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Administrative Appeals Tribunal of Australia |
Last Updated: 27 August 2007
CATCHWORDS – FREEDOM
OF INFORMATION – whether Australia Post exempt from operation
of Freedom of Information Act 1982 in relation to Mail Contractor Management
Manual – whether Manual in respect of its commercial activities –
decision
affirmed.
Australian Postal Corporation Act 1989 
ss 12 , 14 , 15 , 16 , 17 , 18 , 19 , 26 ,
27 , 28, 29 , 30 and 32
Foreign States Immunities Act 1985 s
9
Freedom of Information Act 1982 ss 3, 4, 7 and 11
Australian Broadcasting Corporation v The University of Technology, Sydney
[2006] FCA 964; (2006) 154 FCR 209
Australian Postal Corporation v Johnston [2007] FCA 386; (2007) 94
ALD 586
Re Bell and Commonwealth Scientific and Research Organisation
[2007] AATA 1569
Secretary, Department of Workplace Relations and
Small Business v Staff Development and Training Centre Pty Ltd [2001] FCA 1375; (2001) 114
FCR 301; (2001) 34 AAR 10
Victoria Aircraft Leasing Ltd v United States
[2005] VSCA 76; (2005) 12 VR 340; (2005) 218 ALR 640; (2005) 190 FLR 351
DECISION AND REASONS FOR DECISION [2007] AATA 1685
ADMINISTRATIVE APPEALS
TRIBUNAL )
) V2005/1106
GENERAL ADMINISTRATIVE
DIVISION )
Re PATRICK CUSACK
And AUSTRALIAN POSTAL CORPORATION
Respondent
DECISION
Tribunal: Deputy President S A Forgie
Date: 22 August 2007
Place: Melbourne
Decision: The Tribunal affirms the decision of the respondent dated 7 September 2005 and affirming an earlier decision dated 3 August 2005.
S A FORGIE
Deputy President
P K Cusack Pty Ltd (Cusack) had an agreement with the respondent, the Australia Postal Corporation (Australia Post) dated 28 July 2004 (Mail Contract Agreement) to provide a street mail delivery service to Thuringowa in North Queensland between 1 July 2004 and 30 June 2007. Mr Patrick Kevin Cusack is Cusack’s director and employee as well as its nominated representative under the Mail Contract Agreement. He has asked Australia Post for a copy of its Mail Contractor Management Manual (Manual) and has done so under the Freedom of Information Act 1982 (FOI Act). Australia Post refused his request and affirmed its decision on review. It did so on the basis that the Manual is a document in respect of its commercial activities and that the effect of s 7(2) and Part II of Schedule 2 is to exempt Australia Post from the operation of the FOI Act in relation to the Manual. I have decided that the respondent’s view is correct and have affirmed the decision under review.
THE DOCUMENT REQUESTED
2. On the basis of the evidence given by Mr Kevin Andrew Bilske and my own examination of the Manual, I find that it is a document providing guidance to Australia Post staff in the establishment and management of mail contracts relating to mail services. Among other matters, it deals with the processes to be followed in seeking tenders for mail services, the matters to take into account in assessing tenders submitted in response and the management of the process and of any subsequent Mail Contract Agreement entered between Australia Post and the successful tenderer. Amongst the matters taken into account in assessing the tenders is Australia Post’s own assessed reasonable price for a mail service (ARP). The Manual guides Australia Post staff in relation to that ARP.
BACKGROUND
3. On the basis of his oral and written evidence as well as the documents he lodged, I find that Mr Cusack undertook to provide a street mail delivery service (service) originating at the Thuringowa Delivery Centre, incorporating all of the street addresses set out in Schedule 4 of the Mail Contract Agreement and returning to the Thuringowa Delivery Centre (Delivery Area). There were approximately 846 delivery points to be served. The service operated each week day and required Mr Cusack to prepare for and deliver all envelopes, documents and other materials (including telephone directories and unaddressed mail) to all delivery points in the Delivery Area. If mail could not be carried on a motorcycle due to insufficient space and load capacity, Mr Cusack was required to ready it for delivery with the Depot Bag Delivery Contractor. Standard letters comprised approximately 92% of Mr Cusack’s deliveries, publications printed on A4 size paper comprised a further 7% and bulkier items such as small packets the remaining 1%.[1] In delivering them, he had to comply with Australia Post’s standards and rules regulating matters such as the maintenance of certain delivery records, the collection of money and the hours within which delivery had to be completed.
4. Under the Mail Contract Agreement, Australia Post paid Mr Cusack known as
a Contract Fee.[2] The Contract Fee
is an annual amount adjusted by any additions or deductions determined in
accordance with other terms of that
agreement.[3] One such term is found
in cl 2(d) of Part 1 of Schedule 2. It provides that, if, over the three year
term of the Mail Contract
Agreement, the number of delivery points were to
increase by more than 20, Mr Cusack would be entitled to an additional payment
for
any variations in time and route distance
travelled.[4] A delivery point is
“... the location where Articles are delivered pursuant to
APT&C”[5] i.e. under the
Australia Post Terms and Conditions determined under s 32 of the Australian
Postal Corporation Act 1989 (APC Act). The amount Mr Cusack would receive
for the additional work was to be negotiated between him and Australia Post or
resolved
through the medium of alternative dispute
resolution.[6] Clause 1.1 of Schedule
3 of the Mail Contract Agreement then goes on to provide that the “...
agreed Escalation rate under Clause 2(d) or 3(c) of the Schedule 2 Part 1 is $20
per delivery point.”
LEGISLATIVE BACKGROUND
5. In this section, I will set out the relevant provisions of the FOI Act. As resolution of the issues will also, in part, turn on the APC Act, I will also refer to its structure and key provisions.
Relevant provisions of the FOI Act
6. The right of access to documents given by the FOI Act is framed very carefully. It is set out in s 11, which provides:
“(1) Subject to this Act, every person has a legally enforceable right to obtain access in accordance with this Act to:
(a) a document of an agency, other than an exempt document; or
(b) an official document of a Minister, other than an exempt document.
(2) Subject to this Act, a person’s right of access is not affected by:
(a) any reasons the person gives for seeking access; or
(b) the agency’s or Minister’s belief as to what are his or her reasons for seeking access.”
7. The opening words of s 11 impose the first qualification to the right. They are that the right is “subject to this Act”. Qualifications of a procedural nature and others related to the work imposed on an agency or Minister by the request are found in Part III of the FOI Act. Other qualifications are concerned with the protection of “essential public interests and the private and business affairs of persons in respect of whom information is collected and held by departments and public authorities”.[7] These are found in Part IV.
8. In addition to these groups of qualifications, there are qualifications implicit in the words “document of an agency” and “exempt document”. The right of access is given to a “document of an agency” i.e. it is given to:
“... a document in the possession of an agency, or in the possession of the agency concerned, as the case requires, whether created in the agency or received in the agency.”[8]
That requires a consideration of the words “document” and “agency”.
9. Taking first the word “agency”, it means “... a Department, a prescribed authority or an eligible case manager”.[9] Australia Post is clearly not a Department but it is a prescribed authority. It comes within paragraph (a) of the definition of that expression in s 4(1) of the FOI Act and is not excluded by the qualifications to that paragraph. In so far as it is relevant, paragraph (a) of the definition provides that a:
“prescribed authority means:
(a) a body corporate, or an unincorporated body, established for a public purpose by, or in accordance with the provisions of, an enactment or an Order-in-Council ...”
10. The word “document” is given a wide definition in s 4(1):
“document includes:
(a) any of, or any part of any of, the following things:
- (i) any paper or other material on which there is writing;
- (ii) a map, plan, drawing or photograph;
- (iii) any paper or other material on which there are marks, figures, symbols or perforations having a meaning for persons qualified to interpret them;
- (iv) any article or material from which sounds, images or writings are capable of being reproduced with or without the aid of any other article or device;
- (v) any article on which information has been stored or recorded, either mechanically or electronically;
- (vi) any other record of information; or
(b) any copy, reproduction or duplicate of such a thing; or
(c) any part of such a copy, reproduction or duplicate;
but does not include:
(d) library material maintained for reference purposes; or
(e) Cabinet notebooks.”
11. The right of access created by s 11 of the FOI Act does not extend to an “exempt document”. That is, it does not extend to:
“(a) a document which, by virtue of a provision of Part IV, is an exempt document;
(b) a document in respect of which, by virtue of section 7, an agency is exempt from the operation of this Act; or
(c) an official document of a Minister that contains some matter that does not relate to the affairs of an agency or of a Department of State.”[10]
12. Paragraph (b) of this definition is relevant in this case and it leads to s 7. Section 7 exempts certain persons and bodies from the operation of the FOI Act. In so far as it is relevant to this case, it provides:
“(1) The bodies specified in Part 1 of Schedule 2, and a person holding and performing the duties of an office specified in that Division, are to be deemed not to be prescribed authorities for the purposes of this Act.
(1A) ...
(2) The persons, bodies and Departments specified in Part II of Schedule 2 are exempt from the operation of this Act in relation to the documents referred to in that Schedule in relation to them.
(2AA) A body corporate established by or under an Act specified in Part III of Schedule 2 is exempt from the operation of this Act in relation to documents in respect of the commercial activities of the body corporate.
(2A) ...
(3) In subsection (2AA) and Part II of Schedule 2, commercial activities means:
(a) activities carried on by an agency on a commercial basis in competition with persons other than governments or authorities of governments; or
(b) activities, carried on by an agency, that may reasonably be expected in the foreseeable future to be carried on by the agency on a commercial basis in competition with persons other than governments or authorities of governments.
(4) In subsection (2AA) and Part II of Schedule 2, a reference to documents in respect of particular activities shall be read as a reference to documents received or brought into existence in the course of, or for the purposes of, the carrying on of those activities.”
13. Part II of Schedule 2 of the FOI Act includes the following entry:
“Australian Postal Corporation, in relation to documents in respect of its commercial activities”
Relevant provisions of the Australian Postal Corporation Act
1989
14. Under the APC Act, Australia Post continued to exist.[11] Its principal function is to “... supply postal services within Australia and between Australia and places outside Australia’.[12] A subsidiary function is to “... carry on, outside Australia, any business or activity relating to postal services.”[13] Its functions:
“(1) ... include the carrying on, within or outside Australia, of any business activity that is incidental to:
(a) the supplying of postal services under section 14; or
(b) the carrying on of any business activity under section 15.
(2) Without limiting subsection (1), the functions of Australia Post include the carrying on, within or outside Australia, of any business or activity that is capable of being conveniently carried on:
(a) by the use of resources that are not immediately required in carrying out Australia Post’s principal or subsidiary function; or
(b) in the course of:
(i) supplying postal services under section 14; or
(ii) carrying on any business or activity under section 15.”[14]
15. The APC Act imposes three specific obligations on Australia Post. First, it must as far as practicable, perform its functions in a manner consistent with sound commercial practice.[15] Second, it must supply a letter service.[16] The principal purpose of the letter service is, by physical means, to carry, within Australia, letters that Australia Post has the exclusive right to carry and to carry letters between Australia and places outside Australia.[17] It must carry standard postal articles by ordinary post within Australia at a single uniform rate of postage.[18] Furthermore, Australia Post must make the letter service reasonably accessible to all people in Australia on an equitable basis.[19] The performance standards for the letter service must meet the social, industrial and commercial needs of the Australian community.[20] The third obligation imposed on Australia Post is that requiring Australia Post to perform its functions in a way consistent with certain government policies, Ministerial directions and international obligations.[21]
16. Subject to the qualifications in s 30 of the APC Act, Australia Post has the exclusive right to carry letters within Australia, whether those letters originated within or outside Australia,[22] and the exclusive right to issue postage stamps within Australia[23] (reserved services). This reservation of services to Australia Post extends to the collection, within Australia, of letters for delivery within Australia and the delivery of letters within Australia.[24] Section 30 provides that the reserved services do not include some 17 services. Among the services excluded from Australia Post’s reserved services are the carriage of a letter weighing more than 250 grams in most circumstances,[25] the carriage of a newspaper, magazine, book, catalogue or leaflet[26] and the carriage of a letter to or from an office of Australia Post.[27]
17. Australia Post’s powers are the subject of ss 17, 18 and 19 of the APC Act. Under s 17, it has “... power to do all things necessary or convenient to be done for, or in connection with, the performance of its functions.”[28] No other provision of the APC Act or of any other Act conferring power on Australia Post limits its general power.[29] Section 18 sets out Australia Post’s power in connection with its functions regarding its principal and incidental functions i.e. to supply postal services and to carry on business or activities related to postal services. It has, for example:
“... power, for or in connection with the performance of its functions:
(a) to supply packet and parcel carrying services; and
(b) to supply philatelic and associated services; and
(c) to supply courier services; and
(d) to supply electronic mail services; and
(da) to supply:
(i) carriage services (within the meaning of the Telecommunications Act 1997); and
(ii) content services (within the meaning of that Act); and
(e) to supply document exchange services and contract mail management services;
(ea) to supply mail house services (which may include, for example, the provision of a mail order service and the doing of things incidental to the provision of such a service); and
(f) to supply funds transfer services; and
(g) to supply postal services (including philatelic and associated services) for Norfolk Island, Christmas Island, Cocos (Keeling) Islands and foreign countries; and
(h) to supply any services other than postal services to or on behalf of the Commonwealth, the States and Territories, foreign countries and other persons; and
(i) to manufacture postage stamps and other goods for use in connection with postal services.”
18. Other powers are also given to the Australia Post. It has all the powers of a natural person “for or in connection with the performance of its functions”.[30] Section 19 gives examples of those powers by providing that Australia Post may:
“(a) enter into contracts;
(b) acquire, hold and dispose of real and personal property;
(c) appoint agents and attorneys, and act as agent for other persons;
(d) form, and participate in the formation of, companies;
(e) subscribe for and purchase shares in, and debentures and other securities of, companies;
(f) participate in partnerships, trusts, unincorporated joint ventures and other arrangements for the sharing of profits;
(g) issue debentures and grant floating charges on its property;
(h) make charges and fix terms and conditions for work done, or services, goods and information supplied, by it;
(j) engage consultants;
(k) accept gifts, grants, bequests and devises made to it, and act as trustee of money and other property vested in it on trust;
(m) offer and pay rewards;
(n) deal in futures and other contracts;
(p) provide consultancy and project management services; and
(q) do such other things as it is authorised to do by or under this Act or any other law of the Commonwealth or any law of a State or Territory.”
19. In addition to its other powers, Australia Post is given:
“... power to do all things necessary or convenient to be done for, or in connection with, the performance of its obligation under section 26 [to perform its function in a manner consistent with sound commercial practice], and may, for example:
(a) purchase and otherwise acquire land and buildings that it may require;
(b) sell and otherwise dispose of land and buildings that it does not require;
(c) develop land and buildings to enable their more efficient utilisation;
(d) develop and lease land and buildings not immediately required by it; and
(e) develop land and buildings for the purpose of sale.”[31]
THE EVIDENCE
Australia Post’s activities
20. In its Annual Report 2004/05, Australia Post’s Chairman stated that its “... major corporate challenge is to balance our twin objectives of delivering a quality community service for all Australians while earning a profit that can be reinvested in the business. ...”.[32] She continued:
“At Australia Post, we have a distinguished history of serving the Australian community in three core business activities:
∙ delivering letters
∙ operating retail postal outlets
∙ handling parcels.
Our overarching strategy is to defend our position in these core business activities while seizing on new opportunities to extend into complementary or substitute areas. This strategy requires continual adaptation of our traditional services so that they remain fresh, relevant and highly valued by contemporary consumers.”[33]
Mail contracts
21. Mr Bilske said that mail contracts are mail delivery contracts between Australia Post and external private sector contractors for delivery services. Those delivery services include street mail delivery, roadside mail delivery, parcel delivery and other transport services. Each year, Australia Post seeks tenders in relation to approximately 1,000 delivery services. The term of the mail delivery contracts varies between one and five years with most being five years.
22. In Mr Bilske’s view, Australia Post engages in competition with private sector organisations on at least two levels. The first is in relation to its provision of delivery and related services. The second is in relation to its need to attract appropriately qualified and competitive contractors to perform delivery functions on behalf of Australia Post. As Australia Post is competing with other entities engaged in providing many of the same or similar delivery services to its own, it must compete against those other entities for possible contractors.
The market place
23. Mr Bilske said that Australia post is in direct competition with numerous private sector companies in relation to each of those delivery services. Australia Post, he said, competes with organisations such as TNT, Star Track Express, Australian air Express, Toll, Toll Fast and Allied Express in the long haul or short distance carriage of mail. In addition to its basic letter services, Australia Post offers bulk mail services for businesses and organisations such as PreSort letters, Print Post (publications), Unaddressed mail, Impact Mail, Reply Paid, Clean Mail and Charity Mail. Organisations such as Salmat and PMP Limited conduct mail delivery services for large letter and unaddressed mail segments of the letter business. Document exchange services such as that conducted by Toll Holdings and known as DX are able to carry letters, including letters otherwise falling within Australia Post’s reserved service. Organisations such as Toll, FedEx, UPS, DHL, TNT, Blue Circle and CTI Logistics Limited as well as Australia Post offer parcel delivery services. Australia Post’s parcel delivery services include eParcel, which tracks the parcel and provides for signature on delivery, Express Post, Express Post Platinum, which guarantees delivery from business to business, and Receipted Delivery.
Tender process
24. Mr Bilske said that Australia Post’s tender process requires it to review the particular delivery service concerned and collate information such as the distance covered in the service, the time it is estimated to take, the number of delivery points involved and the area to be serviced. Australia Post then makes an ARP for that delivery service and in relation to a particular period. Having done that, Australia Post compiles a service specification setting out all of the relevant information regarding the delivery service. Tenders are then called for and prospective tenderers are given a tender pack comprising the specifications, general information or notes for mail contract tenderers, the conditions of tender, the general conditions of contract and a tender cost statement or form for tenderers to complete and submit with their tenders. Together, they formed the Mail Contract Tender documents. The tender cost statement sets out information relating to the way in which tenderers have costed their tender.
25. The introductory words of the specifications, being Part B of the Mail Contract Tender documents dated 30 April 2004, Mr Bilske said, contain the following statement:
“Independent advice
Australia Post encourages every Tenderer to obtain independent legal and financial advice concerning its Tender.
The tenderer therefore acknowledges that in lodging a Tender:
26. The ARP is determined by contract managers at Australia Post before any tender is opened for assessment. It is used as a benchmark for the price assessment of tenders. The Manual sets out the cost elements that must be included in the ARP to ensure that the assessed cost base identifies the service as being economically viable and that the ARP is fair and consistent with expected costs in a particular area or region. If the ARP is thought excessive, the Manual requires the contract managers to refer it to more senior managers within Australia Post. The ARP is used to determine Australia Post’s costs in providing the services as well as the impact of those costs on ongoing operating costs and the profitability of particular products and services.
27. Part C of the Mail Contract Tender documents given to prospective tenderers was headed “Conditions of Tender”. It set out notes on subjects such as the eligibility and scope of tender, transport laws and licensing, mandatory insurance and indemnities and the submission of the tender. It also dealt with the Tender Cost Statement and variations in operating costs. That section of the Conditions of Tender told tenderers that they must submit a Tender Cost Statement if they wished to take advantage of the provisions of cll 9 and 10 of the General Conditions of Contract. These clauses prescribed the conditions in relation to the basis and frequency of price variations.[35]
28. Clause 9 of the Tender Cost Statement stated that the contractor might, during the term of the Agreement, apply for a review of the Contract Fee. The review related to an annual review of vehicle operating costs and fuel and labour adjusted in accordance with the Consumer Price Index and to a variation in the services provided. Clause 10 provided for an interim fuel cost component variation review six months after a clause 9 review.
The work of a mail contractor
29. Mr Dennis Stephen Jenner was a Licensed Post Office operator from 1999 until 2003. During those years and up until 2005, he was also a mail contractor working first under a mail contract agreement between his wife and Australia Post and, later, a mail contract agreement between their company, D & J Jenner and Australia Post. Prior to 1999, Mr Jenner had been employed by Australia Post and, before that, by the Postmaster-General’s Department (PMG). At the PMG, he was first employed as a junior postal officer. After qualifying as a postal clerk in 1965, he worked for the next twenty years in a relieving capacity in city, suburban and country post offices. In 1985, Mr Jenner was promoted to a position as second in charge of Waikerie Post Office. A further promotion in 1989 led to Mr Jenner’s becoming second in charge at the Nuriootpa Post Office. That was a controlling post office and its postal manager was both the postal manager at that post office and the person in control of ten to twenty smaller post offices.
30. Mr Jenner said that it is common for mail contractors to use a small motor bike, known as a “postie bike”, to deliver mail. That is sufficient as the mail delivered by mail contractors consists almost entirely of letters weighing no more than 17 grammes. These are letters that fall within Australia Post’s “reserved services” as they weigh less than 50 grammes. Mr Jenner estimated that 90% of a mail contractor’s work comes within that description. A mail contractor cannot carry many heavy or bulky items due to the small size of the postie bikes normally used.
31. In the Additional Estimates Hearings in February 2006, the Shadow Minister for Communications, Information Technology and the Arts, Senator Conroy, asked a question regarding Australia Post’s requirements of its mail contractors and its adherence to occupational health and safety standards. In that context, he asked about the proportion of mail carried by street mail contractors that is reserved services mail and the amount of mail carried by Australia Post as a standard letter and weighing between 50 grammes and 250 grammes. Senator Conroy was given a written answer that Australia Post estimates that 80 to 85% of mail carried by its postal delivery officers or by its mail contractors is reserved to it.[36] As there is only one weight step for small letters, Australia Post does not have definitive data on the proportion of small letters weighing between 50 grammes and 250 grammes. Historical analysis suggests that it is less than 10%.
32. There were 5,941 mail contractors in all as at 31 January 2006. They were grouped into the following contracts: street (1,177); rural/roadside (2,463); parcels (870); messenger post (569); and other (862).[37]
Payment for additional delivery points
33. Mr Cusack complained that, under his previous Mail Contract Agreement with Australia Post, the rate of payment for additional delivery points had been $25 per additional delivery point after the number of delivery points had increased by more than 20. It is Mr Cusack’s understanding that the rate of $20 in his most recent Mail Contract Agreement had been fixed without there being any negotiations between him, on behalf of Cusack, and Australia Post. There had been no opportunity for him to make submissions to Australia Post and he understood that, if his company wanted the Mail Contract Agreement, he had to accept the reduced rate of pay for additional delivery points.
34. On behalf of Australia Post, Mr Bilske refutes Mr Cusack’s view of events. He states that the rate of $20 was agreed with Cusack as part of a negotiation during the tender process. It was not a unilateral decrease. Australia Post keeps a record of the matters discussed during the interview it holds with a prospective mail contractor. It is kept in a “Tender Interview Sheet”. Australia Post kept one in relation to the interview with Mr Cusack on 27 May 2004. It recorded an Action Item to the effect that an escalation payment rate had to negotiated and recorded on the Mail Contract Tender. If a price could not be negotiated, the tenderer was to be advised to submit a payment rate per point in writing. Under the heading of “Interviewer or tenderer notes” was the entry “$20/POINT”. Mr Cusack had signed the Tender Interview Sheet on 27 May 2004.[38] A similar note of the agreed escalation rate appears stamped on the Mail Contract Tender. Mr Cusack’s signature appears in the space provided in the wording of the stamp.[39]
The Mail Contract Management Manual
35. Mr Bilske said that the processes and criteria specified in the Manual ensures that Australia Post applies a consistent approach in assessing tenders and that it complies with its obligations in the public tender process. If Australia Post did not have the Manual, tendering processes associated with mail delivery contracts would be ad hoc and inconsistent. There would be an increased risk that the process would be unfair. The outcome could be a closed tender process by sector or region and that would prove to be unwieldy or unmanageable in view of the fact that Australia Post is party to more than 5,000 mail contracts.
36. Mr Bilske described two of Australia Post’s activities that he considers to be among its commercial activities:
“15 Therefore, the Manual provides management support and a reference point for Australia Post contract managers in undertaking the commercial activity of tendering, assessment of tenders and entry into mail contracts. It provides the basis for consistency of approach in conducting the tendering activity by ensuring that the process, probity and fairness of the tendering process is consistent nationally.
37. He described the Manual as an important commercial business tool. He saw it as a strong management tool and an efficiency and quality assurance tool ensuring that Australia Post acts consistently when entering mail contracts. Mr Bilske added:
“... It was prepared for the purpose of enabling the efficient conduct of the commercial activities of tendering for appropriate contractors and providing mail delivery and related services on a competitive and profitable basis. It is in the course of engaging in those activities that the Manual was prepared.”[41]
38. Australia Post, Mr Jenner said, trained him and others to enable him to relieve the controlling post office. The training took a week in Victor Harbor in 1989 and included two days focusing on the management of the mail contract tendering system. Each participant at the course was given a copy of the Manual. From what he was told at the course, Mr Jenner understood that the Manual had been drafted a long time ago and had been the subject of minor amendments to take account of changes such as the introduction of decimal currency. Otherwise, it had required little change over the years. Mr Jenner kept his copy in a bookshelf near his desk at the Nuriootpa Post Office and the controlling postal manager never told him to store it elsewhere and never referred to it as a confidential, restricted or sensitive document. This is in contrast to the Postal Facilities Policy Manual, which is referred to in the Manual, and which Mr Jenner believed to be confidential and not available to Australia Post staff at his level.
39. The Manual, Mr Jenner said, is a reference guide for Australia Post staff looking after mail contract services. It contains information regarding the procedures to be followed with regard to tenders but also about other matters unrelated to tenders. It contained, for example, information about general operating and mail service procedures for mail contractors. Australia Post staff used it in administering, applying and interpreting mail contracts on a day to day basis. The Manual did not give effect to or contain information about any particular commercial transactions or arrangements or commercial plans or strategies of Australia Post.
40. Mr Jenner said that the participants in the training course were told that they needed to keep tenders for mail contracts under lock and key but there was no suggestion the Manual had to be treated in the same way. No mention was made of its being confidential or that access to it should be restricted. When given a copy, the participants were not required to sign for it and nor were they told how to keep it.
41. Mr Jenner said that his knowledge of the contents of the Manual assisted him when he was a mail contractor. Knowing the guidelines upon which Australia Post’s managers relied in interpreting and applying procedures assisted him in relation to his mail contract. In discussions with postal managers, he has referred to the Manual and no objection was raised to his doing so. Mr Jenner believes that Mr Cusack would be assisted in understanding aspects of the mail contract system, his mail contract and his rights under that contract if he were to have access to the Manual. Those who are contractors but who have previously been Australia Post employees have that advantage. Mr Cusack would also be assisted in his negotiations with Australia Post regarding the rate of pay for additional delivery points.
42. Mr Bilske said that he had attended the same training course in Victor Harbor in 1989. His view was that the document talked about then was the Field Management Manual Part 2 – Mail Contracts (Field Manual 2). That was a predominantly South Australian publication focused on general contracting principles of the tender process and contract management. The Field Manual 2 was supported by the Field Management Manual Part 4 – Facilities and Services (Field Manual 4). At the time, mail contracting processes were largely controlled at a State, and not a national, level. That has since changed with a significant change in requirements and process. That change is reflected in the move from a four page contract in earlier days to a 37 page contract in more recent times.
43. The Manual under consideration is version 1.3 dated June 1998. Since November 1995, there have been four versions reflecting amendments. Those amendments have concerned matters such as changes in the law relating to taxation and the goods and services tax.
44. Mr Bilske said that the Postal Facilities Policy Manual was only ever prepared as a single draft and never as a policy document by Australia Post. Field Manual 4 was in existence up until 1996 but it was withdrawn when the Manual was introduced in 1996.
Commercial sensitivity of the Manual
45. Mr Bilske said that the Manual is of great commercial sensitivity to Australia Post. Were it to become public knowledge and fall into the hands of its competitors, Australia Post’s contractual relationships and arrangements would be undermined. Furthermore, disclosure would remove or reduce the competitive tensions that Australia Post can now achieve through the public tender processes and so ensure the most cost effective and competitive outcome of that tender process.
46. Were the Manual to be disclosed to an existing contractor, Mr Bilske said:
“... it may provide them with an unfair competitive advantage vis a vis any other potential contractor in any future tender arrangement. This is because they would have all relevant information which other potential contractors would not have. This differential in information would remove the level playing field which currently exists in the tendering process. Therefore it becomes an extremely sensitive document. The type of information which would be available includes information about our reasonable assessed price process (ie what it refers to and how it is put together), how Australia Post calculate what are known as Clause 10 reviews, how Australia Post goes about negotiating the contracts and our negotiating approach. If this information came to the knowledge of any contractor or prospective tenderer, there is a significant risk that the would adversely impact on any potential ability for Australia Post to reduce its cost and maximise its revenue.”[42]
47. A further concern of Mr Bilske’s is that the disclosure of the Manual would lead to collusive tendering practices. Such practices might include contrived disparity of tenders. So, for example, tenderers might rotate which of them submits the lowest tender or chooses which among them will tender at all at any particular time. That type of outcome would be inherently anti-competitive and contrary to Australia Post’s efforts to maintain a competitive market.
Mr Cusack’s reasons for seeking access to the Manual
48. Mr Cusack wanted access to the Mail Contract Agreement so that he could use its contents to assist him negotiate with Australia Post in the future regarding the rate of pay for additional delivery points. That knowledge would assist him in understanding Australia Post’s expectations in relation to the Mail Contract Agreement. It would also assist him in being properly informed without having to rely on Australia Post’s staff for information.
CONSIDERATION
The applicable law
49. Australia Post is a body specified in Part II of Schedule 2 of the FOI Act. That means that I should begin with a consideration of s 7(2) of that legislation.
The relevant entry in Part II of Schedule 2 is: “Australian Postal Corporation, in relation to documents in respect of its commercial activities.” Sections 7(3) and (4) are relevant in understanding the meaning of “commercial activities”. Both Mr Halperin and Mr Batskos made a number of submissions regarding the proper interpretation of s 7(2) and Part II of Schedule 2 and referred to a number of authorities as well as regarding its application in the circumstances of this case. After the hearing, Mr Batskos drew my attention and Mr Cusack’s attention to a judgment of Greenwood J in Australian Postal Corporation v Johnston.[43] That is a case which considered both the meaning of ss 7(2), (3) and (4) and that of the relevant entry in Part II of Schedule 2. I considered it and the other authorities in an earlier case, Re Bell and Commonwealth Scientific and Research Organisation.[44] That was a case that also considered the meaning of ss 7(2), (3) and (4) of the FOI Act when read with an entry in Part II of Schedule 2. It did so in relation to the entry that the Commonwealth Scientific and Research Organisation is exempt from the operation of the FOI Act “... in relation to the documents in respect of its commercial affairs”. I undertook a reasonably detailed analysis of the provisions and of the authorities. As it was somewhat lengthy, I do not intend to repeat it but I do adopt it. In these reasons, I will summarise the essential elements of my reasoning that are relevant to my deciding this case:
∙ The Manual is a “document” within the meaning of the definition of that word in s 4(1) of the FOI Act.
∙ If the proper interpretation of s 7(2) and Part II of Schedule 2 is that decided by Bennett J in Australian Broadcasting Corporation v The University of Technology, Sydney,[45] Australia Post will be exempt from the operation of the FOI Act in relation to the Manual if that Manual, can be described as being in relation to a document in respect of Australia Post’s commercial affairs. It will also be exempt if the Manual, which is a document, is in respect of Australia Post’s commercial affairs.
∙ If the proper interpretation of those provisions is that decided by Greenwood J in Australian Postal Corporation v Johnston,[46] Australia Post will be exempt from the operation of the FOI Act if the Manual can be described as being a document in respect of Australia Post’s commercial affairs.
∙ According to s 7(4) of the FOI Act, the Manual is in respect of Australia Post’s commercial affairs if it was “received or brought into existence in the course of, or for the purposes of, carrying on of those activities.”
∙ Given the expanded meaning of “commercial activities” in s 7(3), the documents coming within the scope of s 7(4) are not limited to those that are received or brought into existence into existence in the course of, or for the purposes of activities being carried on in competition with persons other than governments or authorities of governments at the time that they are received or brought into existence.
∙ In deciding whether Australia Post’s activities may be described as activities that it has carried on by it on a commercial basis in competition with persons other than governments or the authorities of governments, it is necessary to have regard to Australia Post’s activities rather than to its functions. A “function” is a purpose, task or duty but an “activity” is something that is done. The FOI Act uses both words or variations of them. That suggests that Parliament has exercised some care in selecting the occasions in which it will use one word or the other. The contexts in which each is used shows that they are directed to different matters.
∙ “126. Activities are conducted on a commercial basis in competition with others if they are activities that are related to, engaged in or used for commerce. Regard must be had both to the nature of the particular activities and their purpose. Profit making or the generation of income or return in some form can be expected as an ultimate goal of the agency that is engaged in the activities but may not be an immediate outcome of the particular activities under consideration. The return can be expected to be that which a reputable business person would expect regard as fair and reasonable in the circumstances of the market. The particular activities must have a quality of regularity or, perhaps, continuity directed to the ultimate goal but, in the early days, it is possible that activities may be commercial activities even if they are sparse.”[47]
∙ The commercial activities must be in competition with persons other than governments or agencies of governments. “...The notion of ‘competition’ generally signifies that there will be a person or entity with whom to compete.[48] ...
[T]he element of rivalry in business or commerce remains. It does not necessarily mean that the rivalry must relate to goods or services that are directly substitutable but the goods and services must be directed to similar uses or address similar needs. If it were the case that the agency were a market leader and there are no such goods or services from rivals and so no rivalry, it cannot be said that the agency’s activities are carried on by it in competition with others. That is so even if the activities are carried on in the way that is on a commercial basis. The activities could not be said to come within s 7(3)(a). They may, though, come within s 7(3)(b). Depending on the facts, they may do so on the basis that there may be rivals in the future and it may reasonably be expected that the agency will carry on its activities on a commercial basis in competition with them. If the agency is so far in front of the market that a competitor is not reasonably likely to appear in the foreseeable future, the agency would have to rely not on exemption of itself from the FOI Act in relation to the document but on exemption of the document from disclosure under the exemption provisions of Part IV of the FOI Act.”[49]
∙ Where activities are carried on by a government agency, it is important to characterise its activities carefully. Its activities may fall into a number of different categories including commercial, administrative or governmental. The fact that an agency engages with those in private enterprise does not necessarily mean that its activities relating to that engagement are properly characterised as commercial. It may be that they are properly characterised as governmental or administrative. This point was made by the Full Court of the Federal Court in Secretary, Department of Workplace Relations and Small Business v Staff Development and Training Centre Pty Ltd.[50] The Full Court referred with approval to the judgment of Drummond J on appeal below:
“26 His Honour considered that there is a distinction between government functions and trading or commercial functions and that that distinction holds true even though government may deliver its governmental functions to interested members of the public in a commercial format, for example, by ‘out-sourcing’ them to private service providers. If it adopts that method of governmental service delivery, it is still engaged in the function of government, not in the business of trade activity.
27 His Honour concluded that the Department, in letting contracts as described above, is nonetheless engaged in governmental, that is, non-commercial, functions. That a government department may procure goods or services from private suppliers as a means of performing government function does not necessarily mean that procurement becomes a commercial activity of the department, even though the sale and purchase of similar goods or services are the subject of trade among private sector suppliers and consumers. ...
28 ... His Honour considered that, to attract the exemption provided by s 43(1)(b), the information must not merely have value to the Department. That value must also be able to be described as commercial in character. The fact that the exemption is an extension of the exemption provided for in respect of trade secrets indicates that the information must have value to the Department in respect of those of its activities which can be said to bear a commercial, as opposed to an administrative or governmental character. ...”[51]
∙ “The expression “in the course of” signifies that the commercial activities are actually being “carried on” by the agency. It signifies that the activities are regularly taking place in a sustained course of activity or some usual process.
∙ The words “for the purposes of” also signify that the activities are being carried on at the time but may also signify that the activities are yet to be carried on but the documents have been received or brought into existence in contemplation of those activities. That broader interpretation is supported by the ordinary meanings of the words making up the expression.
∙ The time at which the proper characterisation of a document is to be determined is the time at which the document was received or brought into existence. It is irrelevant if Australia Post has ceased to engage in those activities by the time the document is requested or if those activities can no longer be characterised as commercial activities.
50. In Australian Postal Corporation v Johnston,[52] Greenwood J considered the meaning of the expression “for the purposes of” in the context of s 7(4) of the FOI Act. His Honour was concerned with whether Australia Post was exempt from the operation of the FOI Act in relation to a list of licensed post offices (LPOs) on the basis that the list was in respect of its commercial activities. He posed the question in this way:
“The sole question to be determined by the tribunal was whether the list is a document in respect of Australia Post’s commercial activities by determining whether the document was brought into existence in the course of or for the purposes of the carrying on of those activities. That test required the Tribunal to determine, on the evidence, the purposes for which the list was brought into existence; whether there was one or more purposes; and if more than one purpose, including a purpose of carrying on Australia Post’s commercial activities, whether that purpose was a substantial purpose.”[53]
Is the Manual a document in respect of Australia Post’s commercial activities?
51. Having regard to the functions for which it was established as well as its Annual Report and the evidence of Mr Bilske, I am satisfied that Australia Post’s main functions are those of supplying postal services both within Australia and between Australia and places outside it and any business or activity relating to that supply. This is the effect of ss 14 and 15 of the APC Act but those functions are reflected in the activities referred to in Australia Post’s Annual Report. At the same time, Australia Post has other functions that can be said to be incidental to those two functions. They include those that are capable of being carried on in the course of its other functions or with the use of resources not immediately required for those activities. That is the effect of s 16 of the APC Act but again its functions are reflected in the activities Australia Post refers to in its Annual Report. Examples include its retail and agency services and its logistic services. Its retail and agency services include, for example, the provision of bill payment services, banking services, money orders and transfers, personal identification and verification services and the provision of a range of products relating to home and office needs for retail purchase. Examples of the logistics services offered by Australia Post include the processing of orders, provision of warehousing, distribution, freight management and customs clearance.
52. The APC Act distinguishes between the functions and powers of Australia Post. Functions are the subject of ss 14, 15 and 16 and powers are the subject of ss 17, 18 and 19. The powers are given in each case “for, or in connection with, the performance of its functions”. In this way, the APC Act draws a clear distinction between Australia Post’s functions and powers. It seems to me that, in the context of considering whether particular activities are commercial activities, I should draw a similar distinction between its activities, as a reflection of its functions, and the activities it engages in to undertake those activities and achieve the outcomes.
53. Although not precisely the same, the distinction has some basis in the principles set out by the Full Court of the Federal Court in Secretary, Department of Workplace Relations and Small Business v Staff Development and Training Centre Pty Ltd[54] and from those set out by the Court of Appeal in Victoria Aircraft Leasing Ltd v United States.[55] In the latter case, the Court of Appeal considered whether a transaction between the Export Import Bank of the United States (Bank) and Victoria Aircraft Leasing Ltd (VALL), an agent of the Republic of Nauru, could be regarded as a commercial transaction within the meaning of s 11 and so an exception to the provision in s 9 of the Foreign States Immunities Act 1985 that foreign states are immune from the jurisdiction of the Australian courts but an exception is provided for in s 11. On appeal, Buchanan JA, with whom Callaway JA and Williams AJA agreed, said that the transaction between Nauru and the United States had to be viewed as a whole. Even if one or more aspects of the transaction fell within one or other aspects of the definition of “commercial transactions”, that transaction did not necessarily come within that description. The promises made by the United States regarding finance were part of a package or program of assistance in return for political favours. The transaction could not be described as one for the provision of finance or as a guarantee or indemnity in respect of a financial obligation.
54. The former case of Secretary, Department of Workplace Relations and Small Business v Staff Development and Training Centre Pty Ltd[56] directs my attention to the functions, and so the activities in this case, and the way in which they are delivered. In that case, the fact that the department concerned carried out its functions by delivering services in a commercial format did not change its functions from government functions to commercial functions. That is so even though there may be private sector suppliers delivering similar services and competing with each other.
55. The consequences for this case of my interpretation of the way in which I identify Australia Post’s activities are that I do not consider that Australia Post’s engaging in a tender process to obtain suitable contractors and so competing with other delivery service providers in the market place is an activity of the sort contemplated by s 7(3) of the FOI Act. The tender process is an activity in which Australia Post engages as part of its carrying out the activities reflected in its functions i.e. the supplying of postal services under s 14, the carrying on of business activities under s 15 and what I will describe as the incidental activities under s 16. It is the activities reflecting the functions in ss 14, 15 and 16 whose characteristics must be considered and in relation to which I must decide whether, for the purposes of s 7(2) and Part II of Schedule 2 of the FOI Act, one or more can be described as commercial activities within the meaning of s 7(3). It is not the activities that are carried out under the authority of the incidental powers under s 19. That is not to say that a document relating to the tender processes may not be a document brought into existence in the course of, or for the purposes of, the carrying on of commercial activities but that is a different question and answered by reference to the activities relating to Australia Post’s functions.
56. Of Australia Post’s activities that I have identified, does Australia Post have activities that may be described as “commercial activities” within the meaning of s 7(3) of the FOI Act? Certainly, s 26 requires it, as far as practicable, to perform its functions in a manner consistent with sound commercial practice. Honouring that obligation in the conduct of activities does not mean that the activities are commercial. In so far as Australia Post’s activities comprise its reserved services, the very fact that, subject to s 30 of the APC Act, Australia Post has the exclusive right to undertake them leads to the conclusion that they are not carried on in competition with others whether those others are in the public or private sector. It may be that others in the private sector provide services, such as document exchange or email, that consumers prefer to the letter delivery service coming within Australia Post’s reserved services. That preference and the fact that alternative services and alternative means of communication may be offered does not lead me to conclude that Australia Post is offering its services in relation to its reserved delivery service as such in competition with persons other than governments or authorities of governments. The same is true of the other services within its reserved services. This is consistent with the conclusion reached by Greenwood J in Australian Postal Corporation v Johnston.[57]
57. Australia Post has activities other than those to do with its reserved services. I have referred to them above but refer in the context of this case particularly to its activities relating to the carriage of parcels and letters, and so its mail services, not coming within the reserved services. On the evidence, I am satisfied that they are carried out by Australia Post on a regular basis in competition with a range of private sector providers of similar services. They are carried out with the intention of deriving a profit or return that could be expected by any reasonable person engaging in the same market and offering similar services. Examples are to be found in its retail activities, its courier services, its carriage of parcels, its banking and bill payment services and its logistics services.
58. Having identified a number of Australia Post’s commercial activities, the next question that I must consider is whether the Manual is a document received or brought into existence in the course of, or for the purposes of, the carrying on of those activities. Only if it is can it be said to be a document in respect of Australia Post’s commercial activities. That is the effect of s 7(4) of the FOI Act.
59. Both on my reading of the Manual and having regard to the evidence of Mr Bilske, I am satisfied that the mail services in relation to which the Manual provides guidance to Australia Post staff in the establishment and management of mail contracts relate to all of its mail services and not simply those relating to its reserved services. It relates, for example, to contracts for mail services relating to parcel deliveries, for the clearance of street posting boxes and for the delivery of telephone directories as much as to contracts, if any, restricted to the delivery of letters coming within Australia Post’s reserved services. Having regard to its contents and the evidence of Mr Bilske, I find that it was brought into existence for the purposes of regulating the manner in which Australia Post chooses those with whom it contracts to provide services to enable it, in turn, to carry out its activities in relation to mail services, both reserved and otherwise. As I have found that the mail services other than the reserved services are commercial activities, I am satisfied that one of the purposes for which the Manual was brought into existence was for the purposes of carrying on one or more of its commercial activities. Therefore, the Manual is a document in respect of Australia Post’s commercial affairs and Australia Post is, by virtue of s 7(2), exempt from the operation of the FOI Act in relation to it.
60. Having reached that conclusion, I have no discretion to consider whether disclosure of the Manual would cause any of the harm contemplated by the exemption provisions in Part IV of the FOI Act. Australia Post is exempt regardless. In so far as Mr Cusack’s particular circumstances are concerned and in so far as his contract with Australia Post might have related only to reserved services (and I make no finding on the matter), that is also a matter to which I can have no regard. The Manual is a more broadly based document brought into existence for a range of contracts relating to mail services and not limited to any particular service.
61. For the reasons I have given, I affirm the decision of the respondent dated 7 September 2005 affirming an earlier decision dated 3 August 2005.
I certify that the sixty-one preceding paragraphs are a true copy of the reasons for the decision herein of
Deputy President S A Forgie,
Signed: .......................................................................
Diane De Andrade Personal Assistant
Dates of Hearing 30 and 31 October 2006
Date of Decision 22 August 2007
Solicitor for the Applicant Mr G. Halperin
C/- Halperin & Co Pty
Ltd
Solicitor for the Respondent Mr M. Batskos
C/- FOI Solutions
[1] Exhibit D at
[5]
[2] Exhibit 4, Mail Contract
Agreement, cl 2.2
[3] Exhibit 4,
Mail Contract Agreement, cl 2.2 and Schedule 3, cl
1.1
[4] Exhibit 4, Mail Contract
Agreement, cl 2.1 and Schedule 2, cl
2(d)
[5] Exhibit 4, Mail Contract
Agreement, cl 1.1
[6] Exhibit 4,
Mail Contract Agreement, cl 32 and Schedule 2, cl
2(d)
[7] s
3(1)(b)
[8] s
4(1)
[9] s
4(1)
[10] s
4(1)
[11] APC Act, s
12
[12] APC Act, s
14
[13] APC Act, s
15
[14] APC Act, s
16
[15] APC Act, s
26
[16] APC Act, s
27(1)
[17] APC Act, s 27(2)(a)
and (b)
[18] APC Act, s
27(3)
[19] APC Act, s
27(4)(a)
[20] APC Act, s
27(4)(b)
[21] APC Act, s
28
[22] APC Act, s
29(1)
[23] APC Act, s
29(3)
[24] APC Act, s
29(2)
[25] APC Act, s
30(1)(a)
[26] APC Act, s
30(1)(c)
[27] APC Act, s
30(1)(h)
[28] APC Act, s
17(1)
[29] APC Act, s
17(2)
[30] APC Act, s
19(1)
[31] APC Act, s
19(2)
[32] Exhibit B,
6
[33] Exhibit B,
6
[34] Exhibit 2,
[12]
[35] Exhibit A, Part C, cl
4.1
[36] Exhibit
C
[37] Exhibit
C
[38] Exhibit 2, Exhibit
KAB1
[39] Exhibit 2, Exhibit
KAB2
[40] Exhibit
1
[41] Exhibit 1,
[18]
[42] Exhibit 1,
[20]
[43]
[2007] FCA 386; (2007) 94 ALD
586
[44] [2007] AATA 1569
[45] [2006] FCA 964; (2006) 154 FCR
209
[46] [2007] FCA 386; (2007) 94 ALD
586
[47] Re Bell and
Commonwealth Scientific and Research Organisation [2007] AATA 1569 at
[126]
[48] Chambers 21st Century
Dictionary, 1999, reprinted 2004, Chambers
[49] Re Bell and Commonwealth
Scientific and Research Organisation [2007] AATA 1569 at
[127]
[50] [2001] FCA 1375; (2001) 114 FCR 301;
(2001) 34 AAR 10;
[51] [2001] FCA 1375; (2001)
114 FCR 301; (2001) 34 AAR 10 at
17-18
[52] [2007] FCA 386; (2007) 94 ALD
586;
[53] (2007) 94 ALD 586;
[2007] FCA 386 at [36]
[54]
[2001] FCA 1375; (2001) 114 FLR 301; (2001) 34 AAR
10
[55] [2005] VSCA 76; (2005) 12 VR 340; (2005)
218 ALR 640; (2005) 190 FLR
351
[56] [2001] FCA 1375; (2001) 114 FLR 301;
(2001) 34 AAR 10
[57] [2007] FCA 386; (2007) 94
ALD 586
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