In Brevan Howard Asset Management LLP v Reuters Limited and others,  EWHC 644 (QB) Popplewell J granted an application for an interim non-disclosure order preventing the publication or use by a news agency of information contained in documents supplied by Brevan Howard Asset Management LLP (“BHAM”) to 36 potential professional investors.
The claimant, BHAM, provided 36 potential professional investors with seven documents electronically. BHAM attempted to keep these documents confidential by:
- telephoning each investor prior to them receiving the documents to inform them that the documents were confidential and highly sensitive;
- protecting each document with unique passwords;
- inserting the heading “Private and Confidential” and “Not for Distribution” on the cover page; and
- including a disclaimer on the cover page which, amongst other things, stated that each document was for the intended recipient only, was confidential, and must not be passed on nor reproduced without BHAM’s prior written consent.
Reuters, the first defendant, obtained information which Popplewell J held most probably derived from the documents provided by BHAM to these investors.
Reuters contacted BHAM to confirm the information’s accuracy prior to threatening publication on 1 March 2017.
BHAM was granted an order to seal the court file on 10 March 2017 and issued a claim form and particulars of claim the same day in a breach of confidence action against the defendants. Shortly after, BHAM sought an interim non-disclosure order to prevent the three defendants, Reuters, Ms Keidan (a financial journalist) and an unidentified person, from disclosing or using the information.
BHAM’s application engaged section 12 of the Human Rights Act 1998 (“HRA 1998”) as it sought to restrain the defendants’ freedom of expression rights enshrined in Article 10 of the European Convention on Human Rights.
Popplewell J explained that the test laid down in section 12(3) of the HRA 1998, which requires the court to be satisfied that an applicant is “likely” to establish that publication should not be allowed in order to grant an interim order, was a “flexible test“. In general, however, the applicant would need to satisfy the court that they would be “more likely than not” to obtain a permanent non-disclosure order at trial.
As this application engaged European Court of Human Rights jurisprudence on restraining press publication, an “enhanced merits test” applied which reflected the role and importance of an independent press within democratic society.
BHAM had to satisfy the following five limbs to establish that it was “more likely than not to succeed at trial” in a breach of confidence action:
- the information had a necessary quality of confidence;
- Reuters received the information in circumstances importing a duty of confidence;
- Reuters threatened unauthorised use or disclosure of the information;
- the public interest defence would fail; and
- damages would be an inadequate remedy.
Popplewell J considered each issue in turn:
- Quality of confidence
Popplewell J held that BHAM was “more likely than not” to establish that the information has a necessary quality of confidence. BHAM submitted that the information could only have been compiled by somebody with access to the documents provided to the investors. Reuters did not challenge this nor did they identify any other sources where the information could have originated. Popplewell J drew on the nature and circumstances in which the information was imparted to the investors, such as the password-protection and disclaimer used, as evidence that it was confidential business information holding the necessary quality of confidence.
- Circumstances giving rise to an obligation of confidence
Reuters submitted that their information was in a “third party” document, not a document BHAM provided to its potential investors, which their source (who they refused to reveal for journalistic reasons) assured them had not been obtained in breach of confidence. However, Popplewell J thought it “probable” that Ms Keidan would have been aware of the document’s confidentiality because its content would have suggested to her that the information emanated from BHAM itself, and her experience as a financial journalist specialising in hedge funds would have led her to recognise that content as commercially sensitive and confidential.
In any event, Reuters and Ms Keidan were on notice of the information’s confidentiality following correspondence with BHAM. This was sufficient to subject them to an obligation of confidence.
- Threatened unauthorised use or disclosure
Similarly to the second limb, Reuters submitted that they did not specifically have the documents provided to the investors but had information they wished to publish. Popplewell J found this argument weak; reasoning that, as he found it “more likely than not” that the information was confidential and derived from the documents, disclosure by Reuters would amount to an actionable breach of confidence.
Popplewell J, referring to Lord Keith’s dictum in Attorney-General v Observer Ltd  1 AC 109 (the “Spycatcher” case), decided it was not necessary for the disclosure to cause detriment to BHAM.
- The public interest defence
Popplewell J decided that the starting point would be to consider the public interest in publication. He considered there to be a public interest in publishing the information for two principal reasons. Firstly, BHAM, with over US$15 million currently under its management, is a large hedge fund manager. Hedge funds are important to the global economy as they can affect markets, identify trends and affect the profitability of other financial institutions and institutional investors.
Secondly, BHAM’s investors include institutional investors who invest to the benefit or detriment of individual pension plan holders and individual public employees. These individuals would not be provided with the information despite its relevance to their investments. Popplewell J considered there was a public interest in such individuals receiving information which allows them to influence and hold to account any institutional investors who made decisions affecting their financial position.
Popplewell J, applying the reasoning espoused in HRH Prince of Wales v Associated Newspapers Limited  Ch 57, decided that simply identifying public interest alone would be insufficient; it would also be necessary for there to be a “public interest in breaching the confidence“. This involved balancing the importance of confidentiality against that of publication and was a fact-specific exercise in each case.
In this case, the public interest in observing the duty of confidentiality was a “weighty factor“, outweighing any public interest in the publication. Popplewell J placed considerable weight on the fact that “full and candid disclosure” was of vital importance to a potential investor’s investment decision. A hedge fund might be deterred from full and candid disclosure of sensitive commercial information to potential investors if it felt that such information might be published in breach of any confidentiality restrictions, ultimately resulting in potential investors being less informed in making their investment decisions. The importance of protecting confidentiality was even greater in this instance as BHAM was a “leading market participant” with current investments totalling over US$15 million.
Popplewell J noted that, although it was no longer necessary for breach of confidence actions to demonstrate any iniquity (Lion Laboratories Ltd v Evans  1 QB 526), it would still be of significance to the public interest argument if publication was necessary to correct a false impression, reveal illegal dealings, expose hypocrisy or uncover improper practice or incompetence. However, none of these were present in this case.
Popplewell J also noted that the matters regarded as in the public interest in the IPSO Code (which section 12(4) of the HRA 1998 requires consideration of) were not applicable on the facts, reinforcing his conclusion that public interest in publishing was at “the lower end of the scale“.
- Damages as a remedy
Popplewell J thought it likely that BHAM would be able to show that damages would be an inadequate remedy.
The interim non-disclosure order was granted as BHAM would be more likely than not to obtain a permanent non-disclosure order at trial.
The judgment provides a useful overview of the court’s approach to whether to grant an interim injunction in an action for breach of confidence between the press and a financial services organisation.
Popplewell J’s consideration of the public interest defence is particularly interesting. The test is not simply whether there is public interest in publishing the information, but also whether there is a public interest in breaching the confidence accompanying the information. This requires a difficult and fact-sensitive balancing exercise.
The difficulties and contradictions inherent in this balancing exercise become apparent when one contrasts Popplewell J’s emphasis of the importance of disclosure so that the public can influence and hold to account institutional investors with his preference for maintaining the confidentiality of information disclosed, resulting in potential (presumably institutional) investors deciding for themselves how to invest for the benefit or detriment of the public with less accountability from the public.
There has been media coverage of the decision (see, for instance, here and here). BHAM have commented that they value their ability to engage their investors “on a candid and confidential basis” whilst Reuters have released a statement commenting that their objective is to publish information in the public interest which they “believe outweighs the confidentiality concerns put forward in this matter“. Reuters have said that they are “deeply disappointed by this ruling and are reviewing the court’s decision“. Therefore it looks as if there will be more to come.
This post originally appeared on The Injunctions Blog and is reproduced with permission and thanks.