AUCKLAND INTERNATIONAL AIRPORT LTD V AIR NEW ZEALAND LTD HC AK CIV-2006-404-5212

AUCKLAND INTERNATIONAL AIRPORT LTD V AIR NEW ZEALAND LTD HC AK CIV-2006-404-5212 22 September 2006ORDER SUPPRESSING PUBLICATION OF THE AFFIDAVITS AND ANNEXURES TO THE AFFIDAVITS SWORN BY MESSRS DAVID BRIDGEMAN, RICHARD THOMSON AND DONALD HUSE AND TO INFORMATION SOURCED FROM THE SUPPRESSED DOCUMENTS INCLUDING IN PARTICULAR PARA 4.20 OF THE WRITTEN SYNOPSIS OF SUBMISSIONS BY MS SARAH KATZ FOR AIAL AND PARA 3.23 OF THE WRITTEN SYNOPSIS OF SUBMISSIONS BY MR DAVID COOPER FOR AIR NEW ZEALAND. ORDER PROHIBITING ANYBODY OTHER THAN THE PARTIES IN THIS PROCEEDING FROM SEARCHING THOSE AFFIDAVITS OR THE ANNEXURES. IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV-2006-404-5212BETWEEN AUCKLAND INTERNATIONAL AIRPORT LTD Plaintiff AND AIR NEW ZEALAND LTD Defendant Hearing: 6 and 7 September 2006 Appearances: Sarah Katz and Anna Harris for Plaintiff David Cooper and Timothy Fitzgerald for Defendant Judgment: 22 September 2006JUDGMENT OF HARRISON JIn accordance with R540(4) I direct that the Registrar endorse this judgment with the delivery time of 12 noon on 22 September 2006_________________________________________________________________________________ SOLICITORS Russell McVeagh (Auckland) for Plaintiff Bell Gully (Auckland) for DefendantIntroduction[1] Auckland International Airport Ltd (AIAL) owns and operates, as its name suggests, Auckland International Airport. It is currently participating in a statutory process of consultation with its substantial customers. Their purpose is to fix charges payable for identified airport activities as part of the next comprehensive pricing review due on 1 September 2007. Air New Zealand, an international and domestic airline group, is AIAL's principal customer. [2] Both parties signed a confidentiality deed before starting that consultative process. Subsequently, AIAL provided Air New Zealand with a comprehensive pricing proposal including details of proposed increases in its charges. Air New Zealand has given notice of its intention to disclose those details to the market. The airline says the information is not subject to the terms of the confidentiality deed, and that in any event it is statutorily obliged to announce the increases. [3] AIAL has applied for injunctive relief, both interim and permanent, on the grounds of anticipatory breach of contract and breach of confidence. Air New Zealand opposes. It was common ground that I should determine AIAL's application by the orthodox three-stage inquiry into, first, whether there is a serious question for trial; second, if so, where the balance of convenience lies, subject to an important reservation which I shall discuss later; and, third, what is the overall justice of the case.Background[4] The relevant background facts are not in dispute. AIAL is empowered to: s 4A Airport Authorities Act 1966:(1) set such charges as it from time to time thinks fit for the use of the airport operated or managed by it, or the services or facilities associated therewith.(2) Any charges set under this section may be charged to persons or classes of persons owning or operating aircraft, or to persons or classes of persons using or otherwise enjoying the benefit of the airport, services, or facilities, or to any other persons.[5] However, before fixing the amount of that charge AIAL: s 4B:(1) must consult with every substantial customer in respect of any charge payable by that substantial customer to the airport company in respect of any or all identified airport activities (2) must consult with every substantial customer in respect of any direct charge payable to the airport company by any passenger in respect of any or all identified airport activities [6] AIAL and Air New Zealand signed the written mutual confidentiality deed on 15 June 2005, reciting among other things that:A Pursuant to section 4B of the Airport Authorities Act 1966 ('the Act'), AIAL intends to consult with its substantial customers in respect of the charges payable by those substantial customers to AIAL in respect of all identified airport activities (as that term is defined in the Act). In the course of this consultation, AIAL and Air New Zealand will exchange with each other certain information. B AIAL is a company listed on the New Zealand Stock Exchange and Australian Stock Exchange. The listing rules of those stock exchanges and the laws of New Zealand and Australia relating to the trading of securities require that confidential information provided by AIAL to Air New Zealand and the other parties taking part in the consultation remains protected. C Accordingly, the parties have agreed to enter into this deed to record the basis upon which they will exchange information with each other in the course of the consultation.[7] Clause 1.1 of the deed defines 'Information' as:All information supplied or made available to the Recipient or any Representative of the Recipient by the Provider or any Representative of the Provider for the purpose of the Consultation.[8] Air New Zealand, subject to specified exceptions, covenanted not to: clause 2.1:a) Disclose information, or permit it to be disclosed, to any person; b) Use or refer to information for any purpose other than to participate in the Consultation.[9] AIAL issued a comprehensive aeronautical pricing proposal on 25 July 2006 and invited commentary. Only 20 copies were produced. Each recipient was required to sign for its copy. Air New Zealand's Industry Affairs Manager, Mr Sean Ford, signed a written acknowledgement. [10] Within a week Air New Zealand spoke to the media about the proposal. An article published in the New Zealand Herald on 31 July 2006 reported:Air New Zealand says it is 'stunned and shocked' by new landing prices proposed by Auckland International Airport (AIA), as the pair trade accusations of posturing and game-playing. 'We are stunned and shocked', said chief financial officer Rob McDonald. '[The airport] is right at the top of worldwide landing fees already. It makes more money on a margin basis than any airport in the world'. 'It was actually time for prices to come down. They are just exploiting that revaluation'. McDonald said that unfortunately this was a game where one player got to be the referee as well. The consultation was 'just a facade', he said. 'You put in some high prices, you show some willingness to drop them, then you say: 'Gee, I was reasonable. Now it's only a really big increase not a massive one'. When in fact no increase was justified in the first place'. There was little recourse for Air NZ if it was unhappy with the process. [11] Air New Zealand's company secretary, Mr John Blair, wrote to AIAL's chief executive officer, Mr Donald Huse, on 25 August 2006. His letter stated:Re: Pricing Proposals We have received comments from financial analysts concerning statements made during the course of your results announcement yesterday about inclusion of the airport departure fee in airline ticket prices and that this is a subject of negotiation between Auckland Airport and the airlines. This issue clearly impacts on airline ticket pricing and consequent levels of customer demand and is already of interest to airline industry analysts. We are also conscious that under the consultation process the travelling public who are forced to pay these charges have no representation other than through the airlines.Air New Zealand of course has a substantially higher proportionate exposure to Auckland Airport pricing than any other airline and this, as well as other future airport charges, is material information. Accordingly we intend to clarify to the market next Monday the expectations of Auckland Airport in terms of future pricing. We are giving you prior notice of this as a matter of courtesy and in recognition thatas a listed company, Auckland Airport may wish to co-ordinate announcements. We have considered this issue in the context of the confidentiality agreement between us. It is obviously the view of Auckland Airport that proposals under consultation and negotiation with airlines do not constitute confidential "Information" as defined in that agreement. That is also our view. We also observe for completeness that should our collective views be incorrect, then there has been a breach of the agreement by Auckland Airport. We will advise you on Monday as soon as our market announcement has been made so that you are in a position to respond promptly. [Emphasis added][12] AIAL replied in immediate protest. There was an unproductive exchange of correspondence between representatives of both sides. However, an interim agreement was reached whereby Air New Zealand would stay its hand providing AIAL sought urgent relief. [13] Mr Huse has sworn two affidavits. He denies that he or AIAL has breached the confidentiality deed in the terms alleged by Air New Zealand. He says that his statements made about the airport departure charge related to issues and information which were already in the public arena. One of those issues was the appropriate collection mechanism for the airport departure charge. Mr Huse accepts that both parties are equally entitled to express views publicly upon it. He emphasises that this proceeding is not aimed at silencing Air New Zealand in that respect. [14] However, Mr Huse says that the information which Air New Zealand intends to disclose is not in the public arena. He says it is commercially sensitive, tentative in nature and subject to consultation requirements not only with Air New Zealand but other customers and industry players. It would be premature to release the information to the market at this early stage of the consultation process. [15] Air New Zealand's proposed press release states:Air New Zealand advises that it has received proposals from Auckland International Airport (AIAL) in respect of airport charges which it considers to be material information required to be disclosed to the market. The status of these proposals has been considered in response to inquiries from market analysts and institutional investors following comments made by AIAL.Although termed 'proposals', the position of AIAL under the relevant legislation enables it to impose the increases following consultation. AIAL has proposed the following quantum and structure of charges:• The Airport Development Charge levied directly on passengers will increase by [X]% from $[Y] to $[Z].• The Airport Development Charge will apply to children above [A] years old instead of the current exemption up to 12 years old• The Airport Development Charge will be required to be collected by airlines in conjunction with the airfare.• Airfield charges for runway and apron facilities will increase on average by [B]%.• The new charges will apply from 1 September 2007 except for the increase in the Airport Development Charge to $[C] which will apply from July 2008. The impact of the proposed cost increases on Air New Zealand and its customers is well in excess of $[D] million over the pricing period. Air New Zealand opposes the Airport Development Charge and its inclusion in ticket prices because of the inability of the travelling public to have any influence over the level of the fee or, if it is included in the ticket, any proper visibility. This is exemplified by the fact that AIAL already increased its revenue from the Airport Development Charge from $20 to $25 in October 2005 when it retained $5 of government charges included in the total, which then began to be levied on airlines instead of passengers. The 2008 increase will mean a [E]% increase in that charge in just two years. Air New Zealand has also queried the validity of a 'development' charge when airports are authorised by legislation only to charge for 'use' of terminals and facilities.(1) Serious Question[16] The first stage in the inquiry is to determine whether AIAL's alternative claims for anticipated breach of contract and breach of confidence raise a serious question for trial. Mr David Cooper, counsel for Air New Zealand, relies on two grounds for denying that premise. I shall deal with them in succession.(a) Information[17] Mr Cooper's primary submission is that the contractual term 'Information' is limited to information disclosed between the parties to enable them to consult in an informed way about AIAL's proposed price increases. It is designed to protect commercially sensitive material supplied for the purpose of explaining orchallenging the amount of the proposed charges. But the word 'Information' excludes details of the subject matter of the consultation; that is, the proposed charges themselves. Accordingly, Mr Cooper says, the confidentiality provision does not apply. [18] The point is principally one of contractual interpretation. Clause 1.1 of the confidentiality deed refers to 'the purpose of the consultation', described in the same clause as 'the consultation required to take place pursuant to [s 4B] referred to in recital A '. Clause A acknowledges that the parties will exchange 'certain information' in the course of the consultation. Clause C recites the parties' agreement to enter into the deed to record 'the basis upon which they will exchange information in the course of the consultation'. [19] The words 'the purpose of the consultation' where used in clause 1.1 must be given their plain meaning. The purpose of the consultation is to set the relevant airport charges from 1 September 2007. The 'course of the consultation' started when AIAL supplied Air New Zealand with a copy of its proposal on 25 July 2006. The definition of 'Information' must include all information supplied by either party within and related to the consultation process from that point. That is the process mandated between AIAL and every substantial customer 'in respect of any charge payable by that substantial customer' or 'any indirect charge payable by any passenger '. Those charges must be 'in respect of any or all identified airport activities'. [20] Mr Cooper accepts that details of AIAL's proposed charges fall within the first part of the clause 1.1 definition; that is, they were 'information supplied or made available' to Air New Zealand by AIAL. But he says the details are not within the meaning of the second part; that is, 'for the purpose of the consultation'. [21] With respect, I cannot follow how such a distinction can logically be drawn between one category of information supplied by AIAL in a comprehensive aeronautical pricing proposal designed to initiate the course of the consultation 'in respect of any charge payable' by Air New Zealand and a separate category of information, supplied in the same document, which is not for the purpose ofconsultation: If details of AIAL's proposed charges were not supplied for that purpose, for what purpose were they supplied? [22] In my judgment, AIAL's details of its proposed charges fall squarely within the clause 1.1 definition. Mr Cooper accepts there would be no purpose within the consultative process in AIAL supplying Air New Zealand with all its core material but excluding details of its proposed charges. They are the springboard from which all consultation must follow. Provision of charging details without the source data, and vice versa, would be useless. There would be no consultation without both. They are two inextricably linked and integral parts of the one whole package of information supplied for the purpose of consultation. [23] Nor do I accept Mr Cooper's submission of a distinction between different types of information. The fact that details of the charges are of a different nature from the source data or what Mr Cooper calls 'one small part of the information' does not matter. Clause 1.1 does not allow one party to undertake a qualitative or quantitative assessment and form its own view about the contractual status of certain information once supplied; the value of the definition of 'Information' lies in its universality. [24] Also, I note that the position now taken by Air New Zealand is directly at odds with its conduct on 25 July 2006. On that day Mr Ford, on the airline's behalf, signed a receipt for one of the 20 copies of the proposal including these words:I further acknowledge that the proposal constitutes Information for the purposes of the confidentiality deed entered into between AIAL and [Air New Zealand] and as such it may only be disclosed and used in accordance with the confidentiality deed and all other provisions of the confidentiality deed apply to it. [My emphasis][25] Moreover, the second page of the proposal, under the heading "Confidentiality and Disclosure Statement", provides:The information set out in this aeronautical pricing proposal (the 'Proposal') is the property of [AIAL] and is subject to the confidentiality agreement between AIAL and its substantial customers ('airlines') as defined by the Airport Authorities Act 1966 (as amended) None of the information inthis Proposal may be disclosed to any person without the prior written authorisation of AIAL. The public disclosure of this information would be likely to unreasonably prejudice AIAL. This Proposal has been prepared for the purposes of aeronautical pricing consultation pursuant to the Airport Authorities Act 1966 and necessarily contains matters of suppositionwhich are not sufficiently definite at this time to warrant public disclosure. [My emphasis][26] The document signed by Mr Ford is an unequivocal acknowledgement that the entire contents of AIAL's proposal, including of course details of proposed charges, constitutes Information within the meaning of clause 1.1 of the deed. The airline is bound by this concession, and cannot seriously contend otherwise following its receipt and retention of the document. The point was put beyond doubt by the second page of the proposal. If Air New Zealand did not accept AIAL's condition of supply, it was obliged to return the proposal immediately without copying any of its contents. [27] Mr Cooper also developed a separate argument that AIAL could not require confidentiality where it was bound, first, to consult and, second, to supply details of the proposed charges for that purpose. In his submission the contractual definition of 'Information' excludes information which AIAL is compulsorily bound to provide. [28] Mr Cooper relies particularly on a passage from Port Louis Corporation v Attorney-General of Mauritius [1965] AC 1111 per Lord Morris at 1124, adopted inWellington International Airport Ltd v Air New Zealand [1993] 1 NZLR 671 at 674: Helpful as the citations were, the nature and the object of consultation must be related to the circumstances which call for it. The situation to which section 73(1) relates is clear. If there is a proposal to alter the boundaries of a town, or the boundaries of a district, or the boundaries of a village, such alteration must not be made until after consultation with the local authority concerned. It follows that the local authority must know what is proposed before they can be expected to give their views. This does not however involve that the local authority are entitled to demand assurances as to the probable form of the solutions of the problems that may be likely to arise in the event of there being an alteration of boundaries. The local authority must be told what alterations of boundaries are proposed. They must be given a reasonable opportunity to state their views. They might wish to state them in writing or they might wish to state them orally. The local authority cannot be forced or compelled to advance any views but it would beunreasonable if the Governor in Council could be prevented from making a decision because a local authority had no views or did not wish to express or declined to express any views. The requirement of consultation is never to be treated perfunctorily or as a mere formality. The local authority must know what is proposed: they must be given a reasonably ample and sufficient opportunity to express their views or to point to problems or difficulties: they must be free to say what they think.[29] I do not accept Mr Cooper's submission. As Ms Sarah Katz for AIAL points out, the Airport Authorities Act neither requires nor excludes confidentiality arrangements. The statute imposes an obligation of consultation but not a mechanism or process. The inference to be drawn from the deed is that both parties sought and agreed upon confidentiality. There is no evidence to suggest that this state of protection was unilaterally imposed. [30] The Port Louis Corporation case cannot stand as authority for Mr Cooper's proposition that AIAL had no power to impose a confidentiality cloak over all information exchanged between the parties within the consultation process. Lord Morris' statement was made to reinforce the right of the consulted party to full disclosure of relevant information. That is precisely what is proposed here through the exchange mechanism agreed between the parties. At its heart or source is AIAL's agreement to supply information to Air New Zealand at this stage which is not otherwise in the public domain. [31] Ms Katz identified three consultation options which were available to the parties: first, a completely open exchange of information (the Wellington International Airport case is an example); second, a fully confidential approach; and, third, a hybrid where the parties agree, for example, that the proposed charges may be made public but all else is to remain confidential. [32] Here the parties agreed upon the second option. I agree with Ms Katz that it ensures a greater exchange of information than might otherwise occur. It is more like a negotiation process, designed to encourage the parties to make full mutual disclosure and reach a compromise. Ms Katz's point is borne out by the terms of the proposal itself.[33] The body of the document is 186 pages. Additional appendices amount to 160 pages. The proposal is an extremely detailed explanation of the bases for AIAL's calculation of proposed increased charges. Among other things, it makes what is described as an early settlement proposal to airlines. It offers to spread increases over a three year timeframe. [34] The proposal recognises that it represents a substantial increase in charges. AIAL's offer is expressed to take account of 'the anticipated cost and distraction of a protracted consultation process' and of the 'desirability of avoiding a significant increase in costs at this time'. The proposal provides a target date for an early settlement on 31 January 2007. But if this result cannot be achieved AIAL reserves its right to revert to a different formula. [35] I am satisfied that all details of the proposed charges supplied by AIAL to Air New Zealand in its proposal on 25 July 2006 fall within the meaning of 'Information' which the airline covenanted to keep confidential. Its disclosure to the public will constitute a breach of clause 2 of the confidentiality deed unless the airline is subject to an overriding legal obligation to the contrary.(b) Materiality[36] Mr Cooper's alternative submission is that Air New Zealand is bound by the Continuous Disclosure regime in the NZX Listing Rules and the Securities Markets Act 1988 to disclose details of AIAL's proposed charges. That is because the details are "Material Information". Clause 5.1 of the deed provides:[Air New Zealand] may, so long as [Air New Zealand] complies with clause 5.2, disclose information if, and to the extent that, [Air New Zealand] is required to do so by law or by the rules of a recognised stock exchange.[37] Air New Zealand and AIAL are both publicly listed on the NZX. Mr Cooper says that AIAL's proposed increase in charges will represent a significant increase in costs to the airline. It is "Material Information", in that it is information that: LR1.1.2 NZX Listing Rules:(a) a reasonable person would expect, if it were generally available to the market, to have a material effect on the price or value of Quoted Securities of the Issuer; and (b) relates to particular securities, a particular Issuer, or particular Issuers, rather than to securities generally or Issuers generally.[38] Mr Cooper relies on a report prepared by a corporate finance specialist, and an opinion expressed by Mr Richard Thomson, Air New Zealand's General Manager. In their views the proposed increase is Material Information. LR10.1.1 provides:Continuous Disclosure of Material Information: Without limiting any other Rule, every Issuer shall: (a) once it becomes aware of any Material Information concerning it, immediately release that Material Information to NZX, provided that this Rule shall not apply when: (i) a reasonable person would not expect the information to be disclosed; and (ii) the information is confidential and its confidentiality is maintained; and (iii) one or more of the following applies: (a) the release of information would be a breach of law; or (b) the information concerns an incomplete proposal or negotiation; or (c) the information comprises matters of supposition or is insufficiently definite to warrant disclosure; or (d) the information is generated for the internal management purposes of the Issuer; or (e) the information is a trade secret.[39] In Mr Cooper's submission, this statutory provision is reinforced by clause 5.1. He says it confirms that a disclosure requirement is paramount over any confidentiality obligations. However, in my judgment the whole clause is relevant and should be recited:5.1 Disclosure: The Recipient may, so long as the Recipient complies with clause 5.2, disclose information if, and to the extent that, the Recipient is required to do so by law or by the rules of a recognised stock exchange. 5.2 Prior notification: The Recipient shall, before disclosing information pursuant to clause 5.1: (a) give to the Provider the maximum notice reasonably practicable in the circumstances, specifying the requirementunder which the Recipient is required to disclose information, and the precise information which the Recipient is required to disclose; and (b) comply with all reasonable directions by the Provider to contest or resist the requirement to disclose information. [My emphasis][40] The purpose and effect of clause 5.2 was not explored in argument other than Mr Cooper's brief dismissal of it as not fitting in with the continuous disclosure regime. I disagree. I can only infer that its inclusion was the result of careful and informed consideration by both parties with the benefit of expert legal advice. And, on analysis, its terms logically conform with the Listing Rules. [41] Air New Zealand has ignored the requirements of clause 5.2. The airline sat on what it now says is Material Information for a month after receipt. On 25 August it advised AIAL that: Accordingly we intend to clarify to the market next Monday [28 August] the expectations of the Auckland Airport in terms of future pricing. We are giving you notice of this as a matter of courtesy and in recognition that as a listed company [AIAL] may wish to co-ordinate announcements.[42] The subsequent exchange of correspondence between the companies' representatives over the ensuing two days did not refer to clause 5. Air New Zealand went ahead as if it did not exist. The airline's draft press release, which it intended to distribute through NZX on 28 August, proceeded on the premise that: it has received proposals from AIAL in respect of charges which it considers to be Material Information required to be disclosed to the market[43] Clause 5.2 is an express recognition of the parties' mutuality of interest in maintaining the confidentiality of all information supplied throughout the consultative process; it was, after all, the purpose of the deed. It prescribes a discrete mechanism to ensure that any exceptions to this overriding objective are dealt with by a rational and co-operative process. The potentially adverse consequences for each party were obvious. Compliance with clause 5.2 was a condition or prerequisite to Air New Zealand making any disclosure, whether to NZX or anyother party. It did not permit the airline to act arbitrarily or peremptorily, as it has threatened to do here. [44] The consistency between clause 5.2 and the Listing Rules, particularly the continuous disclosure provisions, is plain. LR10.1.1(b) prohibits an issuer from disclosing any Material Information to the general public prior to disclosure to NZX. LR1.6.1 allows Air New Zealand to initiate a request to NZX to rule on whether, for example, the exception to LR10.1.1(a) applies. It states:Power to Make Rulings: NZX may, on request or of its own motion and whether or not a dispute exists, by written notice to the Issuer concerned, make rulings as to the meaning, interpretation or application of any one or more of the provisions of the Rules for such period and on such terms and conditions as NZX may determine.[45] Clause 5.2 requires Air New Zealand to give proper notice of its view that it is obliged to disclose details of AIAL's proposed charges; to refer to the appropriate listing rule with reasons in support; to identify 'the precise information' which it considers it is legally bound to disclose; and to allow AIAL to specify grounds and reasons for resisting or contesting disclosure, and to give reasonable directions for that purpose. AIAL has ultimate control of the process. The clause is silent on what constitutes 'the maximum notice reasonably practicable in the circumstances', but given the airline's delays a period of 10 days to complete this process would not have been unreasonable. [46] Air New Zealand would then seek a ruling from NZX on whether it was bound to make disclosure. The airline would have no vested interest in establishing a case for disclosure. AIAL, as the party maintaining confidentiality, would carry the burden of an argument. NZX's ruling would be made under LR10.1.1(a) by applying the 'reasonable person' test. There would be no public disclosure until completion of this process. [47] However, I must now determine whether or not the exceptions provided by LR10.1.1(a) apply, given that Air New Zealand has elected to raise materiality as an express ground of opposition to AIAL's application in this Court instead of referring the issue to NZX in accordance with clause 5.2.[48] Ms Katz accepts for these purposes that details of AIAL's proposed charges are Material Information. The question then is whether the statutory exception to the continuous disclosure obligation applies: LR10.1.1(a)(i), (ii), (iii)(a). All three prescribed conditions must exist to excuse an issuer from its obligation of immediate disclosure. [49] Mr Cooper advocates a hierarchical or staged approach to this issue. He submits that the first condition cannot be satisfied. Thus it is unnecessary to consider whether the second and third are proven. He relies on Note 3 to the Listing Rules which states:For the purpose of Rule 10.1.1(a)(i), a 'reasonable person' would not expect the information to be disclosed if the release of the information would: (a) unreasonably prejudice the Issuer; or (b) provide no benefit to a person who commonly invests in securities.[50] Mr Cooper submits that Note 3 is itself exclusive. Accordingly, the expectations of the 'reasonable person' would exclude any factors other than the two identified in Note 3. He also refers to the NZX Guidance Note on continuous disclosure, which explains that the reasonable person test 'requires a balancing of the value of the information remaining confidential, against the value to investors of the information if made public'. [51] The exception contained in LR10.1.1 imports both subjective and objective components. It starts from the premise that 'every Issuer' is bound to release to NZX 'any Material Information concerning it' on becoming aware of it. However, the statutory identification of exceptions recognises that the duty is not absolute where confidential information is at issue. The dangers of prematurely releasing information in this category are well known. [52] In order for the exception to apply the information must possess three qualities: (1) it is confidential, and the person imposing confidentiality maintains it; (2) its release would be a breach of law; and (3) a reasonable person would not expect it to be disclosed. I agree with Ms Katz that there is no hierarchy between these three conditions. What is required is satisfaction that all exist.[53] I have already found that (1) the information is confidential and AIAL maintains its confidentiality: LR10.1.1(a)(ii) and (2) its release would be a breach of clause 2.1 of the deed and thus of law: LR10.1.1(a)(iii)(a). The only question is whether, in those circumstances, the hypothetical reasonable person would not expect the information to be disclosed. [54] I do not accept Mr Cooper's submission that Note 3 to the Listing Rules proscribes or limits the reasonable person's expectations to the criteria of either unlawful prejudice to the issuer or provision of no benefit to a person commonly invests in securities. LR1.1.4 provides:Notes for Guidance Only: The footnotes to the Rules are intended as a guide for users and an aid in interpretation and, only to that extent, form part of the Rules.[55] Note 3 starts with the words 'for the purpose of Rule 10.1.1(a)(i)'. It identifies two circumstances where a reasonable person would not expect disclosure of information. Like Notes 4 to 7, it provides a degree of practical guidance in deciding whether the exception applies but cannot be exclusive. It has no statutory effect. If the note was meant to be proscriptive, it would have been the subject of a specific definition of 'a reasonable person' earlier in the rules. [56] The NZX Guidance Note is of some assistance to the reasonable person. It summarises continuous disclosure as: a requirement for timely advice to the market of information required to keep the market informed of events and developments as they occur. [It] is intended to achieve a number of goals including an efficient market, reduced information costs and assistance for investors to make informed investment decisions. [It] is also intended to encourage confidence in the integrity of the market by removing opportunities for insider trading andcreation of false markets. [My emphasis][57] In my judgment the reasonable person test requires an objective assessment of all the relevant circumstances once the conditions of confidentiality and breach of a legal obligation are established. The adjective 'reasonable' is designed to introduce an objective quality. It imports the standards of reason and soundjudgment to the hypothetical person's expectations. In this context he or she is somebody who is familiar with the purpose and scope of the continuous disclosure regime, the market within which it operates, the statutory consultative process and the publicly known circumstances of Air New Zealand and AIAL. [58] In forming his or her expectation about disclosure, the reasonable person would take into account and be influenced by these factors: (1) AIAL and Air New Zealand are two financially substantial and responsible entities with access to expert advice. It could be assumed that they would not have agreed upon a regime of confidentiality without a careful assessment of its importance throughout the consultation process. Particular weight would be given to the fact that disclosure requires a breach of Air New Zealand's covenant and to the reasons for AIAL's maintenance of confidentiality; (2) The usual purpose of a confidentiality agreement is to prevent disclosure of an incomplete or provisional nature from finding its way into the public domain. While those details may be prima facie material, they should be withheld if on a balancing exercise the harm of disclosure may outweigh the benefits through the creation of a false or inefficient market; (3) In this respect AIAL as promoter of the proposed charges expects they will be reduced through the process of consultation. Air New Zealand must share that expectation. The magnitude of the reduction is unknown but there is a prospect that it will be reasonably large. Consequently, the final result of the consultative process may yield charges which are materially different from those provisionally proposed; (4) Air New Zealand has already, through the media, made a degree of disclosure, albeit in general and unauthorised terms. Its tenor would have left the market in no doubt that the increase proposed wasreasonably substantial. The informed investor could, as Mr Cooper suggests, make an informed forecast of increases based upon an appropriate rate of return on AIAL's re-valued assets. He or she knows that the charges are to be reset on 1 September 2007. [59] A judgment reached after consideration of these factors, according to reason and good faith, could not subsequently be called into question by an enforcement body such as the Market Surveillance Panel or NZX, even if it was ultimately of a different view. [60] I am satisfied, after taking account of these factors, that a reasonable person would not expect information about the proposed charges to be disclosed. It follows that I am satisfied that AIAL has established a serious question for trial on both its causes of action for anticipatory breach of contract and breach of confidence.(2) Balance of Convenience[61] The second stage of the inquiry on an application for interim relief is traditionally an assessment of where the balance of convenience lies. However, this case is unusual. In the event that I find for AIAL, my decision will bring this proceeding to an end subject to Air New Zealand's rights of appeal. So the orthodox factor of the balance of convenience has little if any relevance. [62] Instead, I must determine which course will carry the least risk of doing a permanent injustice to either party, bearing in mind that to grant injunctive relief will amount substantively to a judgment in AIAL's favour, depriving Air New Zealand of its right of trial: Cayne v Global Natural Resources [1984] 1 All ER 225 (CA). Thus the degree of likelihood of AIAL succeeding at trial becomes a very material factor for discretionary consideration: NWL Ltd v Woods [1979] 3 All ER 614 per Lord Diplock at 626, applied in Edney v Commodore Computer (NZ) Ltd (1984) 2 NZCLC 99,167, Tompkins J. [63] In this case I can take comfort from the fact that the arguments advanced with considerable skill by both counsel at this hearing would be no different from thosewhich would be advanced at trial, apart perhaps from the refinements available with the benefit of more time. I am now in a position to determine the merits on a final basis. It follows from my findings on the first or threshold issue that I am satisfied AIAL has established its claim for anticipatory breach of contract or breach of confidence. In these circumstances it is appropriate to grant injunctive relief, subject to consideration of all other relevant factors: Trounce & Wakefield v NCF Kaiapoi Ltd (1985) 2 NZCLC 99,422, Heron J. [64] Mr Cooper submits that AIAL should be deprived of interim or permanent relief because it will not suffer any loss or harm from public disclosure. He relies on this passage from the Laws of New Zealand: Injunctions at para 8, approved by the Court of Appeal in Todd Petroleum Mining Company Ltd v Shell (Petroleum Mining) Company Ltd CA155/05 23 September 2005 at para 121:The plaintiff must show that there is a strong probability that the defendant's conduct will be the cause of injury, and the threat of injury must be immediate and substantial. It is not sufficient for the plaintiff merely to express a fear of threatened harm.[65] Mr Cooper submits that disclosure of confidential information can have no really detrimental effect on AIAL. The position would be otherwise if the information was commercially sensitive. In support, Mr Cooper points to the public's knowledge that a substantial increase in charges is likely based upon the New Zealand Herald article published on 31 July. [66] In effect, Mr Cooper is seeking to set up Air New Zealand's arguable breach of its contractual obligations in making a degree of disclosure to the media to justify a submission that AIAL will suffer no harm from further disclosure. That argument only has to be recited to justify its dismissal. It would "make a mockery of the duty of confidence [owed by a contracting party] if [it] could discharge it by breaching it": Attorney-General v Guardian Newspapers (No.2) [1990] 1 AC 109 per Lord Griffiths at 271G. [67] In my view there is a principled answer to Mr Cooper's substantive submission. AIAL's inability to show that it will suffer serious financial loss or harm as a result of disclosure is not fatal to its claim for injunctive relief. Equity haslong recognised that an innocent party is entitled to an injunction to restrain a breach of a negative contractual stipulation for this reason: Doherty v Allman (1878) 3 App Cas 709 per Lord Cairns LC at 720:If parties, for valuable consideration, with their eyes open, contract that a particular thing shall not be done, all that a Court of Equity has to do is to say, by way of injunction, that which the parties have already said by way of covenant, that the thing shall not be done; and in such a case the injunction does nothing more than give the sanction of the process of the Court to that which is already the contract between the parties. It is not then a question of the balance of convenience or inconvenience, or the amount of damage or of injury – it is the specific performance, by the Court, of that negative bargain which the parties have made, with their eyes open, between themselves.[68] The negative stipulation in this case is, of course, clause 2.1(a). Both parties have agreed, subject to certain exceptions, not to disclose the information or permit it to be disclosed to any person, or to use or refer to it for any purpose other than to participate in the consultation process. An injunction is the appropriate remedy to restrain a threatened breach. A contractual right of confidence is entitled to protection of this nature, especially where refusal of an injunction at an interim stage will have a final and denying effect subject only to assessment of damage: Fellowes v Fisher [1975] 2 All ER 829 per Lord Denning MR at 837. [69] It is unnecessary for AIAL to prove financial detriment. The general rule is that: Guardian Newspapers per Lord Keith at 256A-C: it is in the public interest that confidences should be respected, and the encouragement of such respect may in itself constitute a sufficient ground for recognising and enforcing the obligation of confidence even where the confider can point to no specific detriment to himself 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. [My emphasis][70] On this basis, Courts have granted an injunction to restrain disclosure of marital confidences, in order to protect the right to personal privacy: Duchess of Argyll v Duke of Argyll [1967] Ch 302. Such relief has also been given to a group of Australian aborigines who sought to restrain publication about cultural and religious secret ceremonies disclosed in confidence many years earlier and who would suffersocial damage of a serious nature and of a type which money could not remedy:Foster v Mountford and Rigby Ltd (1976) 14 ALR 71, 75. [71] If, however, proof of some detriment is required, the existence of a contractual obligation of confidence is of itself a recognition that disclosure of information which might expose a party's conduct to public discussion and criticism is a detriment sufficient to support an injunction: Commonwealth of Australia v John Fairfax & Sons Ltd (1980) 147 CLR 39 per Mason J at 51-52; cited with approval inGuardian Newspapers by Lord Keith at 258. The terms of Air New Zealand's proposed press release, coupled with the critical tenor of the New Zealand Herald article, show that public criticism is a principal objective of its planned disclosure. That event would force AIAL into an unproductive public debate about its proposed charges before both parties had had a full opportunity to evaluate the relevant source material and complete the consultative process. Of itself this would be a significant distraction and thus a detriment. [72] Moreover, the parties have themselves provided for the contingency which has arisen. Clause 9.1, upon which Ms Katz relies, provides as follows:[Air New Zealand] acknowledges that, in the event of any alleged breach of this deed by [Air New Zealand], damages may not be an adequate remedy, and [AIAL] shall be entitled to seek equitable relief (including an injunction) in addition to damages. In any proceeding brought by [AIAL] seeking equitable relief for a breach of this deed, [Air New Zealand] shall [not] claim that the breach is one which may not or ought not to be the subject of equitable relief.[73] Mr Cooper submits that this provision does not stand in Air New Zealand's way. He accepts the airline's acknowledgement that damages may not be an adequate remedy for breach of its obligation of confidence. However, he says that the second sentence does not deprive the Court of its residual equitable discretion to decline relief where AIAL is unable to prove financial harm. [74] I disagree. If the two sentences comprising clause 9.1 are read together, they recognise AIAL's right to claim injunctive relief where "damages may not be an adequate remedy". In other words, Air New Zealand has acknowledged the underlying and well settled principles I have outlined.[75] For these reasons, I am satisfied that AIAL is entitled to injunctive relief.(3) Justice[76] The third and final stage in the inquiry is whether or not the overall interests of justice dictate a different result. [77] Mr Cooper relies upon two principal grounds. First, he submits that an injunction would inhibit or deny Air New Zealand's right to freedom of expression. He relies particularly on the airline's participation in the statutory consultation process for the purpose of protecting the public against abuse of a monopoly power. Mr Cooper says the leading authorities support a principle that a plaintiff seeking an interim injunction to restrain free expression faces a higher threshold than the arguable case standard: TV3 Network Services Ltd v Fahey (1998) 12 PRNZ 443 per Richardson P at 446, citing Attorney-General v British Broadcasting Corporation[1981] AC 303 per Lord Scarman at 362. The Court's interference should only be ordered where there is a substantial risk of grave injustice. [78] The short answer to this submission is found in my conclusion that AIAL has satisfied a higher threshold than an arguable case; it has proven its claim. In any event, decisions in the defamation area are of little assistance here. The law has long recognised the specific value of the media's freedom of publication, leaving a defamed person with rights of recovery for damages other than in exceptional circumstances. But the principle does not provide absolution for a party which, with knowledge that it represents the interests of the public in a statutory consultation, has agreed to maintain confidentiality throughout. [79] Mr Cooper also seeks support from s 14 New Zealand Bill of Rights Act 1990 which reinforces the right to freedom of expression. He cites in support PC Direct Ltd v Best Buy Ltd [1997] 2 NZLR 723. In that case Elias J held that the plaintiff had shown a strong prima facie case that the defendant had or intended to publish advertisements using the plaintiff's trademark. Nevertheless, in refusing interim relief the Judge was influenced by the public interest in both effective competition and free speech and was, at 733: concerned not to cut across the rights to freedom of speech and to receive information protected by s 14.[80] I accept that in PC Direct Elias J took account of s 14 when exercising her discretion to refuse interim relief. However, she was not concerned with protection of contractual rights. And I respectfully question the extent to which s 14 can validly operate in this commercial context. In my judgment that provision was designed to protect a constitutional right, not a right to breach a contractual obligation. [81] The constant and underlying theme of Mr Cooper's submission is that information about AIAL's proposed charges should now be in the public domain and the subject of public debate. He acknowledges that Air New Zealand is not acting from a sense of altruism. It is simply a case, he says, where the airline's commercial interests in reducing AIAL's proposed charges happen to coincide with the public good. [82] Air New Zealand's reliance on the higher moral ground of the public good to justify disclosure does not ring true. In its capacity as watchdog for the public interest, the airline signed a deed agreeing to maintain confidentiality in all information supplied by AIAL in the consultative process. Without protest, it took the benefit of that agreement and received details of AIAL's proposed charges. A month later, using the pretext of statements by AIAL's chief executive, Air New Zealand advised the company that it regarded the details as Material Information which it was bound to disclose to the market. Now it says the public, whose interests it represents but from whom it unequivocally agreed to withhold the information, is entitled to its disclosure. [83] In these circumstances it is difficult to resist Ms Katz's invitation to draw the inference that Air New Zealand is resorting to the public forum in an unlawful attempt to place pressure on the consultative process for its own commercial benefit. Air New Zealand may be dissatisfied and frustrated with the consultative process mandated by Parliament. But that view cannot be elevated to an overriding right to treat its contractual obligations as if they did not exist. I reject Mr Cooper's submission that it is unjust or unfair to require Air New Zealand to honour its duty of confidentiality.[84] Second, Mr Cooper submits that the terms of an injunction, if issued, should not effectively oust the jurisdiction of the Market Surveillance Panel. He says that the duration of any order in this Court should last unless and until the Market Surveillance Panel or the NZX determine that disclosure is required. He says that an order should not prohibit Air New Zealand from seeking a ruling in that forum. [85] I do not accept this submission. Air New Zealand has had its opportunity to obtain a ruling from NZX but has elected to run its case on materiality in this forum. The airline would have no ongoing interest in reverting to the NZX once I have found that it is not lawfully obliged to make disclosure. It is protected by my decision from any enforcement steps which may be invoked. I do not intend to impose such a condition on the terms of an order.Result[86] Accordingly, I make an order until further order of this Court that an interim injunction do issue restraining Air New Zealand from publicly disclosing any information contained in AIAL's Aeronautical Pricing Proposal document dated July 2006 together with any other information provided to it by AIAL for the purposes of the current pricing consultation process under s 4B Airport Authorities Act 1966, other than as provided for in the mutual confidentiality deed between the parties dated 15 June 2005.Costs[87] Costs must follow the event. I assume that counsel will be able to agree costs between themselves. If they are unable to agree, I will hear an application at 9 am on Monday 2 October 2006. In advance counsel are to file submissions of no more than five pages in length by 4 pm on Thursday 28 September 2006. I should add, though, that I am of the view that costs according to category 2B should be awarded for two counsel together with disbursements.______________________________________ Rhys Harrison J