Case Law: ABC v Telegraph Media Group: NDAs and Interim Injunctions, is there ever a public interest in breach of confidence? – Persephone Bridgman Baker

30 10 2018

The case of ABC v. Telegraph [2018] EWCA Civ 2329 raises a number of current and important legal issues about interim injunctions, confidential information and the legitimacy of the use of non-disclosure agreements (NDAs). That was before the disclosure made in Parliament late last week, and the case now raises equally current and important legal issues of parliamentary privilege, circumstances of confidence and the rule of law.

Press and commentators since Sir Philip Green was named have predominantly focused on the justifications for and against Lord Hain’s disclosure. It is worth analysing the decision made by the Court of Appeal and why, to put matters into proper context.

Background

The case concerns an interim injunction granted by the Court of Appeal to prevent publication by the Telegraph of “confidential information disclosed in breach of confidence”. The Claimants, two companies in the same group and a senior executive of that group, had signed five settlement agreements with employees concerning claims of “discreditable conduct” which the parties had settled for substantial payments. The terms of the settlements included express terms of confidentiality. Those terms were not absolute: the NDAs safeguarded the right to make legitimate disclosures, including reporting any criminal offence. The parties all had the benefit of independent legal advice when the NDAs were negotiated and signed.

The information had reached the Telegraph in breach of the NDAs. Of the various complainants, one was happy for the settlement arrangements to be disclosed provided they were not named. Two supported the Claimant’s application for an injunction. Only one did not support the application. It is unclear from the judgment whether the fifth individual was the Telegraph’s source and what precise position they took in relation to the application.

At first instance Mr Justice Haddon-Cave refused the grant of an interim injunction ([2018] EWHC 2177 (QB)) [pdf]). The matter was appealed to the Court of Appeal where an interim injunction was ordered to ‘hold the ring’ until a speedy trial could take place.

Judgment

There is a “frequent need to grant a short-term injunction to hold the position until the court is able to give proper consideration to an urgent application for interim relief… confidentiality, once breached, is lost forever” (Cream Holdings Ltd v. Banerjee [2004] UKHL 44).  The relief granted by the Court of Appeal was only interim: a proper assessment of the confidential information, the veracity of the allegations and a final binding judgment could only take place at a trial, which was ordered to be expedited to minimise the effect of an interim non-disclosure order on the press.

In a relatively short public judgment (a closed judgment was also given which contains relevant confidential information about the parties and the NDAs) the three Court of Appeal judges were in agreement that the interim junction should be granted to the Claimants. The judgment reinforced the important public interest in the observance of duties of confidence: “those who engage employees, or who enter into other relationships that carry with them a duty of confidence, ought to be able to be confident that they can disclose, without risk of wider publication, information that it is legitimate for them to wish to keep confidential”.

The judgment balances the parties’ divergent and competing interests under the European Convention on Human Rights (ECHR) and the Human Rights Act 1998 (HRA). The Telegraph’s Article 10 ECHR right to freedom of expression is “one of the foundations of a free press, and its importance in a democratic society can hardly be overstated”. However, it is not an unqualified right. Article 10(2) states “The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society…for the protection of the reputation or rights of others, for preventing the disclosure of information received in confidence”.

The Article 10 rights of the press must be balanced against the Claimants’ (and the other parties’ to the NDAs) Article 8 ECHR rights: the right to respect for one’s “private and family life, his home and his correspondence”, subject to certain restrictions that are “in accordance with law” and “necessary in a democratic society”. The court must also take account of Section 12 HRA when considering whether to grant any relief which, if granted, might affect the exercise of the Convention right to freedom of expression.

If the rumours are true, arguably there is a public interest in the disclosure of allegations of repeated sexual harassment, bullying and racial abuse by a senior business individual who has paid out reportedly seven figure sums to silence victims.  However, the judgment makes clear that this is not a test of whether the matter is in the public interest, but whether it is in the public interest that the duty of confidence should be breached. That test is conducted having regard to all the relevant circumstances, including having regard to the nature of the information: “with regard to the public interest (if any) in the disclosure of private or confidential information, this clearly extends to the disclosure of conduct which, if established at trial, would involve the commission of a criminal offence or some other recognised form of wrongdoing.”

Whilst the NDAs contained an express contractual obligation of confidence, the judgment acknowledges the “importance of freedom of political debate, the right of freedom of expression, the essential role played by the press in a democratic society, including contributing to debate on a matter of general interest, and the important public concern about misbehaviour in the workplace as well as the legitimacy of non-disclosure agreements and other legal devices for ‘gagging’ disclosure by victims”. One can understand the furore of the Press that, despite these acknowledgments, the Court of Appeal granted the relief sought. However, the injunction was only granted to ‘hold the ring’ until trial. The Court of Appeal (as opposed to the court of public opinion) were best placed to make that decision: they knew what the allegations were, had reviewed the NDAs and heard detail about the negotiation of the NDAs.  Neither the Press nor the public have been privy to that information, yet the judgment has been roundly critcised by each.

Now that the confidential information has reached the public domain, we will never have the opportunity to truly test the public interest in the publication of the allegations at trial and shape this highly relevant area of law.

Comment

The #metoo movement has put NDAs into the spotlight. The criticism voiced against them is encapsulated in an article published by the Telegraph on the day the judgment was published, in which it referred to concerns about NDAs being used to cover up potential wrongdoing.

In March of this year, the Solicitors’ Regulation Authority issued a written warning about the use of NDAs recognising that whilst NDAs, including with employees, can legitimately be used to protect commercial interests and confidentiality and protect reputation to the mutual benefit of both parties, they must not be used to prevent disclosure of otherwise reportable conduct or as a means of “exerting inappropriate influence over people not to make disclosures which are protected by statute, or reportable to regulators or law enforcement agencies.”

The Court of Appeal cited on Mionis v Democratic Press SA [2017] EWCA Civ 1194, in which the claimant sought an injunction to restrain further publication of statements which the defendant had previously agreed, as part of a settlement to libel proceedings, not to publish. That judgment outlined the public policy reasons for giving effect to contractual terms restricting a party’s Article rights as follows:

Parties are of course generally free to determine for themselves what primary obligations they accept; and legal certainty requires that they do so in the knowledge that if something happens for which the contract has made express provision, then other things being equal, the contract will be enforced (pacta sunt servanda). This is a rule of public policy of considerable importance.”

In that case, the Court of Appeal considered that the only circumstances in which a court would review the validity of an existing settlement agreement would be where there were grounds “which might cast doubt on the reality of contractual consent, such as fraud, undue influence, misrepresentation and mistake”. Against this background, the judgment in ABC pays particular regard to the fact that the NDAs were apparently freely entered into, without improper pressure or other vitiating factor, with the benefit of legal advice and with due allowance for disclosure of wrongdoing to the police. The NDAs included allegations disputed by the Claimants and for which there was no corroborative evidence before the court. This merited the granting of interim relief and an expedited trial to deal with these matters properly: “the Court should not ignore the seriousness of the possible adverse consequences of disclosure prior to a disputed issue of fact being resolved at trial”.

There is undoubtedly an important and legitimate role played by NDAs in the consensual settlement of disputes, which commonly arise in the employment field. The judgment refers to the Women and Equalities Select Committee’s Report on Sexual harassment in the workplace which echoes the SRA warning that NDAs should not be used unfairly by employers to silence victims of sexual harassment and should not be used unethically. However, settlement agreements provide a way to resolve workplace disputes or end a working relationship without the need to go through the cost, publicity and stress (for both parties) of an Employment Tribunal or trial. NDAs are important to enable victims of sexual harassment to get a settlement from their employer; in many cases no settlement would be agreed without NDA:

there may be times when a victim makes the judgement that signing an NDA is genuinely in their own best interests, perhaps because it provides a route to resolution that they feel would entail less trauma than going to court or because they value the guarantee of privacy”.

The press and the public perhaps do not appreciate that often complainants may very willingly agree to or seek out confidentiality provisions, to resolve disputes privately and, sometimes, because those provisions may result in a higher settlement payment.

The confidentiality provisions in the NDAs were breached. Particularly relevant, and interesting in the context of Lord Hain’s disclosure of the First Claimant’s name in Parliament, is that the information was passed to the Telegraph in breach of duty: the Telegraph acquired the information with knowledge both of the NDAs and the breach of confidence. The same is alleged of Lord Hain’s receipt of the information.

An injunction to prevent disclosure of confidential information is very different from an injunction in a claim for misuse of private information. Confidential information is that which is confidential in nature, having the ‘necessary quality of confidence’; and disclosed in circumstances importing an obligation of confidence. Once the information loses that quality of confidence, the information is no longer confidential and cannot be protected by way of an injunction. This is the consequence of Lord Hain’s disclosure; that the information is now in the public domain and can no longer be protected. This is the reason for which the reporting in the media does not place the newspapers in contempt of Court: under the Spycatcher principle an interim injunction binds anyone who is on notice of it.

An injunction to prohibit the disclosure of private information, however, can continue despite some or even many individuals knowing the private information. The case of PJS v. Newsgroup Newspapers Ltd [2016] UKSC 26 held that whilst publicity may cause confidentiality to be lost, an injunction could still serve a useful purpose in preventing further intrusion into the private life of the Claimant and his family. The distress and intrusion that would follow publication in the English newspapers and unrestricted internet reporting would be qualitatively different from that which had gone before.

Lord Neuberger highlighted this point:

If PJS’s case was simply based on confidentiality (or secrecy), then, while I would not characterise his claim for a permanent injunction as hopeless, it would have substantial difficulties. The publication of the story in newspapers in the United States, Canada, and even in Scotland would not, I think, be sufficient of itself to undermine the claim for a permanent injunction on the ground of privacy…. However, there comes a point where it is simply unrealistic for a court to stop a story being published in a national newspaper on the ground of confidentiality, and, on the current state of the evidence, I would, I think, accept that, if one was solely concerned with confidentiality, that point had indeed been passed in this case.

But for Lord Hain’s disclosure, the information would have remained confidential and protected until trial. The matter remained sub judice since the proceedings were (and remain) “active”. In circumstances where the House was not considering primary or secondary legislation and the Speaker had not relaxed the rule (which is designed to avoid prejudicing court proceedings), this suggested that Lord Hain should have exercised his judgement to be fair to the interests of the Claimants, and refrained from disclosing the First Claimant’s name in parliamentary motions. There was no urgency in the Telegraph’s proposed reporting which would have required the matter to be approached without due care or proper consideration of the Claimants’ position in the proceedings, such that no advance publicity could be justified pending the full resolution of the matter in what the Court of Appeal indicated would be an “expedited trial”.

However, since the Bill of Rights in 1689, Members of Parliament have enjoyed immunity from legal proceedings for anything they say in Parliament. The media, in turn, have privilege from prosecution by the courts if they fairly and accurately report statements made in Parliament. The Parliamentary Papers Act 1840 stipulates that official reports of parliament will be protected from legal liability if it can be proved that the publication was bona fide (in good faith) and without malice. However, there is a long-standing constitutional principle of comity between Parliament and the courts which means that “each takes care not to intrude on the other’s territory, or to undermine the other”.

This is not the first time that a Member of Parliament has taken it upon themselves to breach a court order under the protection of parliamentary privilege. Injunctions obtained by Sir Fred Goodwin and Ryan Giggs were both disclosed by MPs on this basis – to the delight of the press and, understandably, to the chagrin of lawyers. It is perhaps most eloquently put by Sir Stephen Sedley:

If Parliament does not like what the courts do, it changes the law. The sovereignty of Parliament as the final source of law and the sovereignty of the courts in interpreting and enforcing the law are the twin pillars on which democracy and the rule of law in the UK rest”.

When a member of either House, protected by the privilege which prevents his being prosecuted for it, consciously breaks a High Court injunction by naming an individual who has been anonymised by court order, it suggests two possibilities. One is that he does not understand the constitution; the other is that he does and has set out to transgress it.”

Lord Hain’s disclosure, which he justified by reference to the fact that “the media have been subject to an injunction preventing publication of the full details of this story which is clearly in the public interest” also reveals a fundamental misunderstanding of (or disregard for) the nature of the order handed down by the Court of Appeal in ABC: namely, an order granted at an interlocutory stage for a short period of time until the issue can be more fully considered. Lord Hain’s revealing of injuncted information in effect substitutes his interpretation of the public interest for that of the Court of Appeal judges. It would appear that Lord Hain has in fact not read the Court of Appeal judgment, or as a paid adviser to the Defendant’s solicitors (Gordon Dadds) he might have spotted that firm’s name in bold on the front page.

Sir Philip Green and the two claimant companies have lost the right to keep information confidential until a proper trial of the issues can take place. The decision that it was not in the public interest to break that confidence was made unanimously by three of the most senior judges in our judiciary, after a fine balancing of the parties’ competing human rights. What could have been a seminal case on breach of confidence and the use of NDAs, has instead become a fundamental threat to the rule of law and will likely see a reopening of the protections afforded by parliamentary privilege. Perhaps Lord Hain and Parliament will let the judiciary decide that for them.

Persephone Bridgman Baker is a Senior Associate at Carter-Ruck


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