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McKinnon and Department of Immigration and Citizenship [2012] AICmr 34 (21 December 2012)

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Decision and reasons for decision of Australian Information Commissioner, Professor John McMillan

Summary of case details
Applicant:

Michael McKinnon

Respondent: Department of Immigration and Citizenship
Other parties: Serco Australia PtyLtd (ABN 44 003 677 352)
Decision date: 21 December 2012
Application number: MR12/00213
Catchwords:

Freedom of information — Request that matter be referred to AAT without conducting IC review — (CTH) Freedom of Information Act 1982 54W

Freedom of information — Request that an IC review hearing be held — (CTHFreedom of Information Act 198255B

Freedom of information — Requirement that submissions be exchanged in IC review — (CTHFreedom of Information Act 1982 s 55(4)(b)

Freedom of information — Exempt information — Documents disclosing trade secrets or commercially valuable information — (CTHFreedom of Information Act 1982s 47

Freedom of information — Public interest conditional exemption — business — (CTHFreedom of Information Act 1982s 47G

 Contents

 Summary

  1. I set aside the deemed decision of the Department of Immigration and Citizenship (the Department) and substitute my decision, under s 11A of the Freedom of Information Act 1982 (the FOI Act), to grant full access to the documents identified at paragraph [36] below.

 Background

  1. On 12 May 2011 the applicant made an FOI request to the Department in the following terms:

    Specifically, I am seeking access to documents produced in the last five years, including correspondence, containing information from Serco about (a) forecasts, warnings, advice about current or future overcrowding in immigration detention centres and facilities and (b) Immigration's consideration and views on such forecasts, warnings or advice and (c) any responses from the Immigration Department to Serco to stop, cease or change such forecasts, warnings or advice about actual or possible overcrowding.

    I am not interested in duplicate copies of documents or documents that have already been publicly released or media releases, media articles or media statements. I would also like to withdraw this request if the information I have sought is due to be released under FOI to individuals or organisations prior to finalisation of my FOI request.

  2. On 17 February 2012 the Department made a decision on the applicant's FOI request. The Department identified 19 documents as being potentially relevant to the request. Access to three documents was refused on the basis that they were irrelevant to the terms of the FOI request. Access was granted to a further 16 documents, fully or partially. The Department made deletions to parts of some of those documents under two provisions of the FOI Act — s 22(1)(a)(ii), on the basis that the deleted material was irrelevant to the terms of the applicant's request; and s 47, on the basis that material in three documents would disclose commercially valuable information of Serco Australia Ltd (Serco).
  3. On 20 March 2012 the applicant sought internal review of the Department's decision. The Department failed to make a decision on this application within the 30-day deadline prescribed by s 54D(1) of the FOI Act. Therefore the Department is deemed to have affirmed its decision of 17 February 2012 under s 54D(2).
  4. By letter dated 12 June 2012, the applicant sought Information Commissioner review of the Department's deemed affirmation. The applicant asked that I decide, under s 54W(b), not to undertake a review on the basis that 'the interests of the administration of this Act make it desirable that the IC reviewable decision be considered' by the Administrative Appeals Tribunal (AAT).
  5. The applicant raised a number of procedural issues that I will deal with before considering the exemption issue. They are: whether this review should be conducted by the AAT; whether a hearing should be held; and whether the applicant was, as he requested, entitled to access all correspondence between my office and the other parties to the review.

 Procedural issues

 Referral to the AAT — discretion not to conduct a review (s 54W)

  1. As noted, the applicant requested that I decide not to conduct a review so that he could apply directly to the AAT for review of this matter. This request was made under s 54W(b) of the FOI Act which provides that I 'may decide' not to undertake an IC review if I am 'satisfied that the interests of the administration of this Act make it desirable that the IC reviewable decision be considered by the [AAT]'. Barring a decision under s 54W(b) a person cannot apply directly to the AAT for review of an access refusal decision but must first apply for IC review (s 57A).
  2. The applicant made submissions in support of his request. In summary, he submitted that the objects of the Act require the prompt resolution of disputes concerning FOI decisions; that there was a particular public interest in his request being finalised quickly given the relevance of the documents he sought to current debate; that the AAT would provide a prompt result (the applicant estimated the matter would be finalised within 10 to 14 weeks from the date of filing in the AAT); and that in contrast, this office would be unable or highly unlikely to resolve his application promptly.
  3. Before ruling on this request I sought further information from the applicant as to the grounds on which he contested the Department's decision. I also invited the Department's view on the s 54W(b) request. It objected to the matter being heard by the AAT prior to IC review.
  4. I decided that I was not satisfied that the precondition in s 54W(b) was met. The premise from which I started is that the FOI Act establishes a two-tier system of external review and, as stated in Guidelines that I have issued under s 93A of the FOI Act, '[i]t is intended that the Information Commissioner will resolve most applications'.[1] The Act accordingly requires that I be satisfied that it is 'desirable' in 'the interests of the administration of the Act' that a matter be considered by the AAT without IC review occurring first.
  5. The applicant's primary argument for seeking a decision under s 54W(b) was that his application could be resolved more quickly through AAT review than through IC review. I accept that the timeframe for resolving a case is a relevant consideration. However, it is not the only or the principal matter to be considered.
  6. The nature of the issues to be decided is an important consideration. In this case, they were the correctness of the Department's decisions under s 22(1) that parts of some documents were irrelevant to the FOI request, and under s 47 that information with a commercial value was exempt. Both issues were of a nature that could appropriately be addressed through the normal procedures of IC review that include inspection of documents and submissions from the parties.
  7. I saw no compelling reason why the interests of the administration of the Act made it desirable that this review be conducted before the AAT without an IC review being held first. There was nothing unusual about this matter that made it different to the many other review applications under the FOI Act that my office receives and processes.
  8. The applicant later requested a statement of reasons for my decision not to exercise the discretion under s 54W(b). As required by the Administrative Decisions (Judicial Review) Act 1977 s 13, I provided a statement of reasons dated 10 August 2012.

 Request for a hearing (s 55B)

  1. The applicant's legal representative next requested under s 55B(1) that I arrange a hearing for this matter. I invited the Department and Serco to make submissions on this request, as required by s 55B(3). The Department objected to holding a hearing.
  2. In considering this issue I applied the guidance that I have given in the FOI Guidelines. They state that '[h]earings are not intended to be a common part of Information Commissioner reviews', the presumption in the Act is that 'an IC review will be conducted on the papers unless there is a special reason to warrant a hearing' and that I 'will only decide to hold a hearing if satisfied that there is a special reason to warrant a hearing'.[2]
  3. I decided not to hold a hearing in this case. Before reaching that view I inspected the three documents covered by the s 47 exemption claim, and resolved that the s 22(1) scope issue no longer arose (for reasons explained below). My preliminary assessment of the s 47 claim, after inspecting the documents and considering the Department's and Serco's submissions, was that the exemption claim should be set aside. I therefore prepared a non-binding preliminary view that I sent to the Department and Serco on 30 November 2012 to solicit further submissions. I considered this to be a more suitable and convenient method of resolving the issues under review than conducting a hearing.
  4. I will comment on one particular argument made by the applicant. He submitted that 'detailed questions of fact arise on this review [that] are properly matters for evidence to be led by Serco and the Department' and that upon receiving that evidence he may seek to test it and lead responsive evidence. I had difficulty in giving substantial weight to that argument in this case, as I thought it might not be possible for any such evidence to be led and tested in an open hearing of the kind the applicant requested. This was because of the nature of the exemption claim that the commercial value of information would be diminished or destroyed by disclosure. I thought it might not be possible for the Department or Serco to elucidate that claim without revealing information that was claimed to be exempt.

 Access to correspondence between this office and parties

  1. The applicant requested during this review that he be given access to all communications between my office and the other parties to the review. Some documents were provided but not all.
  2. The applicant acknowledged that he did not seek exempt information. To provide such access would frustrate the purpose of the IC review.[3] However, that is not the only situation in which it may be inappropriate to provide an IC review party with all information provided by other parties.
  3. A guiding principle in an IC review is that each review party must be 'given a reasonable opportunity to present his or her case' (s 55(4)(b)). That statutory requirement is supplemented by the general principles of natural justice that a party should be given 'an opportunity ... to deal with adverse information that is credible, relevant and significant to the decision to be made'.[4]
  4. It is consistent with those principles that an IC review can be conducted in a less formal manner than a court or tribunal may resolve a matter. In fact, the FOI Act further provides that I may conduct an IC review in the manner that I consider appropriate (s 55(2)(a)), and with as little formality and technicality as is possible (s 55(4)(a)); that I may obtain information from any person or make inquiries that I consider appropriate (s 55(2)(d); and that I may use alternative dispute resolution techniques to facilitate an agreed resolution of issues (s 55(2)(b)).
  5. Applying those principles, it is common in IC review proceedings that staff of my office communicate informally with review parties, discuss options for resolving matters expeditiously and by agreement, and receive information that goes beyond the submissions on whether an agency decision should be affirmed or set aside. This broad communication with review parties has enabled a large number of IC review applications to be resolved by agreement between the parties and more quickly than if an IC review decision were made.
  6. It is not the practice of my office in all cases to provide each party to an IC review with a copy of all documents that we receive from other review parties. That is generally unnecessary and could lengthen and complicate the resolution of IC reviews. A stated objective of the FOI Act is 'to facilitate and promote public access to information, promptly and at the lowest reasonable cost' (s 3(4)).
  7. A particular example of information that I received in this case that I chose not to provide to the applicant was correspondence between the Department and Serco that I required in order to be satisfied that Serco had been given an opportunity to be joined as a third party (s 54P). It is likely, had I received an FOI request for that correspondence, that I would have transferred the request to the Department under s 16 of the FOI Act. I was not in a position to know whether that correspondence contained exempt information, and it was not an issue that I was required to resolve.
  8. In his submissions on this point, the applicant drew an analogy between IC review and the procedures of the AAT. He said that the AAT registry provides parties with copies of all documents filed by other parties, and argued that I was obliged to do so as well. I do not accept that analogy. The FOI Act Part VII and Administrative Appeals Tribunal Act 1975 Part IV contain different review procedures.
  9. A view contrary to what I have said was expressed obiter dictum by Deputy President Forgie in Apache Energy Pty Ltd and Chief Executive Officer of the National Offshore Petroleum Safety and Environmental Management Authority and Winestock [2012] AATA 298 at footnote 11. The Deputy President outlined some advantages of the Information Commissioner adopting a protocol of forwarding all documentary material submitted by a party to this office to other parties to an IC review. The chief advantage seemed to be that an agency that had made an access grant decision that had been reviewed by the Information Commissioner and was on appeal to the AAT would be better placed to discharge its obligation under s 37(1)(b) of the AAT Act to provide the AAT with the evidentiary material relevant to the AAT review. I accept that to be a consideration, but regard it as only one consideration in deciding on the appropriate procedure to be adopted in IC review proceedings, generally and in particular cases. The range of issues and principles that are applied by this office are explained in the FOI Guidelines at paragraphs [10.78–97].
  10. I am satisfied, in the present case, that each of the parties has been given a reasonable opportunity to present a case as required by the FOI Act s 55(4)(b).

 Other issues

  1. The applicant through his legal representative also requested in writing the recusal of an officer who was assisting me in this IC review. It was submitted that the officer had not provided the applicant with an accurate description of the contents of a document held by my office that had been sent from the Department to Serco.
  2. I advised the applicant that I rejected this request, for two reasons. First, I did not accept the factual premise that the officer had given misleading advice, but was satisfied that the officer had acted appropriately, helpfully and professionally in handling this IC review application. Secondly, the officer was not the decision maker in this case. In my view, a fair-minded observer apprised of all the facts would not reasonably apprehend that I (as the decision maker) would fail to bring an impartial mind to resolving the IC review application.[5]

 Scope issue (s 22(1)(a)(ii))

  1. The IC review application contested the Department's decision to delete some material under s 22 on the basis that it was irrelevant to the applicant's request. This section provides that an agency can decline to provide access to information in a document that 'would disclose information that would reasonably be regarded as irrelevant to the request for access'. By applying s 22 an agency can be relieved of the obligation to follow other FOI Act processes, for example, to decide whether an exemption applies to the deleted information and whether third party consultation should be undertaken.
  2. The applicant disputed the Department's decision under s 22(1)(a)(ii) (and requested that this matter be resolved by the AAT). The gist of the dispute turned on the proper construction to be placed on the applicant's request (which I have republished above in paragraph [2]). The Department's view was that the phrase 'containing information from Serco' preceded and qualified the three categories of information listed (a), (b) and (c) in the FOI request. The applicant disputed the Department's construction.
  3. This question of construction has been overtaken by other developments. On 13 July 2012 the applicant made a new FOI request to the Department for access to all documents covered by the earlier s 22(1)(a)(ii) decision.
  4. I comment that a fresh FOI request, as in this case, will usually be a more convenient path for resolving a disputed issue as to whether deleted information falls within or is outside the scope of an earlier FOI request. Since the 2010 amendments to the FOI Act there is no longer an FOI application fee, and there is no charge for the first five hours of decision making time by an agency. Alternatively, a disputed issue of construction can often be resolved by discussion between an agency and an applicant during the processing of an FOI request or upon internal review.
  5. I do not exclude the need for a s 22(1)(a)(ii) disagreement to be resolved by an IC review determination. However, the need to do so no longer arises in this case. I wrote to the applicant on 19 August 2012 advising him of my preliminary view that there was no reason for me to consider this aspect of the Department's decision. The applicant did not contest this preliminary view and the review proceeded on the basis that the only remaining issue to be decided was the application of exemptions by the Department.

 Application of exemption to the three letters

  1. I turn now to examine the exemption claim applying to portions of three letters from Serco to the Department. The three letters are:
    • A letter from Serco to DIAC dated 8 July 2010, entitled 'Christmas Island (CI) – Insurance Issues – Riot & Civil Commotion Risks'. The information deleted from this letter seeks the Department's permission to release certain information to Serco's insurer regarding the number of clients at Christmas Island and related matters.
    • A letter from Serco to DIAC dated 13 December 2010, entitled 'Christmas Island (CI) – Overcrowding Issues'. The information deleted from this letter makes a passing reference to the fact that should client numbers continue to increase, then Serco may have difficulty insuring for riots and civil commotion on Christmas Island.
    • A letter from Serco to DIAC dated 21 April 2011, entitled 'Christmas Island Incident March 2011 – Insurance Issues'. The information deleted from this letter raises concerns about the cost of insurance for riots and civil commotion on Christmas Island. It sets out Serco's view on the appropriate division of this cost between Serco and the Department. It appears that this letter forms part of a negotiation between Serco and the Department.

 Exemptions referred to by Serco and the Department at review

  1. The Department, in its decision of 17 February 2012, decided that the documents were in part exempt under s 47.
  2. In a submission dated 28 August 2012, the Department relied again on s 47, and submitted that the deleted information in the documents 'relates to confidential information describing Serco's internal workings and internal business affairs, including price negotiations', and that its release 'would likely be of interest to Serco's competitors' and 'could diminish Serco's future bargaining position, and/or the fairness of future tender processes that could reasonably be expected to receive a bid from Serco'.
  3. Serco's submission dated 30 August 2012 relied on section 47G:

    The redacted portions of the Serco Documents relate to our internal business affairs. The redacted information refers to sensitive negotiations relating to the costs and responsibilities for insurance. Release of this information could reasonably be expected to affect Serco's future ability to negotiate insurance for facilities which we are responsible for, or significantly affect the premiums of any future insurance. The redacted portions would not inform public debate, or promote the objects of the FOI Act (such as increasing public participation in government decision making).

  4. In a supplementary submission dated 12 September 2012 Serco advised that it also relied on s 47.

 Documents disclosing trade secrets or commercially valuable information exemption (s 47)

  1. Under s 47(1)(b) of the FOI Act, a document is exempt if its release would disclose 'information having a commercial value that would be, or could reasonably be expected to be, destroyed or diminished if the information were disclosed'. This test has two elements: the information in issue must have 'commercial value'; and that commercial value 'would be, or could reasonably be expected to be, destroyed or diminished if the information were disclosed.'
  2. To have commercial value for the purpose of s 47, information need not necessarily have 'exchange value', in the sense that it could be sold as a trade secret or intellectual property. However, the information must have some value to the relevant organisation that can properly be characterised as commercial in character (Secretary,
    Department of Workplace Relations & Small Business and The Staff
    Development & Training Centre Pty Ltd
    [2001] FCA 1375 [28]-[29]).
  3. Neither the Department nor Serco have stated what information in each letter has commercial value to Serco, or why. Serco states that the information relates to the 'internal business affairs' of Serco. This by itself is not enough to establish that the information has commercial value for the purposes of s 47.
  4. The letters state Serco's proposed solution in a negotiation with the Department about how insurance costs at Christmas Island should be divided. Information about a party's negotiating position can have intrinsic commercial value that would be diminished by disclosure before the position is communicated to the other party to the negotiation. However, the proposal set out in these letters has been put to the Department. In circumstances where both parties to a negotiation know one party's position, I am not satisfied that the information continues to have commercial value that could be diminished by its disclosure.
  5. Both the Department and Serco argue that Serco's business will be harmed if the information becomes publicly known. I am not satisfied that merely because the disclosure of some information may adversely affect a person or a business, that this fact alone establishes that the information has commercial value or that the commercial value of the information will be diminished by public disclosure. It is still necessary to point to some intrinsic commercial value that information holds, independently of the impact that disclosure of the information will have on a person or business. In other words, the commercial value the information has must be a type of commercial value that is capable of being 'destroyed or diminished' by disclosure. Section 47G of the FOI Act, rather than s 47, is the more appropriate FOI exemption to be considered where it is claimed that disclosure of information would adversely harm an organisation's business or commercial affairs.
  6. Another issue that arises in applying s 47 in this case is the age of the information and the issue to which it relates. The letters are between 20 and 30 months old, and relate to a negotiation that may have concluded. For the exemption to apply I would need to be satisfied that the information still retained commercial value and that disclosure at this time would diminish that value. I am not able to be satisfied on those matters on the basis of the submissions received from the Department and Serco.
  7. Therefore, this exemption cannot apply.

 Public interest conditional exemptions — business (s 47G)

  1. In the alternative, I have considered whether the documents are conditionally exempt under s 47G, even though this exemption was not directly raised by the Department. Both Serco's and the Department's submissions do however relate to the harm that may result to Serco's business if the information is released.
  2. Section 47G relevantly states that a document is conditionally exempt if its disclosure 'would disclose information ... concerning the business, commercial or financial affairs of an organisation', and 'would, or could reasonably be expected to, unreasonably affect ... that organisation ... in respect of its lawful business, commercial or financial affairs'.
  3. The information in the documents could be said to concern Serco's business, commercial or financial affairs. In essence, information can relate to the 'commercial affairs' of an organisation even though the information does not have 'commercial value'. On this view, the first limb of the test in s 47G is satisfied.
  4. However, the second limb of the test is not satisfied. There is insufficient information before me to allow me to conclude that disclosure of the information could reasonably be expected to result in an unreasonable effect on Serco.
  5. The Department submitted that 'disclosing the information would reduce the value and/or profitability of Serco's business'. I have no information before me that demonstrates that the value or profitability of Serco's business would be harmed by the disclosure of the information in issue. It is difficult to see how this would occur. Serco delivers services to the Department under an existing contract that has a fixed price.
  6. The Department submits that disclosure would 'diminish Serco's ability to conduct essential negotiations that relate to its business affairs' and that release of information about negotiations between Serco and the Department would 'diminish Serco's future bargaining position'.
  7. Neither the Department nor Serco have indicated which negotiations are referred to. The only possibility would seem to be negotiations between Serco and insurers. Self-evidently, negotiations with the Department could not be prejudiced by disclosure of the information, as the full content of the letters is already available to the Department.
  8. In considering whether disclosure would harm Serco's ability to negotiate with insurers, I observe that the information in the letters is general in nature. It expresses Serco's concern about its ability to maintain insurance for its Christmas Island facilities. From the content of the letter dated 8 July 2010, it appears that the information expressed in the letters is already known to its insurer, who appears to have similar concerns to Serco. As an aside, I note that if the letters did contain factual information relevant to the insurance of Serco's business, Serco might be obliged to disclose such information to prospective insurers under its common law and statutory duties of utmost good faith and disclosure; this would be relevant to the question of whether disclosure of the information would be unreasonable.
  9. The Department has stated that disclosure of the letters 'could diminish Serco's ability to generate an effective tender when the current contract expires in 2014, by providing Serco's competitors with an unfair competitive advantage'. This argument is hard to understand. If the information is disclosed, Serco will be in the same position as other tenderers. In fact, it is arguable that disclosure of the information will lead to a more transparent and competitive tendering process.
  10. The Department also states that disclosure 'could compromise such a tender process, possibly placing DIAC in breach of procurement rules, and/or in danger of litigation'. The impact of disclosure on the Department's processes is not relevant for this exemption, which is concerned with the impact of disclosure on Serco.
  11. Serco submitted that the 'information refers to sensitive negotiations relating to the costs and responsibilities for insurance' and public release could affect 'Serco's future ability to negotiate insurance for facilities for which we are responsible for, or significantly affect the premiums of any future insurance'.
  12. If I were satisfied that disclosure of this information could reasonably be expected to have the consequence of significantly increasing Serco's insurance costs, this would be a sound argument. However, Serco did not spell out how disclosure of the information would affect its future insurance arrangements, either in its initial submissions, or in response to my preliminary view in which I advised that I did not have sufficient information before me to draw this conclusion. As noted above, the information in the letters is general in nature and likely already available to Serco's insurer.
  13. Importantly, the Department (with the assistance of Serco) bears the onus of establishing that the application of an exemption is justified (s 55D). For the reasons above, it is my decision that there is insufficient information before me to conclude that Serco's business or commercial affairs would be harmed by disclosure of this information. Therefore, the information is not conditionally exempt under s 47G.

 Conclusion regarding exemptions

  1. The three documents are not exempt.

 Decision

  1. Under s 55K of the FOI Act, I set aside the deemed decision of the Department of Immigration and Citizenship (the Department) and substitute my decision, under s 11A of the Freedom of Information Act 1982 (the FOI Act), to grant full access to the three documents in issue in this review.

 

Professor John McMillan
Australian Information Commissioner

21 December 2012

Review rights

If a party to an IC review is unsatisfied with an IC review decision, they may apply under s 57A of the FOI Act to have the decision reviewed by the Administrative Appeals Tribunal. The AAT provides independent merits review of administrative decisions and has power to set aside, vary, or affirm an IC review decision.

An application to the AAT must be made within 28 days of the day on which the applicant is given the IC review decision (s 29(2) of the Administrative Appeals Tribunal Act 1975). An application fee may be payable when lodging an application for review to the AAT. The current application fee is $816, which may be reduced or may not apply in certain circumstances. Further information is available on the AAT's website (www.aat.gov.au) or by telephoning 1300 366 700.


[1] Guidelines Issued by the Australian Information Commissioner under s 93A of the Freedom of Information Act 1982 [FOI Guidelines] at paragraph [10.67].

[2] FOI Guidelines at paragraphs [10.45–47].

[3] See also Washington and Australian Prudential Regulation Authority [2011] AICmr 11 at paragraph [36], in which Freedom of Information Commissioner Popple rejected a review party's submission to be provided access to all submissions by the respondent agency, on the basis that some portions of the submissions contained exempt information.

[4] Kioa v West (1985) 159 CLR 550 at 629 per Brennan J, affirmed by the High Court in Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 225 CLR 88 at 95–96.

[5] See also Hot Holdings Pty Ltd v Creasy (2002) 210 CLR 438 in which the High Court dismissed an allegation of bias that was based on the conduct of a person who provided assistance to the decision maker.