The digital media age creates difficulties in managing information flow. Yet, a recent decision of the Supreme Court of New South Wales shows that powers still exist to protect confidential information and that where you act quickly, further leaks can be contained. It also demonstrates that the law places an obligation on unauthorised recipients of confidential information not to disclose it.

ASADA and the Sharks

The investigation by the Australian Sports Anti-Doping Authority (ASADA) of the Cronulla Sharks football club has filled the pages of Sydney newspapers of late. In the absence of any formal public findings, gossip and innuendo have been the hallmark of the newspaper reports.

The problem for the Sharks has been their association with the sports scientist Stephen Dank and his links to the use of banned supplements by rugby league players and other professional sports persons.

ASADA’s investigation led to the Sharks retaining Dr Tricia Kavanagh to conduct an internal review focused on a five month period in 2011 during which Dank was associated with the Sharks. Following the review, Dr Kavanagh provided the Club with a report.

The Sharks then obtained advice in writing in relation to the contents of the Kavanagh report from Mr Darren Kane, a solicitor, and Mr Allan Sullivan QC, a barrister retained by Mr Kane on behalf of the Sharks.

Following receipt of the Kane and Sullivan advices, on 9 March 2013 the Club publicly announced that the head coach of the Sharks, Shane Flanagan, had been stood down and the employment of four other officials had been terminated. The Club indicated that these measures had been taken in response to alleged “negligence”. Specifically, the deputy chairman of the Sharks told the press conference:

''The issue we have, and you have heard the phrase 'drug cheats', [but] I think in some cases [at the Sharks] - and maybe the majority of incidences - it may be [a] case more of negligence rather than cheating.''

When questioned at the same press conference why Flanagan had been stood down, Dr Kavanagh said: ''He was an integral part of the management team in the period we are referring to in 2011 … the period that Stephen Dank was associated with the club.''

Publication of the Kane and Sullivan advices, and indication of more to come

On Friday, 26 April 2013 and Saturday, 27 April 2013 the Daily Telegraph newspaper published articles that referred to the Kane and Sullivan advices and the contents of the report of Dr Kavanagh. Then in a radio interview on 27 April 2013 Rebecca Wilson, a journalist who writes for the Daily Telegraph, said that:

in the next couple of weeks what will come to the surface will absolutely devastate you because there’s a lot more to come and, you know, the legal issues mean we are a bit restrained at the moment”.

Later in the same interview, Wilson said:

So Tricia Kavanagh - former Deputy Director of ASADA - you know she hasn't minced her words but she's been cautious in the way she's gone about compiling the report. She's done it in a completely legal and above board way, and then another lawyer has gone over the report and added to it with what the possible legal ramification would be for the Board, the club, the players and everyone involved, so we've got two pretty senior people have compiled the report.”

Urgent application to the Supreme Court

The Sharks commenced urgent proceedings in the Supreme Court of New South Wales for an injunction restraining the four defendants from publishing materials taken, it claimed, from the Kane advice and the Sullivan advice. An injunction is an equitable remedy in the form of a court order that requires a party to do, or refrain from doing, specific acts. A party that fails to comply with an injunction faces criminal or civil penalties.

The hearing before Rein J in the Supreme Court took place on Tuesday, 30 April 2013, after the Sharks had commenced proceedings and obtained temporary orders against the defendants over the weekend. Some may be surprised to know that the Supreme Court is open 24 hours a day, 7 days a week, and even on Public Holidays; although one should not expect such service unless your case is extremely urgent.

Nationwide News, the publisher of the Daily Telegraph newspaper, was the first defendant to the proceedings. The second to fourth defendants were persons employed by, or who write for, Nationwide News.

Decision of Rein J

Generally speaking, to obtain the injunction sought the Sharks had to establish three elements:

  • there was a real risk that the defendants would in future publish material derived from the Cain advice and/or the Sullivan advice;
  • if the defendants did so, that would amount to a breach of confidence; and
  • as a matter of discretion, the Court should grant the injunction.

As to the first element, having examined the Kane advice and the Sullivan advice, Rein J was satisfied that thirteen items published in the Daily Telegraph on 26 April 2013 and 27 April 2013 had in fact been taken from the Kane advice.

Rein J noted that no undertaking had been offered by the defendants that they would not publish any further materials from the Kane advice and the Sullivan advice (or re-publish they had already published). His Honour also observed that there “is evidence that defendants are actively pursuing the story and given consideration to what they will publish in the near future”. In this regard, the Court referred to and the Sharks relied on various items of evidence including the interview which Rebecca Wilson (the second defendant) on Triple M Radio Station on 27 April 2013, mentioned above.

As to the second element, generally speaking the law says that:

  • Information is of a confidential nature if it was communicated in circumstances that give rise to an obligation of confidence;
  • A duty of confidence arises whenever a person (the “confidee”) receives information s/he knows, or ought to know is fairly and reasonably to be regarded as confidential;
  • If the confidee breaches their duty of confidence or there is a threatened breach of that duty, then legal action may be taken;
  • Subject to a few limited exceptions, there can be no breach once information loses its quality of confidentiality.

Taken at face value the Kane advice and the Sullivan advice, being legal advices given by lawyers to a client, were clearly confidential. However, the defendants argued the advices were not confidential to the extent they were based on publicly known facts; or, in the alternative, that the Sharks waived the confidential nature of the advices by virtue of answers given to questions at a press conference held by the Sharks. Both arguments were unsuccessful.

The Court was also satisfied that the defendants were aware that in preparing the material in question that was published in the Daily Telegraph on 26 and 27 April 2013, they were utilising part of legal advice given by a lawyer retained by the Sharks.

As to the third element, the defendants pointed to the fact that the plaintiff had taken no action in respect of an article by Roy Masters that was published in the Sydney Morning Herald on 10 March 2013 which referred to the Kane advice and the Sullivan advice; and that for this reason, as a matter of discretion the Court should decline to grant the injunction. The plaintiff’s response to this submission was the Masters article did not accurately describe the advice given by Kane and Sullivan. Rein J noted that counsel for the defendant did not dispute this argument and therefore should be taken to have accepted it.

The Court also appeared to be swayed by the conduct of and stance adopted by the defendants, with Rein J observing:

Until the defendants explain exactly what they hold and the provenance of whatever notes they hold if they do not have copies of the actual advices it is difficult to form a view about what the defendants hold and what they might consider publishing if not restrained. It is also possible that the defendants do not intend to make any further use of the material they have which came from the Kane advice but they have not said that they do not intend to do so.”

In all the circumstances, the Court found that the Sharks were entitled to an injunction restraining the defendants from publishing materials taken from the Kane advice and the Sullivan advice and made appropriate orders.

There was no evidence in the above case that any of the defendants had done anything untoward in accessing, or obtaining portions or extracts from the Kane and Sullivan advices. However, they should have known that such material was confidential and accordingly, having received it, the defendants became “confidees” who owed a duty of confidence to the Sharks and could not use the material without the Sharks’ consent.

Points to consider

There are a number of lessons to be taken from this case:

  • Confidential information can be protected if you act quickly;
  • Where the disclosure of such confidential information is likely to have a deleterious impact upon you or your business, the Supreme Court will be available to hear your case immediately, no matter the day or the time;
  • Just because certain material falls into a person’s possession does not mean it can be used as the person sees fit; particularly if the material is confidential in nature. The law is available to protect an unauthorised disclosure or (other) misuse of information that is subject to an obligation of confidentiality. An obligation is placed upon the recipient of confidential information.
  • By publicly indicating that action had been taken against the head coach and other club officials for “negligence”, the Sharks left open the argument that they had waived the confidentiality of legal advice which they had received on the subject. It is therefore important that confidential information not be disclosed even partially as this may rob you of legal protection in respect of the totality of the information.