Tuesday, May 19, 2009

Times London Article

Does anyone understand what the Privy Council does?

A new report says the body of advisers dating back to feudal times can no longer escape constitutional reform

A shaft of light was cast last week on the Privy Council, one of the most obscure and unknown parts of the British constitution and hidden parts of the justice system.

The law lords who sit as the Privy Council's Judicial Committee ruled that a gallantry medal established by the Queen for Trinidad and Tobago was unconstitutional because it discriminated against non-Christians.

But what is the Privy Council - and its court? A recent report by Justice, the law reform body, says that “the lack of accessibility and transparency of the Privy Council means that almost no one understands its processes”.

The Council is a body of advisers to the Queen dating back to feudal times when the monarch ruled by divine right. Yet the Privy Council and its court are far from a relic of history.

Until recently, its members took precedent over other MPs whom the Speaker might call on to speak - and they could speak for longer. They also take precedence after Knights of the Garter and of the Thistle when it comes to ceremonial hierarchy.
More important, though, Privy Counsellors can make orders that bypass Parliament, while still having the same force as democratically passed laws. And their laws don't have even have to carry a statement that they comply with the European Convention on Human Rights.

Meanwhile, its court, the Judicial Committee, operates away from the public eye, in a little-visited room off Downing Street. But it has the power to save a person from death or, for instance, as in its recent ruling, to dispossess Chagos Islanders from their homes.

As Roger Smith, the director of Justice, put it in his forward to a Justice report: “Many people may have heard of its judicial committee, but its other roles emerge from the constitutional fog only occasionally.”

The Privy Council’s continued existence, he added, is “regarded as vaguely charming and largely formal”. But it can still display “the power that once it had more widely as an instrument of feudal rule”.

The Justice report, a fascinating expose by Patrick O’Connor, QC, of Doughty Street Chambers, notes that even the statutory definition of the Privy Council is circular: it is defined as the members of “Her Majesty’s Most Honourable Privy Council”.

The term was first coined under Henry V in the early 15th century; by then it had had jurisdiction to deal with finance, aliens and trade, the church and preservation of the King’s Peace. By 1487 its judicial function became the infamous Court of the Star Chamber, specialising in supervising the press and public morality.

Who are Privy Counsellors? Currently there are more than 540, mostly senior politicians who were once MPs. As with a gentlemen’s club or secret society, members swear allegiance to the Queen and to “assist and defend...against all Foreign Princes”.

Their task is to advise the sovereign on the exercise of the Royal Prerogative, her personal powers, and carry them out on her behalf.

Patrick O’Connor says: “Some of these powers are purely symbolic and ceremonial: some are of constitutional importance and high sensitivity. In the latter cases, the advisory role is often a fiction: the Privy Council is a vehicle for executive decisions by the Government, formally issued under the name of the monarch.”

The Lord President is always a Cabinet minister and normally also is leader of the House of Commons or the Lords. It is described as “synonymous” with government. But there are many hundreds of Privy Counsellors, Mr O’Connor notes, who are nothing to do with the current government.

Once out of high office, no counsellor – they are all appointed for life - is consulted or summoned to meetings, he says, “save upon the sovereign’s demise or marriage”. And, he notes, its rapid expansion in recent decades leaves the impression, at least, that it is “another resource for Government patronage”.

In 2007, a snapshot showed it met 13 times formally, on issues ranging from UN sanctions against North Korea to the charter of the Royal Caledonian Horticultural Society. There is no consistent rationale for these diverse functions, Mr O’Connor says. “They are little more than a rag bag of historical accidents.”
As for the Judicial Committee, it is made up of the same 12 law lords who make up Britain’s highest court, namely the Appellate Committee of the House of Lords, occasionally supplemented by leading foreign judges.

It acts as the final court of appeal for many former colonies and UK overseas territories, mainly in the Caribbean but also including appeals from the Channel Islands and Isle of Man, Admiralty appeals from the Cinque Ports, and disciplinary appeals involving doctors and dentists as well as some appeals from ecclesiastical courts.

Since 1998 it has also had power to rule on constitutional appeals arising over devolved powers to Scotland and Wales.

In recent years its overseas jurisdiction has reduced as successive countries have cut off the Privy Council as a court of final appeal: Canada, India, Sri Lanka, African nations, Singapore and, most recently, Hong Kong and New Zealand have all withdrawn.

In all it handles about 55 to 65 Commonwealth and devolution appeals a year, appeals nominally to the Queen as head of state. The judges, notes Mr O'Connor, do not make decisions like other courts; they “humbly advise Her Majesty” whether to grant a petition to the appellant. But the Queen can also refer to it any matter that she wants to. In effect, he says, it is “an embryonic, but unused, constitutional court”.

The Privy Council, he says, cannot escape any programme of constitutional reform, concluding it is a “dysfunctional body” with an “eclectic range of work” - part government, part independent court, part a forum for the monarch’s remaining personal powers and part “a theatre for benign historical ceremonial”.

From this autumn the Judicial Committee will move to a room in the new supreme court building due to open in Parliament Square. It will be a welcome move of another court in the UK justice system into a more transparent and open world.

Wednesday, November 7, 2007

Arklow vs.Maclean




The Privy Council

Judgement by New Zealander Justice Henry

On 14th October 1999 at the conclusion of the hearing their Lordships agreed humbly to advise Her Majesty that the appeal should be dismissed and that they would give their reasons later. This they now do.

The appeal is from a judgment of the Court of Appeal of New Zealand delivered on 16th July 1998 ( Maclean v. Arklow Investments Ltd., and results from the sale of Matakana Island, which lies across the entrance to Tauranga Harbour on the eastern coast of the North Island of New Zealand. A forest, consisting mainly of radiata pine, extends over much of the area of the island, which approximates 4,300 hectares. The vendor of the sale in question was Matakana Forest Ltd., which had been placed in receivership in October 1990. The receivers put the island up for sale in February 1991, and it remained on the market until the sale was negotiated in late 1992. During that year milling of the mature trees was in operation.

The relevant facts are fully set out in the majority judgment of Richardson P., Gault and Keith JJ. delivered by Gault J., and need not be repeated in detail. They are also reviewed comprehensively by Thomas J. in his dissenting judgment. The background to the proceedings can be stated quite briefly. The appellant Mr. Wingate had become interested in the purchase of Matakana Island in July 1991, his intention being to develop the land for residential, recreational and resort uses. Arklow Investments Limited was to be the vehicle for this venture. On 15th June 1992, the FAR group of companies, which operated a merchant banking business, were approached on behalf of Mr. Wingate with a view to obtaining the group’s assistance in raising finance to enable the proposal to proceed. Mr. Wingate had previously employed another merchant banker, Fay Richwhite & Co. Ltd., for that purpose but their relationship had been terminated.


Reply;Martin Reesby a Fay Richwhite executive was caught on tape trying to steal the deal from Arklow. It was after this Arklow were recommended to Far Financial.

On 16th June 1992, in response to that approach FAR made a written proposal setting out the terms on which it would accept appointment.

Those terms were not acceptable to Mr. Wingate, and on 15th July 1992 FAR gave written notice of withdrawal of its mandate offer.


Reply;June 15 1992
Arklow provided Wellington merchant bank FAR Financial with a business plan on how Arklow would end up with 10,000 acres of prime coastal development land for free.

FAR directors promised confidentiality both orally and in writing.

Arklow approached Far Financial to borrow $4.25m

Within 48hrs of receiving the business plan FAR were putting a deal in place without Arklow .

June 16
FAR Financial provided Arklow with a proposal on not how they could provide the money, but rather how Arklow could pay FAR $5000 to try finding the $4.25m.

Arklow printed their own information memorandum and sent it to FAR offering them 25% of the deal if they came up with the $4.25m and left them to decide on that.

Evidence at trial showed that FAR Financial were in imminent financial ruin facing a written demand from the National Bank.

Within days of getting Arklow’s business plan and before doing any research FAR Financial offered Matakana forest to ITT Rayonier for $15.6m.

The Arklow Kanematsu deal was $15.75m for the 17-34 year age.

The New Zealand Supreme Court decision in Chirmside v Fay deals with this issue but delivers a different result.

Justice Tipping and CJ Elias in Chirnside V Fay
Lord Hodson in Boardman v Phipps:

It does not appear to me that this rule is, as has been said, founded upon principles of morality. I regard it rather as based on the consideration that human nature being what it is, there is danger, in such circumstances, of the person holding a fiduciary position being swayed by interest rather than duty, and thus prejudicing those whom he was bound to protect.

[93] The point, in short, is that joint ventures, like partnerships, can generally be brought to an end by appropriate notice.

The previous joint venturers must, however, still act equitably towards each other in the steps necessary to bring the affairs of the joint venture to a conclusion which is fair to all concerned. The further the joint venture has progressed the more complex those obligations may be. Once the venture becomes contractual the contract will normally govern what is to happen on the termination of the venture or the withdrawal of a party from it. In the absence of contractual regulation, equitable principles will supply the solution.

93 See Maclean v Arklow Investments Ltd [1998] 3 NZLR 680 at 760 (CA) per Blanchard J. This aspect was not addressed in the Privy Council.)



FAR proceeded to broker arrangements with other parties for the purchase of the island, which ultimately led to the February 1993 sale now in question. The transaction initially comprised a composite arrangement, under which ITT Rayonier Ltd. had acquired the forestry right to the mature standing timber, Ernslaw One Ltd. acquired the land, the remaining timber and some associated assets, and a FAR group member company acquired the balance of the assets, particularly the mill and the mill land. The total purchase price was $20.7 million, of which $50,000 was paid by the FAR interests.

Reply; FAR never paid this money .It was paid by Ernslaw One. The term broker is a defence invention to describe a dishonest Banker. This was a FAR led deal – See FAR’s CML/Joseph Banks letter 1 September 1992- written by Far Financial consultants Frank Graham and Ian Smith it says- Proposal to CML/Joseph Banks Trust for the underwriting, funding of a securitised forestry investment. The Far group through Far Forestry is working to secure a long-term land resource known as Matakana Island. Far Financial Consultants is the investment banking arm of the Far group. As such it is acting to facilitate Far Forestry’s objective by managing for Far Forestry its purchase of Matakana and the packaging and on sale of the existing forests. FAR is contributing significantly to the purchase of Matakana from its own resources. However in order to fully fund the purchase of Matakana Far Forestry must sell forestry rights to the existing forest. A registered forestry right over trees planted during and before 1974(17-34 year trees) is to be sold to a major forestry company, which has, confirmed its intention to enter into a sale and purchase agreement with FAR for these trees subject to valuation…end…..Attached to that offer to CML were Arklow’s photographs of Matakana which FAR denied ever receiving)

This transaction, originally negotiated in November 1992, was restructured to overcome statutory requirements governing acquisition by overseas interests. There has also been a subsequent re-arrangement of interests which are not relevant to matters now in issue. In broad terms the appellants, for convenience referred to as Arklow, contend that in taking the actions it did leading to the November 1992 transaction, FAR breached its fiduciary duties to Arklow. Two separate causes of action were pleaded in that respect.

In an interim judgment delivered in the High Court on 5th May 1997, Temm J. answered a series of specific questions governing the issue of liability. They were framed as follows:-

"1. In relation to the cause of action of breach of fiduciary duty owed by FAR to Arklow/Wingate:

(a) whether the FAR interests owed a fiduciary duty to the plaintiffs and

(b) If there was a fiduciary duty, did FAR breach any fiduciary duties.

In relation to the cause of action of misuse of confidential information:

(a) as to whether FAR Financial and/or other of the FAR interests received confidential information:

(i) whether those defendants received the information which the plaintiffs claim to have conveyed;

(ii) whether such information as they did receive was confidential;
(b) whether the FAR interests were under an obligation not to use the information received by them other than for the purposes for which it was conveyed;

(c) if the FAR interests received confidential information, and were under an obligation not to use it other than for the purposes for which it was conveyed, whether they did use it other than for the purposes for which it was conveyed;

(d) if detriment to the plaintiff is a relevant ingredient of a cause of action founded in breach of confidence – whether or not Arklow/Wingate suffered any loss or damage, and hence any detriment, as a result of the FAR actions."

Temm J. answered all questions in the affirmative. In the Court of Appeal, the majority judgment delivered by Gault J. considered the separate issues of breach of fiduciary duty not to promote or become involved in a competitive acquisition of Matakana Island, and of breach of the duty not to misuse confidential information. They held that the evidence did not establish that there was an actionable breach of either duty. Blanchard J. held that there were breaches of those or similar duties, but that they were relatively minor and not causative of any loss to Arklow.


Reply;The evidence at trial by DRT Receiver Rod Pardington responsible for selling the Matakana assets was clear and simple- If FAR Financial was not there Arklow was the only other buyer. Arklow had the funding from Kanematsu $15.75m buying the 17-34 year forest and $5m plus from businessman Peter Spencer for an agreed 50% of the Arklow project

In his dissenting judgment, Thomas J. took the view that FAR owed Arklow a duty not to act contrary to Arklow’s interests, that it had done so in breach of that duty, and further that FAR had misused information which was confidential to Arklow.

Although their Lordships heard extensive argument on both the nature and extent of fiduciary duties and the facts of the case, they have reached the conclusion that the real issues on appeal fall within a rather narrow compass which can be resolved without the need for either a comprehensive or detailed consideration of the law or a close review of the evidence.

In the course of his argument, Mr. Underhill Q.C. for Arklow stressed that in this case there was a considerable overlap between the duty "not to be disloyal" and the duty to respect confidence. It was clear however, that as in the Court of Appeal and in the High Court, a major plank in Arklow’s case was that FAR did have a fiduciary duty which was wider than the duty not to misuse confidential information, and extended in the circumstances to that described by Gault J. as one not to promote or become involved in a competitive acquisition of Matakana Island whether or not confidential information had been used. It is immediately apparent that protection of confidential information may be involved in or form an integral part of such a duty, and misuse may be evidence of a breach of that duty. But as the case was pleaded and argued on the basis that there was a duty which was actionable for breach in the absence of any misuse of confidential information, it is necessary to consider that contention. The first issue therefore is whether FAR owed a fiduciary duty of that nature to Arklow.

Duty of loyalty

The description of the duty under consideration as being one of loyalty was not seen by Mr. Underhill as being the most appropriate one, but for present purposes it is convenient to label it in that way. In the present context, the concept encaptures a situation where one person is in a relationship with another which gives rise to a legitimate expectation, which equity will recognise, that the fiduciary will not utilise his or her position in such a way which is adverse to the interests of the principal. An example of the obligation relevant to the present case is not to exploit or take advantage of the position of fiduciary at the expense of the principal. The existence and the extent of the duty will be governed by the particular circumstances. It is therefore essential at the outset to turn to the circumstances which it is said gave rise to FAR’s duty of loyalty. The basic facts are not in dispute. They do not require any critical consideration of Temm J.’s findings on any of the primary facts, and can be summarised quite briefly.

In reaching this conclusion, their Lordships have not overlooked the evidence of Mr. Pryke, an experienced economist and financial adviser, whose opinion as to standard practice in this field supported the duty of loyalty claim. Evidence of practice and accepted standards of professional conduct may be of assistance in determining what is essentially a question of law, but it cannot be determinative. It must be said however that the obligations defined by Mr. Pryke as applying in this case were expressed in surprisingly wide terms and do not in their Lordships’ respectful view equate to the law.


Reply;The evidence of Phil Pryke in Arklow’s defence stated the banking industry would collapse if such breach of trust were the accepted practice because trust is the foundation of the relationship between bankers a potential client or existing client. If not bankers would open shop to obtain information to exploit clients and that would be the end of banking business. If the process of seeking and receiving advice from investment bankers and simular financial instititutions is to remain viable it is essential that information entrusted in confidence be respected. This applies as much to information in the early stages of contact between the parties when they seek to explore whether or not they wish to enter into a contract as to information imparted later. If persons cannot make approaches to investment bankers on the basis of strict confidentiality then the whole system of giving and receiving financial help and advice from businesses of this type will be put in jeopardy.

Whether or not the obligation not to misuse confidential information is properly classed as a fiduciary duty ( Attorney-General v. Blake, 454; LAC Minerals Ltd. v. International Corona Resources Ltd., such as the obligation of loyalty which Arklow relies upon in the present case, will depend upon the particular facts. To repeat the words of Millett L.J. in Bristol and West Building Society, it is the obligation and duty which makes the obligor a fiduciary. Characterising the duty to respect confidential information as fiduciary does not create particular duties of loyalty, which are imposed as a result of the nature of the particular relationship and the circumstances giving rise to it. It is not the label which defines the duty.

Misuse of confidential information

The second issue is whether FAR breached its obligation of confidentiality.


Reply;New Zealand Court of Appeal in Bank of New Zealand v New Zealand Guardian Trust Co Ltd adopted a strict approach to compensation for breach of the fiduciary duty of loyalty. Tipping J stated: In the second kind of case, the trustee or other fiduciary has committed a breach of duty which involves an element of infidelity or disloyalty engaging the fiduciary’s conscience — what might be called a true breach of fiduciary duty... . In short, in such a case once the plaintiff has shown a loss arising out of a transaction to which the breach was material, the plaintiff is entitled to recover unless the defendant fiduciary, upon whom is the onus, shows that the loss or damage would have occurred in any event, i.e. without any breach on the fiduciary’s part. Questions of foreseeability and remoteness do not arise in this kind of case ... . Policy dictates that fiduciaries be allowed only a narrow escape route from liability based on proof that the loss or damage would have occurred even if there had been no breach.

It is common ground that the obligation not to use confidential information attaches only to information which has the necessary element of confidentiality and continues only so long as the information remains confidential ( Saltman Engineering Co. Ltd. v. Campbell Engineering Co Ltd. Coco v. A.N. Clark (Engineers) Ltd. [No. 2]


Reply; The law being quoted was from a different type of relationship altogether. The Saltman Engineering Case. Saltman Co, the plaintiff, had conceived the idea for some leather punches, and it asked another company todraw up plans for the punches. The second company instructed a third company, the defendant, to manufacture the dies in accordance with the plans provided by the second company. The defendant company then used the information to make leather punches for sale by themselves. Design drawings were given to the defendant to manufacture tools. After the order was complete they retained the drawings and carried on using them for their own profit. There was an implied term that the drawings were confidential. Lord Greene said: The information, to be confidential, must….apart from contract, have the necessary quality of confidence about it, namely, it must not be something which is public property and public knowledge. Fiduciary obligations arises where one person possesses unilateral power or discretion on a matter affecting a second "peculiarly vulnerable" person. The vulnerable party is in the power of the party possessing the power or discretion, who is in turn obligated to exercise that power or discretion solely for the benefit of the vulnerable party. A person cedes (or more often finds himself in a situation where someone else has ceded for him) his power over a matter to another person. The person who has ceded power trusts the person to whom power is ceded to exercise the power with loyalty and care. This is the notion at the heart of the fiduciary obligation.


The test for a cause of action for breach of confidence in the common law world is set out in the case of Coco v. A.N. Clark (Engineers) Ltd, (1969) R.P.C. 41 at 47: the information itself must have the necessary quality of confidence about it; that information must have been imparted in circumstances imparting an obligation of confidence; there must be an unauthorised use of that information to the detriment of the party communicating it As stated by Megarry J in Coco v. A.N. Clark (Engineers) Ltd, a court may require a detrimental use of the confidential information. This would place the duty of confidentiality in a different category to fiduciary relationships which do not require any detriment to the principal or beneficiary.)

"(a) That all the assets available for sale by the receivers could be bought for $20 million.

(b) That the mature forest (aged 17 years and over) could be sold for $13 million (and maybe more if [an] estimate of value at $15.75 million could be sustained).

(c) That the immature forest could be sold for $3 million to $4 million for the radiata trees, and the eucalyptus trees could fetch up to $3 million in addition depending on market forces.
(d) That the mill had a break up value of $1 million to $1.5 million.

(e) That [Arklow] had a buyer for the mature forest which was willing to provide $15.75 million in cash.

(f) That [Arklow’s] scheme was practicable and feasible if suitable financial arrangements could be made."

The sources of the information were the discussion Mr. Bailey had with the FAR directors on 15th June, the Fay Richwhite document, and the Arklow brochure distributed as from the end of June. The scheme referred to was described by Temm J. as one by which Arklow could acquire the whole of the assets without putting up cash of its own, providing approximately $5 million could be raised on the security of assets other than the mature forest. Some observations as to the confidential nature of this information can be made.

First, the price of $20 million. This was the figure set by the receivers in March 1992 as the minimum acceptable, and as such originally would have been confidential to them. Whether this information was received by Arklow in confidence is unclear, but what the evidence did show was: the receivers were prepared to disclose it to parties believed to be in serious negotiation to purchase (it was in fact disclosed by them to FAR by August 1992); $21 million was seen by Mr. Olsen, a forestry consultant, as a price likely to be acceptable to the receivers, and he had told FAR shortly before the meeting of 15th June that the value of all assets was in the range of $21 million to $27 million; and Arklow’s own brochure of June 1992 disclosed to all recipients the contemplated purchase price of approximately $20 million.


Reply;FAR asked them to confirm that price was acceptable. The receiver Mr Pardington said in his evidence no on else apart from Mr Wingate knew that $20m was an acceptable price for the asset ( Several tape recordings of telephone and face to face expose what Mr Olsen was saying in court was false. At the time of giving his evidence Mr Olsen was on the payroll of at least 3 of the defendant companies, FAR Financial, Tekotukutuku and Blakely Pacific.

Secondly, the forest valuation. As Temm J. expressly recognised, the value of the forest (and the mill) may well have been known to other experts if appraisals had been undertaken by them. That must be so. As an example Mr. Olsen, with whom FAR had had previous dealings, had been involved with Matakana Island since 1971. In 1991 his company had been consulted concerning the establishment of a joint venture between a real estate developer and a forestry partner, and his then estimate of $21 million as a likely acceptable price for land and trees obviously required an assessment of the value of the forest. Nothing unique or unusual in the valuations made available by Arklow was identified. Thirdly, the scheme. Mr. Wingate’s interest in Matakana Island and its development was public knowledge.

Reply;Mr Olsen was on the payroll for 3 of the defendant companies. He was caught on tape saying Far Financial owed him money and were tire kickers.
There was no information in the media about Arklow’s business strategy or how Arklow was going to end up with 10000 acres of land for free.


Development of this nature obviously involved disposal of the mature forest, which in 1992 was in the process of being milled. The perceived value placed on the assets by the receivers, and the availability of a purchaser (Kanematsu) for the mature forest would seem to be the only possibly significant features of the scheme.

Accepting there was a receipt by FAR of confidential information, the crucial issue is whether Temm J.’s conclusion that FAR misused it is supported by the evidence. That conclusion was expressed very shortly in general terms, but without any specific findings as to how or when the use occurred. The relevant evidence possibly going to use has been comprehensively analysed in the judgment delivered by Gault J. The analysis revealed that there was neither evidence of actual use of the identified items of information, whether individually or in combination, nor that there was any basis for the inference that there had been use.


Reply;The Arklow deal for the 17-34 year forest was $15.75. The FAR / ITT deal was first attempted at $15.6m. Just because ITT negotiated FAR down to $13.2m is no reason to suggest the deals were different for the purpose of determining if a breach of confidence had occurred as that would give permission to bankers and financial advisors all over the world to simply alter a deal by a small amount for them to escape the fiduciary relationship of trust and obligations.

It was not suggested that the two participants in the FAR transaction (ITT Rayonier and Ernslaw) had been given or used information received by FAR. Both these parties had had previous dealings with FAR, the former had already undertaken its own research into Matakana Island in 1991.

Reply;There was no evidense of a relationship between Far and Ernslaw under late October 1992. There was no evidense Far has discussed Matakana with ITT until after Far had the Arklow information. ITT Rayonier profit from this deal was $20m plus from culling the 17-34 year forest. ITT lawyer Patricia Fordyce told Sir Peter Tapsell and Christopher Wingate in November 2000 that her former boss the CEO of ITT gave false evidence to help FAR escape liability which would then flow onto ITT.

In essence the evidence showed that the transaction which FAR had put together resulting in the purchase did not utilise the Arklow forest valuation, did not involve Kanematsu, did not involve any resort development of the island, and did not result in FAR obtaining ownership of the land without expenditure of its own. Even if FAR was "galvanised" into other action by reason of its knowledge that Arklow was in a relatively advanced stage of implementing its scheme, it is not possible to translate that into actionable misuse, particularly when regard is had to the considerable time lapse down to November 1992 when the FAR transaction was finally negotiated. As the majority of the Court of Appeal held, supported by Blanchard J., there is no basis upon which Arklow could be entitled to relief.

Entry;Lord Denning established the broad principle under equity law that a person who has received information in confidence cannot take unfair advantage of it. That person must not make use of it to the prejudice of the person who gave it without obtaining his consent

It’s prospects of successfully concluding an agreement with the receivers was not shown to have been adversely affected by FAR’s use of that knowledge.


Reply;The evidence at trial by the receiver Mr Pardington responsible for selling the assets was simple- If FAR Financial was not there Arklow was the only other buyer. Arklow had the funding from Kanematsu $15.75m buying the 17-34 year forest and $5m plus from businessman Peter Spencer for an agreed 50% of the Arklow project

Any possible advantage it may have obtained had dissipated by November 1992. Without further elaboration or unnecessary repetition, their Lordships would respectfully adopt the reasoning of the majority in concluding that no actionable misuse of confidential information was established. On this head too, the claim must therefore fail.

End of Judgement

See key documents at http://courtsofappeal.blogspot.com/

If the system allowed the Arklow case to remain as the new standard in equity that rule destroys every case from Keech v Sanford, Ex parte James another foundation case, but also Boardman v Phipps, Ansell Rubber Co Pty Ltd v Allied Rubber Industries, Hodgkinson v Simms, Frame v Smith, Day v Mead, McKenzie v McDonald, Coleman v Myers, Watson v Dolmark Industries and Reading v Rand. It also runs against all that has been written by John Glover in Commercial Equity : Fiduciary Relationships or P J Millet's "Equity's Place in the Law of Commerce,or the dicta of Lord Woolf MR in Attorney General v Blake. Finn in "Fiduciary Obligations" or Maitland on Lectures on Equity who writes: " I shall have to come back to this over and over again- that use, trust or confidence originates in an agreement."

Lord Millet in Law Quarterly Review (op cit 222) states the founding principle:

" Information is not property and confidential information is not trust property, but it shares this characteristic with trust property, that the person who is entrusted with it is bound to use it, if he uses it at all, only for the purpose for which he received it. He cannot be heard to say that he uses it for ulterior purpose of his own. If he does so, he is treated as acting for his principal and is accountable to his principal for any profit which results. This particular remedial mechanism is central to equitable jurisprudence. But it should not be limited to the case where the use or disclosure of the information would be a breach of fiduciary duty. It would not be in accordance with principle to extend it to the finder or thief. "

The view by Millet above suggests that the line is drawn between those cases in which information is imparted in confidence and cases where confidential information is acquired by accident or wrong doing. If one takes Millets view there is no need to distinguish those relationships of confidentiality that are fiduciary from fiduciary relationships of trust and confidence, the former just a sub category of the latter. If this view is correct it could form the foundation for two distinct arguments:
1- that the actions for breach of fiduciary duty and breach of confidence overlap when confidential information imparted is misused;
2- that to the extent of the overlap, the action for breach of confidence must be absorbed into the action for breach of fiduciary duty.
If one person entrusts another control over some aspect of the financial well being or interests of the first, or over the pursuit of interests that are not exclusively those of the party trusted that the first wishes to promote,on the agreed condition either;

1- that the other will not use the position conferred at all; or

2- that the other will use the position, if it is used, only to serve the interests of the first,

or interests that are not exclusively those of the party trusted that the first defines, or only to do some specific thing that the parties understand the first considers will further such interests, then the trust must be respected.

This expresses the basic principle of morality the heart and the basis for a need to have fiduciary obligations, duties and responsibilities obliged with through equity. The essential and simple idea behind it is that if you take a position of trust in regard to another's interests or concerns you must not abuse that trust. The evidence of Phil Pryke stated the banking industry would collapse if such breach of trust were the accepted practice because trust is the foundation of the relationship between a banker a potential client or existing client. If not bankers would open shop to obtain information to exploit clients and that would be the end of banking business. If the process of seeking and receiving advice from investment bankers and simular financial instititutions is to remain viable it is essential that information entrusted in confidence be respected. This applies as much to information in the early stages of contact between the parties when they seek to explore whether or not they wish to enter into a contract as to information imparted later. If persons cannot make approaches to investment bankers on the basis of strict confidentiality then the whole system of giving and receiving financial help and advice from businesses of this type will be put in jeopardy. That this is indicated by strong evidence given in the Arklow case by expert witness Phil Pryke as noted by Temm J at p36 of his judgement ; 3/824 .

Confidentiality agreements are needed for the normal arms length relationships. Arklow's relationship with FAR did not fit into that category, the facts show this. They advertised as Investment Merchant Bankers with enormous integrity.... it was written all over their company promotional documentation. This was no ordinary arms length relationship.This was a relationship where Arklow would become vulnerable to the behaviour of the FAR Financial Merchant Banking Group and its directors.

Lord Upjohn said "The fundamental rule of equity is that a person in a fiduciary capacity must not make a profit out of his trust which is part of the wider rule that the trustee must not place himself in a position where his duty and his interest must never conflict."

Yet although the judges did not reject that FAR owed Arklow a fiduciary duty not to misuse the confidential information disclosed, the court treated it as a different type to those that give rise to duties of loyalty and fidelity which they said came to an end when FAR's offer to act was withdrawn 30 days after they obtained our business plans and during which time FAR were setting about to do the deal for themselves.

The New Zealand Supreme Court had to deal with this issue in Chirnside vs Fay and as they said the matter was left unanswered in the Privy Council yet it was the central question.

Other cases and notes on the law


Cadbury Schweppes Inc. v. FBI Foods Ltd.
[1999] 1 S.C.R. 142

* Relevance of Detriment

52 La Forest J. said in Lac Minerals that if the plaintiff is able to establish that the defendant made an unauthorized use of the information to the detriment of the party communicating it, the cause of action is complete (at pp. 635-36 and 657; see also ICAM Technologies Corp. v. EBCO Industries Ltd. (1991), 36 C.P.R. (3d) 504 (B.C.S.C.), affirmed (1993), 52 C.P.R. (3d) 61 (B.C.C.A.), per Toy J.A., at pp. 63-64; Ontex Resources Ltd. v. Metalore Resources Ltd. (1993), 13 O.R. (3d) 229 (C.A.); 655 Developments Ltd. v. Chester Dawe Ltd. (1992), 42 C.P.R. (3d) 500 (Nfld. S.C.).


53 The issue of detriment arises in this case because the trial judge made a specific finding that the respondents had not suffered financial loss, yet she proceeded to find liability and award damages “in the interest of fairness”. While La Forest J. in Lac Minerals considered detriment to be an essential element of the breach of confidence action (Sopinka J. did not express a view on this point in his discussion of the applicable principles), it is clear that La Forest J. regarded detriment as a broad concept, large enough for example to include the emotional or psychological distress that would result from the disclosure of intimate information (see, e.g., Argyll (Duchess) v. Argyll (Duke), [1967] Ch. 302. In the Spycatcher case, supra, Lord Keith of Kinkel observed, at p. 256, that in some circumstances the disclosure itself might be sufficient without more to constitute detriment:

So I would think it a sufficient detriment to the confider that information given in confidence is to be disclosed to persons whom he would prefer not to know of it, even though the disclosure would not be harmful to him in any positive way.
(1) Absence of a Fiduciary Relationship *reply entry-see Chirnside vs.Fay

30 Even prior to Lac Minerals the Court expressed the view that the policy objectives underlying fiduciary relationships did not generally apply* to business entities dealing at arm’s length. In Frame v. Smith, [1987] 2 S.C.R. 99, Wilson J. stated, at pp. 137-38:

Because of the requirement of vulnerability of the beneficiary at the hands of the fiduciary, fiduciary obligations are seldom present in the dealings of experienced businessmen of similar bargaining strength acting at arm’s length: see, for example, Jirna Ltd. v. Mister Donut of Canada Ltd. (1971), 22 D.L.R. (3d) 639 (Ont. C.A.), aff’d [1975] 1 S.C.R. 2. The law takes the position that such individuals are perfectly capable of agreeing as to the scope of the discretion or power to be exercised, i.e., any “vulnerability” could have been prevented through the more prudent exercise of their bargaining power and the remedies for the wrongful exercise or abuse of that discretion or power, namely damages, are adequate in such a case.


To the same effect, see Lac Minerals per Sopinka J. at p. 595, Hodgkinson v. Simms, [1994] 3 S.C.R. 377, at p. 414, per La Forest J., and the comment of Professor Davies that “[s]trong evidence should be required before a breach of confidential information situation is metamorphosed into one of fiduciary relationship” (Davies, supra, at p. 7). Despite these warnings, a majority of this Court in Hodgkinson v. Simms, supra, held that where the ingredients giving rise to a fiduciary duty are otherwise present, its existence will not be denied simply because of the commercial context. The vulnerability of clients to their professional advisors invoked traditional fiduciary principles. In this case there is nothing in the relationship between a juice manufacturer and its licensee to suggest that the former surrendered its self-interest or rendered itself “vulnerable” to a discretion conferred on the latter. The overriding deterrence objective applicable to situations of particular vulnerability to the exercise of a discretionary power (M. (K.) v. M. (H.), supra, per McLachlin J. at p. 86) does not operate here. If different policy objectives apply, one would not expect the remedy necessarily to be the same.

(2) Fiduciary Duties Arising Outside the Framework of Fiduciary Relationships

31 In Lac Minerals Wilson J. expressed the view that while no fiduciary relationship existed, nevertheless a fiduciary duty arose when Corona, in communicating the confidential information, placed itself “in a position of vulnerability to Lac’s misuse of that information” (p. 630). This approach was not accepted by the other members of the Court (see Sopinka J., at p. 600), and La Forest J., at p. 657 of the same decision, quoted a contrary view expressed by Professor F. Gurry in Breach of Confidence (1984), at pp. 161-62:

In a breach of confidence action, the court’s concern is for the protection of a confidence which has been created by the disclosure of confidential information by the confider to the confidant. The court’s attention is thus focused on the protection of the confidential information because it has been the medium for the creation of a relationship of confidence; its attention is not focused on the information as a medium by which a pre-existing [fiduciary] duty is breached. [Emphasis in original.]

In some sense, disclosure of almost any confidential information places the confider in a position of vulnerability to its misuse.

Such vulnerability, if exploited by the confidee in a commercial context, can generally be remedied by an action for breach of confidence or breach of a contractual term, express or implied (Pre-Cam Exploration & Development Ltd. v. McTavish, supra, per Judson J., at p. 555). In this case, the licensing arrangement expressly contemplated open competition upon termination, subject for a period of five years to avoidance of what came to be recognized as a useless limitation, namely mixing clam broth with tomato juice. While the law will supplement the contractual relationship by importing a duty not to misuse confidential information, there is nothing special in this case to elevate the breached duty to one of a fiduciary character.

38 This analysis is correct so far as it goes, but it leaves out of consideration the fact the respondents did not bargain for the unfair competition of having their own know-how, imparted in confidence, used against them. The contract cannot reasonably be read as negating the duty of confidence imposed by law. The contractual context, while it may place important parameters on what compensation would be appropriate, does not assist the appellants in their effort to eliminate the compensation altogether.

D. Relevance of Respondents’ Argument Based on an Alleged “Proprietary” Interest in the Information

39 Much of the respondents’ argument on the appeal and cross-appeal rested on an analogy which they allege exists between breach of a duty of confidentiality and protection of intellectual property. In effect, they argue that the policy objectives underlying patent protection apply to breaches of confidence in a commercial case where trade secrets constitute the subject matter of the wrongful use or disclosure.



40 The argument that confidential information is property for some purposes is made by Professor A. S. Weinrib in “Information and Property” (1988), 38 U.T.L.J. 117. In R. v. Stewart, [1988] 1 S.C.R. 963, this Court concluded that whatever may be the property status of information in other contexts, information is not property for purposes of the theft provisions of the Criminal Code. Lamer J. (as he then was) commented in passing on the possibility that trade secrets could be considered property, at pp. 974-75:

Indeed, [confidential information] possesses many of the characteristics of other forms of property: for example, a trade secret, which is a particular kind of confidential information, can be sold, licensed or bequeathed, it can be the subject of a trust or passed to a trustee in bankruptcy. In the commercial field, there are reasons to grant some form of protection to the possessor of confidential information: it is the product of labour, skill and expenditure, and its unauthorized use would undermine productive efforts which ought to be encouraged. As the term “property” is simply a reference to the cluster of rights assigned to the owner, this protection could be given in the form of proprietary rights.


41 The respondents’ characterization of confidential information as property is controversial. Traditionally, courts here and in other common law jurisdictions have been at pains to emphasize that the action is rooted in the relationship of confidence rather than the legal characteristics of the information confided. See, for example, Holmes J. in the United States Supreme Court in E. I. Du Pont de Nemours Powder Co. v. Masland, 244 U.S. 100 (1917), at p. 102:

The word property as applied to . . . trade secrets is an unanalyzed expression of certain secondary consequences of the primary fact that the law makes some rudimentary requirements of good faith. Whether the plaintiffs have any valuable secret or not the defendant knows the facts, whatever they are, through a special confidence that he accepted. The property may be denied but the confidence cannot be. Therefore the starting point for the present matter is not property . . . but that the defendant stood in confidential relations with the plaintiffs, or one of them.


42 The same point was made in the High Court of Australia, per Deane J., in Moorgate Tobacco Co. v. Philip Morris Ltd. (1984), 156 C.L.R. 414, at p. 438:

Like most heads of exclusive equitable jurisdiction, its rational basis does not lie in proprietary right. It lies in the notion of an obligation of conscience arising from the circumstances in or through which the information was communicated or obtained.

47 The reluctance of common law courts outside the United States to treat trade secrets as a species of property or quasi-property has been criticized: see, e.g., M. Chromecek and S. C. McCormack, World Intellectual Property Guidebook: Canada (1991), wherein it is observed, at p. 3-27:

Not all information can be property; only confidential information can. Confidentiality is a condition sine qua non of the information’s proprietary status. This view is fully consistent with the essence of other intellectual property rights, patents, copyrights, industrial designs, trade marks, or even personality rights, the value of which lies not in their possession but in the owner’s ability to exclude others from exploiting them.

The Supreme Court of Canada in Guerin confirmed that the fiduciary
obligation related to the exercise of Crown authority and discretion in a manner consistent with those equitable principles which require a fiduciary to act with “the utmost of loyalty to its principal” and in the “best interest” of the principal or beneficiary. Dickson J. (as he then was) described the Crown’s fiduciary duty as follows (in the context of the Crown’s post-surrender scenario): Through the confirmation of the Indian Act of the historic responsibility which the Crown has undertaken, to act on behalf of the Indians so as to protect their interests and transactions with third parties, Parliament has conferred upon the Crown a discretion to decide for itself where the Indians' best interest really lie.

Further, in discussing the source of the Crown's fiduciary duty, Dickson J. underscores the discretionary nature of the Crown's authority:

. . . where by statute, agreement or perhaps by unilateral
undertaking, one party has an obligation to act for the benefit of
another, and that obligation carries with it a discretionary power,
the party thus empowered becomes a fiduciary . Equity will then
supervise the relationship by holding him to the fiduciaries strict
standard of conduct.

The Supreme Court of Canada decision in Fales v. Canada Permanent Trust Company, [1977] 2 S.C.R. 302 at p. 315, in support. McLachlin J. reasoned:

The duty of the Crown as fiduciary was that of a man of ordinary
prudence in managing this own affairs. A reasonable
person does not inadvertently give away a potentially valuable asset which has already demonstrated earning potential. Nor does a
reasonable person give away for no consideration what it will cost
him nothing to keep and which may one day possess value, however
remote the possibility.



New Zealand Court of Appeal in Bank of New Zealand v New Zealand Guardian Trust Co Ltd adopted a strict approach to compensation for breach of the fiduciary duty of loyalty. Tipping J stated:
In the second kind of case, the trustee or other fiduciary has committed a breach of duty which involves an element of infidelity or disloyalty engaging the fiduciary’s conscience — what might be called a true breach of fiduciary duty... . In short, in such a case once the plaintiff has shown a loss arising out of a transaction to which the breach was material, the plaintiff is entitled to recover unless the defendant fiduciary, upon whom is the onus, shows that the loss or damage would have occurred in any event, i.e. without any breach on the fiduciary’s part. Questions of foreseeability and remoteness do not arise in this kind of case ... . Policy dictates that fiduciaries be allowed only a narrow escape route from liability based on proof that the loss or damage would have occurred even if there had been no breach.
In his judgment (for himself, Richardson P, Henry and Blanchard JJ), Gault J suggested that there was a link between breaches of trust in dissipating the trust estate, and abuse of fiduciary duties of loyalty and fidelity, in that both would attract liability on a ‘restitutionary’ basis. These cases were then linked with ‘dishonesty in the commission of certain intentional torts such as fraudulent misrepresentation’ (later enlarged to fraud and impropriety) as circumstances where there was justification to approach issues of causation and remoteness in determining compensation differently from contract and non-intentional tort cases. Tipping J also adverted to this. If the wrong committed was one ‘engaging the conscience of the wrongdoer, what has sometimes been called fraud in equity, a stricter approach is justified. That corresponds with the position when there is fraud in the common law sense, ... In such cases the greater moral turpitude of the wrongdoer supports a restitutionary ‘but for’ approach, at least on a prima facie basis.’ The true fiduciary duty, being one of loyalty and fidelity, can only be breached by disloyalty and infidelity, which per se is equitable fraud.

What is important is that the controlling limits on the reparative compensatory response for loss suffered by breach be seen to be coherent with the nature of the obligation owed. Thus, the ‘absolute’ nature of the duty, which carries with it the notion that any breach is ‘equitable fraud’, sustains a ‘but for’ test of causation. If this is so, it follows that there should be little, if any, scope for considerations which would enable the defendant to escape liability. This would support the presumption in the rule in Brickenden v London Loan & Savings Co (that, in effect, once the court has determined the materiality of a breach of fiduciary duty arising from non-disclosure of a conflict of interest or a significant likelihood of such a conflict, speculation as to what course the aggrieved party would, on disclosure, have taken is not relevant). It might also mean that there ought to be no judicial jurisdiction to apportion responsibility for loss, although there might be discretion to attach certain conditions on the award of equitable compensation.


Liffe Administration and Management -v- Pinkava and Another - [2007] EWCA Civ 217

CA
15 March 2007

Chancellor, Longmore LJ, Jacob LJ Employment - Intellectual Property

The employee had patented in the US a trading system he invented whilst employed by the defendant, who now sought ownership. He appealed a finding that the inventions had been made during the normal course of his employment. The employment contract provided: 'All trade secrets, inventions, written documents, and other confidential information developed or created by or with your assistance during your employment in the course of carrying out your duties are LIFFE's property and such rights or interest in any such property or information that you may have are prescribed by the law.' Held: The employee's appeal failed. The job description included the development of credits derivatives products, and the work had become part of his normal duties. For s.39(1)(a) to apply not only must the invention be made in the course of the employee's normal or specifically assigned duties but also that 'the circumstances in either case were such that an invention might reasonably be expected to result from the carrying out of his duties.' Since the relevant part of the 1977
Act extended an employee's rights it was not necessary further to interpret it to preserve common law rights.

Jacob LJ: 'Since one cannot go by the contract alone I do not think one can be too precise about how the duty is to be ascertained. The contract and the general nature of the job both call for examination. It is not possible to be too analytical about this. In the end one is asking whether the employee is employed to try to innovate and, if he is, what general sort of areas his innovation duties cover.'


Australian Government Solicitor
Inherently Confidential
There are two elements which go to establishing that information is 'inherently confidential'. These are that the information:

is 'sufficiently secret'; and
is significant.

Sufficiently Secret
For information to be 'sufficiently secret', it must not be 'public property or public knowledge' or to put it another way, 'it must be private information and not in the public domain'. 19 Accordingly, except by improper means, another party who would wish to have it would have difficulty obtaining it. 20

The test which is most often used by the courts to decide whether information is inaccessible involves an assessment of whether any special labours would be necessary for a member of the public to reproduce it. If the information can only be reproduced at the cost of time, labour and effort, this is a good indication that the information is 'inherently confidential'.
Information can be characterised as public knowledge even though it is well known only in a particular industry or profession. 21 However, publication in one place but not in the 'local' jurisdiction, may not destroy the confidentiality of the information. 22 Neither will confidentiality be destroyed where the information appears only briefly in transient form (eg for a few seconds on television) to a small segment of the community. 23

If part of the information has been published, the remainder may still be inherently confidential. 24 For example, if a part of a report has been published, this does not, of itself, destroy the confidentiality of undisclosed parts of the report. 25 Similarly, the information may in some circumstances be shared with others without destroying its confidentiality. 26 Information will not remain confidential forever. It will generally lose its inherently confidential character over time.

Significant
The information in question must be significant in that the preservation of its confidentiality or secrecy is of substantial concern or interest to the confider. 27 The information will not be confidential merely because the confider wishes it to be confidential.

The information must not be trivial in nature, and not so innocuous, or of so little consequence, as to qualify as 'trivial tittle tattle'. 28

The requirement of significance appears to be satisfied if the information has commercial value. 29 If a confider can show that members of the public are prepared to pay money to obtain the information, this will be persuasive evidence that the information is significant.

The investment of time and money is not a decisive indicator in itself of the fact that information has a commercial value. Information can be costly to produce without necessarily being worth anything. 30

Communicated and Received in Confidence
The basis of the obligation to respect confidences 'lies in the notion of an obligation of conscience arising from the circumstances in or through which the information was communicated or obtained'. 31

Generally, for information to be treated as confidential information by the courts, it must at the time have been communicated by the confider and received by the recipient on the basis of a mutual understanding that the information was not to be disclosed except where authorised.

Where there is no express statement of confidentiality, one test for deciding whether an obligation of confidence exists is whether information has been supplied by the confider for a limited purpose and in circumstances where there is a reasonable expectation that confidentiality will be preserved. However, it has been held that the 'test of confider's purpose will not ordinarily be appropriate where each party's interest in quite different, and known to be so'. 32 In that case the court held that the use by the department of information which had been supplied for one purpose, for another purpose, was not a breach of the confidence.

'Communicated' in the context of confidential information is used widely to include all situations in which a recipient is given access to information with the knowledge and consent of the confider.

This issue must be judged according to the understanding of the parties at the time of the communication of the information.

Where information is required to be produced by statutory demand, and is not given voluntarily, the recipient of the information may not be under an obligation of confidence in respect of that information. 33 Whether or not the recipient will be under an obligation of confidence will depend on the wording of the statute, which may in some cases state that the information is to be kept confidential. 34

Types of Information that may be 'Inherently Confidential'
There are four broad categories of information that the courts have been prepared to protect as confidential information so long as the additional element, communication of the information to the recipient in the appropriate circumstances, is also present. These are:

business or commercial information
personal information
government secrets
artistic or literary information.
The first three of these are the most relevant for agencies.

Business and Commercial Information
Some, but certainly not all, of the information that an agency will be provided with in the course of their activities will be business or commercial information.

There appears to be a widely held belief in agencies that all business or commercial information is confidential information. This is not correct. For business or commercial information to be confidential information, it must meet the criteria for the existence of confidential information discussed above. Such information, of itself, is not regarded by the courts as 'inherently confidential' information. 35 However, one category of business or commercial information that is consistently treated by the courts as 'inherently confidential' is 'trade secrets'.

The Federal Court has held that a trade secret has three characteristics:

it must be information used in, or useable in, a trade;
'the owner must limit the dissemination of it or at least not encourage or permit widespread publication'; and
it is 'information which if disclosed to a competitor, would be liable to cause real (or significant) harm to the owner of the secret'. 36 (The fact Arklow/Wingate could get 10,000 acres of land for free is a good secret)

Trade secrets cover a range of information, some of which relates to the production of goods and services and includes, for example, inventions (eg a tool), manufacturing processes, chemical formulae, engineering and design drawings, craft secrets and recipes (eg Worcestershire sauce, Coca-Cola).

Another important class of 'inherently confidential' business or commercial information is information which a business entity generates about its own activities. This kind of information can include profit margins, costs of production and pricing data; sales statistics; customer and supplier lists; sources of supply; market projections; details of promotional strategies and expansion plans; information about customer requirements; details of a business entity's current negotiations; and negotiated prices paid by customers.

In relation to pricing information in the Commonwealth environment, whilst the total price paid under a government contract is not 'inherently confidential' (because of gazettal requirements), 37 the details of the rates or pricing structures might be 'inherently confidential'.

There may be legitimate grounds for an agency to accept an obligation of confidentiality in relation to the rates being charged by the supplier. It will be a question of the facts and circumstances in each case whether the particular information is 'inherently confidential'.

Personal Confidences
Personal information can come within the ambit of confidential information if it meets the requirements listed above. Types of personal information which could be regarded as 'inherently confidential' are information relating to sexual conduct, personal finances, religion, political beliefs, and tax affairs.

As in the case of business or commercial information, the confidentiality that may be attached to personal information ceases when that information enters the public domain. 38

Government Information
The tests described above are also applicable to ascertaining whether any information about government which has been generated by government (ie Government Information) is inherently confidential, and whether an obligation of confidence has arisen where that information is held by a third party.

However, whether it will be possible for the government to show that a third party is under an obligation of confidence in respect of particular Government Information depends on different considerations to those which apply to the case of an individual or business. For an obligation to exist, it must be shown not only that the information is 'inherently confidential', but also that it is in the public interest that such information remain 'inaccessible' or 'secret'. 39

Therefore it is important for an agency to give consideration to public interest issues when they are considering whether to seek to impose an obligation to protect Government Information under a contractual provision, or otherwise. 40

Duration of Obligation
Obligations of confidence may come to an end in a number of ways, including:

the parties could pre-agree a defined period during which the obligation of confidence is to be in operation, and this period expires;
the information comes into the public domain;
the information provided in confidence loses its 'inherently confidential' nature over time.
The confider of the 'inherently confidential' information is usually in the best position to propose a period during which the obligation of confidence is to be in force. This should be a realistic period taking all the relevant circumstances into account. Even if a long period is agreed, the obligation will not subsist if, say, the information comes into the public domain, or the information loses its 'inherently confidential' character over time.

Detriment
Detriment to the confider of information or other persons is not required to create an obligation of confidence in relation to particular information. Detriment is only relevant, if at all, when there is a breach of an obligation of confidence.

However, in considering whether the Commonwealth should agree that information should be treated as confidential information, for example, under a contract, it would be relevant to consider whether disclosure of the information would in fact cause detriment of some kind to the confider or another party. Where no detriment has been, or will be, suffered, equity may refuse to enforce the obligation.

But in considering possible detriment, it is important for an agency to keep in mind where the Commonwealth is wishing to impose an obligation of confidence in respect of Government Information, that publication of confidential Government Information will be restrained only if it will injure the 'public interest' if the information is disclosed.

In Commonwealth common law jurisdictions, confidentiality and trade secrets are regarded as an equitable right rather than a property right (with the exception of Hong Kong where a judgment of the High Court indicates that confidential information may be a property right). The Court of Appeal of England and Wales in the case of Saltman Engineering Co Ltd v. Campbell Engineering Ltd, (1948) 65 P.R.C. 203 held that the action for breach of confidence is based on a principle of preserving "good faith".

The test for a cause of action for breach of confidence in the common law world is set out in the case of Coco v. A.N. Clark (Engineers) Ltd, (1969) R.P.C. 41 at 47:

the information itself must have the necessary quality of confidence about it;
that information must have been imparted in circumstances imparting an obligation of confidence;
there must be an unauthorized use of that information to the detriment of the party communicating it.

The "quality of confidence" highlights that trade secrets are a legal concept. With sufficient effort or through illegal acts (such as break and enter), competitors can usually obtain trade secrets. However, so long as the owner of the trade secret can prove that reasonable efforts have been made to keep the information confidential, the information remains a trade secret and generally remains legally protected. Conversely, trade secret owners who cannot evidence reasonable efforts at protecting confidential information, risk losing the trade secret, even if the information is obtained by competitors illegally. It is for this reason that trade secret owners shred documents and do not simply recycle them.

"I ... find it by no means straightforward to reconcile on the one hand the apparently blanket rule that any claim of breach of confidence must fail if the material in question is in the public domain (see e.g. Saltman v Campbell Engineering (1948)... and Mustad v Dosen [1964]...) and on the other hand the 'spring board' cases, that seem to inhibit use of even public domain material if it is conveyed in circumstances that aspire to confidence: a difficulty that, with respect, is not resolved by the observations in the House fo Lords in A-G v Guardian Newspapers [1990] 12 AC 109 at 285. These may be questions of considerable importance that call for an answer in this court or, quite likely, at a higher leel" per Buxton L.J., ibid [73].



The basic criteria for breach of confidence at common law were set down in CoCo v AN Clarke (Engineers) and the Lords referred to this during their consideration in Douglas v Hello!. In order for there to be a breach of confidence:

- the information itself must ‘have the necessary quality of confidence about it’;

- that information must have been imparted in circumstances importing an obligation of confidence;

- there must be an unauthorised use of that information to the detriment of the party communicating it.

The judge held Hello! liable and applied the three well known criteria for liability for breach of confidence: (i) the information itself must have the necessary quality of confidence about it; (ii) the information must have been imparted in circumstances importing an obligation of confidence; and (iii) there must be an unauthorised use of that information to the detriment of the party communicating it: see Coco v A. N. Clark (Engineers) Ltd ([1969] RPC 41, 47).

Considered: Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574; referred to: Seager v. Copydex Ltd., [1967] 2 All E.R. 415; Coco v. A. N. Clark (Engineers) Ltd., [1969] R.P.C. 41; Aquaculture Corp. v. New Zealand Green Mussel Co., [1990] 3 N.Z.L.R. 299; M. (K.) v. M. (H.), [1992] 3 S.C.R. 6; Pre‑Cam Exploration & Development Ltd. v. McTavish, [1966] S.C.R. 551; Apotex Fermentation Inc. v. Novopharm Ltd. (1998), 80 C.P.R. (3d) 449; Ben‑Israel v. Vitacare Medical Products Inc. (1997), 78 C.P.R. (3d) 94; Attorney‑General v. Guardian Newspapers Ltd. (No. 2), [1990] A.C. 109; Seager v. Copydex Ltd. (No. 2), [1969] 2 All E.R. 718; Frame v. Smith, [1987] 2 S.C.R. 99; Hodgkinson v. Simms, [1994] 3 S.C.R. 377; 337965 B.C. Ltd. v. Tackama Forest Products Ltd. (1992), 91 D.L.R. (4th) 129, leave to appeal refused, [1993] 1 S.C.R. v; BG Checo International Ltd. v. British Columbia Hydro and Power Authority, [1993] 1 S.C.R. 12; R. v. Stewart, [1988] 1 S.C.R. 963; E. I. Du Pont de Nemours Powder Co. v. Masland, 244 U.S. 100 (1917); Moorgate Tobacco Co. v. Philip Morris Ltd. (1984), 156 C.L.R. 414; Federal Commissioner of Taxation v. United Aircraft Corp. (1943), 68 C.L.R. 525; Macri v. Miskiewicz (1991), 39 C.P.R. (3d) 207, varied (1993), 50 C.P.R. (3d) 76; Phipps v. Boardman, [1967] 2 A.C. 46; Re Keene, [1922] 2 Ch. 475; Smith, Kline & French Laboratories Ltd. v. Canada (Attorney General), [1987] 2 F.C. 359; Guerin v. The Queen, [1984] 2 S.C.R. 335; Canson Enterprises Ltd. v. Boughton & Co., [1991] 3 S.C.R. 534; Mouat v. Clark Boyce, [1992] 2 N.Z.L.R. 559, rev’d on other grounds, [1993] 4 All E.R. 268; Elsley v. J. G. Collins Insurance Agencies Ltd., [1978] 2 S.C.R. 916; ICAM Technologies Corp. v. EBCO Industries Ltd. (1993), 52 C.P.R. (3d) 61, aff’g (1991), 36 C.P.R. (3d) 504; Ontex Resources Ltd. v. Metalore Resources Ltd. (1993), 13 O.R. (3d) 229; 655 Developments Ltd. v. Chester Dawe Ltd. (1992), 42 C.P.R. (3d) 500; Argyll (Duchess) v. Argyll (Duke), [1967] Ch. 302; Nichrotherm Electrical Co. v. Percy, [1957] R.P.C. 207; English v. Dedham Vale Properties Ltd., [1978] 1 W.L.R. 93; Malone v. Commissioner of Police of the Metropolis (No. 2), [1979] 2 All E.R. 620; Pharand Ski Corp. v. Alberta (1991), 80 Alta. L.R. (2d) 216; Nocton v. Lord Ashburton, [1914] A.C. 932; Recovery Production Equipment Ltd. v. McKinney Machine Co., [1998] A.J. No. 801 (QL); Treadwell v. Martin (1976), 67 D.L.R. (3d) 493; Planon Systems Inc. v. Norman Wade Co., [1998] O.J. No. 3547 (QL); Z Mark International Inc. v. Leng Novak Blais Inc. (1996), 12 O.T.C. 33; United Scientific Holdings Ltd. v. Burnley Borough Council, [1978] A.C. 904; Interfirm Comparison (Australia) Pty. Ltd. v. Law Society of New South Wales, [1977] R.P.C. 137; Terrapin Ltd. v. Builders’ Supply Co. (Hayes) Ltd., [1967] R.P.C. 375 (1959), aff’d [1960] R.P.C. 128; Santé Naturelle Ltée v. Produits de Nutrition Vitaform Inc. (1985), 5 C.P.R. (3d) 548; Montour Ltée v. Jolicœur (1988), 19 C.I.P.R. 25; Matrox Electronic Systems Ltd. v. Gaudreau, [1993] R.J.Q. 2449; Dowson & Mason Ltd. v. Potter, [1986] 2 All E.R. 418; Rainbow Industrial Caterers Ltd. v. Canadian National Railway Co., [1991] 3 S.C.R. 3; Chaleur Silica Inc. v. Lockhart (1990), 108 N.B.R. (2d) 366; Saltman Engineering Co. v. Campbell Engineering Co. (1948), 65 R.P.C. 203; Institut national des appellations d’origine des vins et eaux‑de‑vie v. Andres Wines Ltd. (1987), 40 D.L.R. (4th) 239, aff’d (1990), 71 D.L.R. (4th) 575n, leave to appeal refused, [1991] 1 S.C.R. x; Stephenson Jordan & Harrison Ltd. v. MacDonald & Evans (1951), 69 R.P.C. 10; Shelfer v. City of London Electric Lighting Co., [1895] 1 Ch. 287; Schauenburg Industries Ltd. v. Borowski (1979), 101 D.L.R. (3d) 701; Robb v. Green, [1895] 2 Q.B. 1; United Horse‑Shoe and Nail Co. v. Stewart (1888), 13 App. Cas. 401; Wood v. Grand Valley Railway Co. (1915), 51 S.C.R. 283; Penvidic Contracting Co. v. International Nickel Co. of Canada, [1976] 1 S.C.R. 267; Canson Enterprises Ltd. v. Boughton & Co. (1992), 72 B.C.L.R. (2d) 207, aff’d (1995), 11 B.C.L.R. (3d) 262.

The site is being updated every week.



Other sites to view

Arklow's plans to develop Matakana Island. http://matakanadevelopment.blogspot.com/

This site has key documents that prove the court were wrong.
http://courtsofappeal.blogspot.com/

These three sites cover the maori extortion, blackmail, the death of a key witness,theft of information, claims the Matakana land was sacred. And in saying so asked the courts of Appeal and Privy Council to forget about Far's wrong doing as the maori had purchased the land from Caldora/Far Financial. But once given the land by the court the maori leadership sell the sacred land for $75m and the tribe does not get any of this only the key maori witnesses in this litigation who are tribal leaders.
http://matakanaislandsold.blogspot.com/
http://matakanaleadership.blogspot.com/
http://matakanaterrorism.blogspot.com/

Lord Wingate on Immunity
http://idiotsinpower.blogspot.com/

Others
http://wingate-scottdixon.blogspot.com/
http://christopher-wingate.blogspot.com/
http://sarahwingatepoem1.blogspot.com/
http://wingate-indiatolondon.blogspot.com/
http://arklowprivy.blogspot.com/