Introduction

On 23 August 2012, the Western Australian Court of Appeal handed down its decision in Apache Northwest Pty Ltd v Department of Mines and Petroleum,1the first Freedom of Information Act2 application to reach the Court of Appeal. The decision considered the correct standard to be applied in determining whether a matter is “exempt” from disclosure under the FOI Act and the level of scrutiny that the court is willing to place on administrative decisions.

Background

The appellant, Apache Northwest Pty Ltd (Apache), is the licensed operator of oil and gas production and processing facilities located on and around Varanus Island, approximately 100 km off the north west coast of Western Australia. Apache’s operations and facilities on and around Varanus Island are regulated by a number of different statutes and corresponding regulations (the Regulatory Regime)3, which is administered by Department of Mines and Petroleum (DMP) (the first respondent to the appeal proceedings).

On 3 June 2008, during the course of production operations, a gas pipeline ruptured causing a large explosion and fire on the beach of Varanus Island. This incident caused significant damage to the Varanus Island facilities and resulted in an immediate and total cessation of gas supply, cutting Western Australia’s total gas supply by approximately 30 per cent.4

Following the incident, on 15 September 2008, lawyers acting for an insurer of at least one of Apache’s major gas customers made an application to the DMP under the FOI Act seeking access to documents relating to Apache’s facilities on Varanus Island, which  Apache had previously provided to the DMP under the Regulatory Regime.5

While the DMP initially refused access after consultation with Apache, following an internal review, the DMP reversed its initial decision. The Western Australian Information Commissioner (the Commissioner) upheld the DMP’s decision, with limited exceptions. An appeal by Apache against the decision of the Commissioner was dismissed by the primary judge. Apache then made a further appeal to the Court of Appeal, that appeal being the subject of this paper.

Overview of the statutory regime

The FOI Act provides a general right of access to documents held by government agencies, and importantly, extends to documents they receive from third parties.6 Any person who wishes to obtain access to documents may make an application to the relevant agency in accordance with the requirements of the FOI Act.7

The rationale for this regime is to strengthen democracy, promote open discussion of public affairs, ensure that the community is kept informed of the operations of government and subject government performance to informed and rational debate.8 This is reflected in the objectives of the FOI Act.9

Certain types of information however, are exempt from this general regime of access.  These exemptions are contained in schedule 1 of the FOI Act and relevantly exclude disclosure of a matter, if its disclosure either:

  • would reveal information (other than trade secrets) that has a commercial value to a person and could reasonably be expected to destroy or diminish that commercial value;10
  • could reasonably be expected to have an adverse effect on those affairs or to prejudice the future supply of information of that kind to the government or to an agency;11
  • could reasonably be expected to endanger the life or physical safety of any person;12
  • could reasonably be expected to endanger the security of any property;13 or
  • could reasonably be expected to prejudice the maintenance or enforcement of a lawful measure for protecting public safety.14

Background to the Court of Appeal decision

Apache’s Case before the Information Commissioner

Apache argued before the Commissioner that the documents sought to be accessed were properly exempt under the FOI Act schedule 1 exemptions set out above (collectively, the Exemptions).15  Fundamentally, Apache argued that disclosure of the relevant information “could reasonably be expected to” have the relevant effects as expressly contemplated by the Exemptions.

The Commissioner did not accept Apache’s submissions and in doing so, found that Apache had failed to meet the appropriate standard to establish each of the Exemptions. The Commissioner concluded that Apache was required to specifically demonstrate a causal link between disclosure and the effects claimed in the relevant Exemption. Relevantly, the Commissioner appeared to suggest that something more than just a reasonable expectation of the relevant effect was required.

In making this finding, the Commissioner appeared to do two things. First, the Commissioner imported the word “would” (rather than “could”) into the language of the test in a number of places in the decision. Secondly, the Commissioner concluded that Apache was required to establish the test on the balance of probabilities, that a certain effect “could reasonably be expected” to arise.

Appeal at First Instance

Apache challenged the Commissioner’s approach to the phrase “could reasonably be expected” in its appeal to the Supreme Court of Western Australia.16 Apache contended that the Commissioner’s approach was a substantive error concerning the standard of proof. Edelman J in considering the Commissioner’s reasons “as a whole” rejected Apache’s arguments and found that overall, the Commissioner had applied the correct test, despite instances where contrary language may have been used or inconsistencies existed in the reasons.

The Court of Appeal decision

Basis of Appeal

Apache appealed to the Court of Appeal on the basis that the trial judge had erred in failing to find that the Commissioner had wrongly:

  • concluded that Apache was required to satisfy him on the balance of probabilities; and
  • applied a test of “would” have adverse consequences instead of “could reasonably be expected to” have adverse consequences.17

Reasoning of the Court of Appeal

On the first issue, Apache’s primary argument was that the Commissioner had applied the wrong standard and therefore misstated Apache’s standard of proof under the Exemptions. Apache submitted that the correct approach in determining the standard to be applied was as set out in Attorney General’s Department v Cockroft,18 which required the Commissioner to consider “whether the expectation claimed was reasonably based”. Apache also submitted that the balance of probabilities is a curial standard, which is inappropriate when applied to an administrative decision.19

While the court agreed with Apache’s submission that the correct approach to the standard of proof was set out in Cockroft, it went on to find that the primary judge had correctly found that the Commissioner did not apply the balance of probabilities test, notwithstanding the Commissioner’s express references to the “balance of probabilities” in his reasons.20

On the second issue, Apache made two arguments. First, that it was inherent in the Commissioner’s reasons that he had applied a higher test by importing the phrase “would reasonably” into the language of the relevant exemptions. Second, and contrary to the trial judge’s findings, the fact that the Commissioner had correctly used the phrase “could reasonably” at times in his reasons did not, of itself, demonstrate that the correct test was in fact applied. In support of its contention, Apache referred to a number of places within the Commissioner’s reasons which it said indicated that the Commissioner had misconstrued the test. The court disagreed and held that the trial judge had correctly found that the examples relied upon by Apache must be read in the context of the decision as a whole.

Implications from the decision

Scope of Exemptions

The Court of Appeal’s decision (and the earlier decisions by the Commissioner, in particular) highlights the potential limited application of the Exemptions in the FOI Act and how commercial documents provided to government or similar agencies are extremely vulnerable to disclosure under the FOI Act.

While corporate entities have traditionally relied on the Exemptions, most notably the “commercial information exemption”21 in resisting FOI applications, the decision is likely to narrow the scope and operation of the Exemptions, and the ability of corporates to successfully rely on them to prevent third party access to commercially sensitive documents.

By effectively endorsing the reasoning and approach taken by the Commissioner, the Court of Appeal has raised the bar for corporations attempting to protect their information.  There is a risk that business will bear the higher onus of establishing that the relevant effect is more than likely to occur from the disclosure. This is likely to be extremely difficult – particularly once a significant period of time has passed.

“Hands off” approach

Both the trial judge and the Court of Appeal’s reluctance to analyse the Commissioner’s application of the legislation and instead focus on the “context” of the decision suggests that the courts are unlikely to intervene and overrule determinations made by the Commissioner. This “hands off” approach effectively gives the Commissioner significant and potentially unscrutinised discretion in the application of the Exemptions and the legislation.

The outworking of the Court’s approach is that corporate entities wanting to prevent the disclosure of their sensitive information will need to focus on convincing the early decision makers (for example, the Commissioner) that their information is properly exempt.