised as follows:
· category 1 matter - comprising references to the actual amount of the financial assistance granted to the third party, and some peripheral matter;
· category 2 matter - comprising claims for reimbursement (out of the grant monies) submitted by the third party to the respondent (containing details of subcontractors' invoices) evidencing the way in which the grant was spent;
· category 3 matter - comprising internal financial documents of the third party and other references to its business affairs; and
· category 4 matter - comprising a memorandum from an officer of the respondent to the Director-General seeking approval to offer the grant to the third party .
The respondent claimed that all of the matter in issue was exempt under s.45(1)(b), s.45(1)(c), s.46(1)(a) and/or s.49 of the FOI Act. The third party only objected to the disclosure of some category 3 matter and the category 4 matter, arguing that it was exempt under s.45(1)(b) or s.45(1)(c) of the FOI Act.
Application of s.45(1)(b) of the FOI Act
I decided that none of the matter in issue qualified for exemption under s.45(1)(b).
As far as the respondent's claim for exemption was concerned, I was not satisfied that, in administering the QIIS, the respondent was conducting a commercial activity, such that it could argue that the matter in issue had a commercial value to it within the meaning of s.45(1)(b). Rather, in granting public monies to a private business operator in order to stimulate desirable economic activity, I was satisfied that the respondent was conducting a traditional governmental function. The fact that the overall objective of grants schemes such as the QIIS is to promote commercial activity does not mean that, in making a grant to the third party for that purpose, the respondent was itself engaging in a commercial activity for the purpose of generating income or profits. Although the activity had a commercial appearance as the result of the execution of a formal agreement between the third party and the State of Queensland, the activity in question was a traditional governmental activity.
In making that finding, I followed the decision of Drummond J of the Federal Court of Australia in Secretary, Department of Employment, Workplace Relations and Small Business v Staff Development and Training Centre Pty Ltd [2001] FCA 382, 4 April 2001, (2002) 66 ALD 514 at paragraphs 58-60 (approved, on appeal, by a Full Court of the Federal Court of Australia). I distinguished the decision of the Victorian Civil and Administrative Appeals Tribunal in Re Bracks and Department of State Development [1998] VCAT 579 (15 January 1999).
Although I was of the view that the matter in issue did not have a commercial value to the respondent under s.45(1)(b) because the respondent was not, in administering the relevant financial incentive schemes, engaged in business or commercial activities, I nevertheless went on to consider the respondent's substantive claims for exemption under s.45(1)(b), at the same time as considering the third party's' claim for exemption under that provision. The respondent had submitted that the category 1 matter had intrinsic commercial value because it allowed the respondent to set a benchmark or precedent for its grants schemes (both in general sense and in the specific industry) when it came to assessing other projects seeking grants. I held that whatever value the category 1 matter might still have for the respondent in that regard did not depend on the information being kept secret, and its value in that regard could not be diminished by its disclosure under the FOI Act. The real nub of the respondent's case for keeping the information secret was that, in an environment of competition with the New South Wales, Victorian and overseas governments to attract industry and investment through financial assistance grants, disclosure of the amounts of grants paid to specific businesses would set benchmarks for comparable claims in comparable industries, that:
(a) could be used by other applicants for assistance to assess a starting point for negotiations over an appropriate grant figure, and to that extent weaken the respondent's negotiating position;
(b) enable competitor governments to assess the likely terms on which grant assistance would be offered by the respondent, and tailor their offers to outbid Queensland on projects; and
(c) this would in turn encourage forum shopping by business operators to get the best deal available.
Those arguments did not flow from any intrinsic commercial value attaching to the category 1 matter, and were more appropriate to be assessed under s.47(1)(a) (substantial adverse effect on the ability of government to manage the economy of the State) or s.49 (substantial adverse effect on the financial interests of the State or an agency).
As regards the other categories of matter in issue, I found that none of the matter in question had a current commercial value within the meaning of s.45(1)(b) of the FOI Act which could reasonably be expected to be diminished by its disclosure under the FOI Act. In terms of the third party' s claim for exemption under s.45(1)(b), I found that the relevant category 3 and category 4 matter did not have a commercial value to the third party in terms of there being a genuine, arms-length buyer for the information, nor in terms of it being important to the profitability or viability of the third party's business operations. Rather, the information in question related to a specific project completed more than three years previously.
Application of s.45(1)(c), s.47(1)(a) and s.49 of the FOI Act
I found that none of the matter in issue was exempt matter under s.45(1)(c), s.47(1)(a) or s.49 of the FOI Act.
For the same reasons as explained in the context of s.45(1)(b), I was not satisfied that the information in issue concerned the business or commercial affairs of the respondent, within the meaning of s.45(1)(c). While it was arguable that the category 1 matter (the amount of the grant) concerned the respondent's financial affairs, I said that, in my view, the better approach was that stated in Johnson and Queensland Transport; Department of Public Works (Third Party) 2004 6 QAR 307 at paragraphs 51-57; i.e., that the s.45(1)(c) exemption should only apply to agencies to the extent that the relevant agency is engaged in a business undertaking carried on in an organised way for the purpose of generating income or profits, or is otherwise involved in an ongoing operation involving the provision of goods or services for the purpose of generating income or profits. In this case, the activities of the respondent in administering the relevant financial incentive scheme did not fall within either of those descriptions. Nevertheless, I was prepared to evaluate the respondent's case for exemption under s.45(1)(c) as well as s.47(1)(a) and s.49.
As regards the category 1 matter, I observed that the respondent had, in effect, presented a 'class claim' for exemption of the amounts of all grants of financial assistance made by it (as summarised above). I noted the problems associated with making a 'class claim', and stated that I was not satisfied that disclosure of the amount of the particular grant in issue in this case could reasonably be expected to have any of the prejudicial consequences asserted by the respondent. Its precedent value was limited having regard to the particular circumstances of the relevant grant and there were too many potential variables that could affect the amount of grant assistance that the respondent would be prepared to pay in future cases. I said that even at the time the respondent made its decision in response to the applicant's FOI access application, I did not consider that it was reasonable to expect that disclosure of the amount of the grant awarded to the third party could have the adverse effect contemplated by s.45(1)(c), s.47(1)(a) or s.49 of the FOI Act.
Applying s.45(1)(c) to the category 2 matter, I was not satisfied that disclosure of the relevant information now could reasonably be expected to have an adverse effect on the business, commercial affairs or financial affairs of the third party, or on the financial affairs of the respondent.
As for the category 3 matter, it could not properly be characterised as information concerning the respondent's financial affairs because it concerned expenditure by the third party and associated financial implications of the third party's project, et cetera . While the information may have been commercially sensitive to the third party while the third party was engaged in negotiating contracts relevant to the relocation of its premises to Lytton, that was no longer the case. I therefore found that any commercial sensitivity that may once have attached to the category 3 matter had dissipated.
Applying s.45(1)(c), s.47(1)(a) and s.49 to the category 4 matter, I noted that any commercial sensitivity that once attached to the segments of information about the third party's business affairs had long since dissipated, and that disclosure could not reasonably be expected to have an adverse effect on the third party's business, commercial or financial affairs. Nor did I consider that there was a reasonable basis for expecting that disclosure at this point in time of information about the respondent's reasons for recommending the grant, could have an adverse effect on the financial affairs of the respondent, or a substantial adverse effect on the ability of government to manage the economy of the State, or on the financial interests of the respondent or the State. I therefore found that the category 4 matter did not qualify for exemption under s.45(1)(c), s.47(1)(a) or s.49 of the FOI Act.
Although it was not strictly necessary for me to consider the application of the public interest balancing tests contained in s.45(1)(c), s.47(1)(a) and s.49, I nevertheless addressed the public interest considerations weighing for and against disclosure of the matter in issue, since the applicant and the respondent had provided extensive submissions on that issue. I gave detailed consideration to the Auditor-General's Report No.3 of 2002-03, the Public Accounts Committee's Report No. 61 ( "Commercial-in-confidence arrangements"), and a speech given in November 2002 by the Chairman of the Productivity Commission ("Inter-State bidding wars: calling a truce"). I decided that, with the exception of a small amount of the matter in issue, there were significant public interest considerations favouring disclosure of the matter in issue, primarily, the public interest in enhancing the accountability of the respondent in administering the relevant grants schemes, and enabling interested members of the public to properly assess the costs and benefits of the expenditure of public monies to attract or retain business investment in Queensland.
Application of s.46(1)(a) of the FOI Act
With the exception of the category 3 matter in issue, I found that none of the matter in issue qualified for exemption under s.46(1)(a) of the FOI Act.
The respondent's submissions under s.46(1)(a) invoked primary reliance on a contractual obligation of confidence in clause 22 of the Financial Assistance Agreement between the State of Queensland and the third party. An equitable obligation of confidence was relied upon by the respondent in the alternative.
I noted that clause 22 of the Agreement imposed an obligation on the respondent to treat as confidential all "commercial intelligence" arising from the project (subject to specific exceptions), but that clause 22.2 specifically reserved to the respondent the right to disclose certain information, including details of the "Financial Assistance" (as defined in the Agreement) and the project. A separate obligation of confidence was imposed on the third party in respect of all information in relation to or in connection with the "Financial Assistance".
I decided that disclosure by the respondent under the FOI Act of the category 1 matter could not found an action by the third party (the third party being the only plaintiff with standing to sue for a breach of clause 22) for breach of a contractual obligation of confidence because of the unilateral and unconditional right of the respondent to disclose that information under clause 22.2 I was not satisfied that any concurrent equitable obligation of confidence binding the respondent would be subject to any different conditions/exceptions to those negotiated and included in the written Agreement. I also noted that there is a public interest exception to an action for breach of confidence concerning information supplied to government, that takes into account the public's legitimate interest in obtaining information about the affairs of government. I reiterated my view that there were strong public interest considerations favouring disclosure of the category 1 matter.
I decided that the category 2 information was too innocuous to have sufficient commercial value or sensitivity to the third party such as to qualify as "commercial intelligence" warranting confidential treatment by the respondent under clause 22.1 of the Agreement. In any event, the category 2 matter answered the description of "details of the Financial Assistance" in clause 22.2, and the respondent was therefore expressly permitted to disclose such information. Accordingly, its disclosure could not found an action for breach of a contractual or equitable obligation of confidence. Similarly, I found that the category 4 matter either could not be described as "commercial intelligence" within clause 22 of the Agreement, or was information already in the public domain, or was information that it would be in the public interest to disclose, such that it could not qualify for exemption under s.46(1)(a) of the FOI Act.
However, I considered that the category 3 matter had some commercial sensitivity when it was first communicated to the respondent some 3-4 years earlier, and that the respondent would have been obliged to accord it confidential treatment in accordance with clause 22.1 of the Agreement. While I considered that it had now lost any commercial sensitivity, it had remained secret, and the third party continued to object to its disclosure. I found that the third party was entitled to continue to rely on clause 22.1 of the Agreement which imposed on the respondent a continuing obligation to treat the category 3 matter in confidence. I therefore found that disclosure of the category 3 matter would found an action for breach of a contractual obligation of confidence, and that the category 3 matter therefore qualified for exemption under s.46(1)(a) of the FOI Act.
Addendum to decision
For reasons explained in an addendum to my decision (which was able to be disclosed to the applicant, and published in accordance with s.89(5) of the FOI Act, only after the respondent withdrew judicial review proceedings in respect of my decision), I was satisfied that the category 1 matter was readily ascertainable from records in the public domain, and that, on that additional ground, the category 1 matter did not qualify for exemption under s.45(1)(b), s.45(1)(c), s.46(1)(a), s.47(1)(a) or s.49 of the FOI Act.