Fearing reputational damage, employer seeks confidentiality, suppression orders
The Federal Court of Australia recently dealt with an employment dispute involving allegations of misconduct, confidentiality breaches, and a contentious settlement agreement. The case highlighted the balance between open justice and the need for confidentiality in certain legal proceedings.
The Court addressed issues of suppression orders, settlement negotiations, and the public's right to access court information. The case involved claims and counterclaims between a major company and its former executives, touching on themes of corporate governance, whistleblowing, and the handling of sensitive workplace matters.
The former executives, who held positions as chief legal officer and company secretary, raised serious concerns about their employer's practices.
They alleged an undisclosed relationship between the CEO and the former chief human resources officer, claimed they had experienced bullying and victimisation, and argued that they were subjected to adverse treatment after voicing their concerns.
Moreover, they asserted that a binding settlement agreement had been reached to resolve the dispute, a claim hotly contested by their former employer. As the case unfolded, the Court had to navigate issues of corporate accountability, employee rights, and the limits of confidentiality in legal proceedings.
Corporate drama unfolds
The dispute started when a chief legal officer and a company secretary raised concerns about governance issues within their organisation.
These concerns included allegations of an undisclosed relationship between the CEO and the former chief human resources officer, as well as claims of bullying, victimisation, and adverse treatment.
The company denied these allegations and said the former executives were using "shake down" tactics. The situation escalated when the company made a public announcement to the Australian Securities Exchange (ASX) about the expected litigation, citing potential claims of $30 million to $50 million.
This public disclosure prompted the former executives' legal representatives to issue a media statement, claiming that their clients were whistleblowers and that the company's announcement amounted to victimisation.
Dispute over ‘binding settlement’
One of the key issues in the case was whether a binding settlement agreement had been reached between the parties. The former executives claimed that an agreement had been made, while the company disputed this assertion.
"[The chief legal officer] and [the company secretary] through their solicitors engaged in further without prejudice discussions. A settlement was not reached that day and the discussions continued the following day between [the lawyer for the former executives], and [the lawyer for the company]."
The dispute over the existence of a settlement agreement formed a crucial part of the legal proceedings and highlighted the importance of clear communication and documentation in settlement negotiations.
Open justice vs. corporate interests
A significant portion of the case focused on the company's application for suppression orders to prevent the disclosure of certain information, particularly the terms of the alleged settlement agreement.
The company argued that such disclosure would:
- Discourage parties from engaging in settlement discussions
- Act as a disincentive to resolve the current dispute
- Potentially harm future negotiations in related proceedings
The company's lawyer said:
"[The employer] apprehends that 'if orders 1-3 sought in the [employer] Application are not made', then disclosure 'will severely limit, or altogether eliminate, the prospects that the Dispute will ever be resolved by non-litigious means, because it will be very difficult, or impossible, for [the employer] to reach a non-litigious dispute settlement in circumstances where any settlement offer might be used to wage a public relations campaign against it, on the basis – however unmeritorious – that the parties had reached a binding settlement agreement'."
However, the Court was not persuaded by these arguments. It emphasised the importance of open justice in legal proceedings.
The Court decided against granting the broad suppression orders sought by the company. It found that the necessity for such orders had not been established, particularly given the amount of information already in the public domain.
The Court explained its reasoning:
"Assessing whether a suppression order is necessary in that it goes beyond merely being convenient, reasonable or sensible has to be judged by reference to all the circumstances, including what relevant information is already in the public domain."
The Court said:
"Parties and witnesses must accept the embarrassment, damage to reputation and the possible consequential loss which can be inherent in litigation."
The Court also noted:
"The widespread practice of seeking inappropriate, or inappropriately broad, confidentiality and suppression orders remains the case notwithstanding this phenomenon is inconsistent with principle and has been deprecated by Full Courts (and judges in the original jurisdiction) who have repeatedly sought to remind the profession of the express statutory limits on the making or such orders; the demanding nature of the statutory test involved; and the 'very heavy' onus that needs to discharged in order to obtain such an order."
Finally, the Court concluded:
"Even taking into account that a primary objective of the administration of justice is to safeguard the public interest in open justice, and despite serious misgivings as to some of the redactions sought by [the employer], orders are necessary to prevent prejudice to the proper administration of justice because it would allow [the employer], after they have had the opportunity of considering my reasons, the opportunity to bring applications for leave to appeal and not have them rendered otiose. To do otherwise would be to act contrary to the interests of justice."
This final quote shows the Court's balanced approach, allowing for a temporary suppression order to preserve the employer's right to appeal, while still maintaining the principle of open justice in the long term.
