Case Law: ZXC v Bloomberg, Publication of investigation into businessman was a misuse of private information – Nathan Capone

3 06 2019

In the case of ZXC v Bloomberg LP ([2019] EWHC 970 (QB)) a businessman was awarded damages of £25,000 for misuse of private information after media organisation Bloomberg published an article citing confidential information obtained from a UK law enforcement agency which identified the businessman.

The judgment follows the precedent set in Richard v BBC, that individuals investigated by law enforcement bodies have a reasonable expectation of privacy as a matter of general principle. The judgment is also a cautionary tale for solicitors to ensure the accuracy of its client’s witness statements and their duties to the Court when evidence emerges which may be contrary to earlier findings of fact by the Court.

Background

In 2013, a UK law enforcement body (“UKLEB”) announced a criminal investigation into a company (“X Ltd”). This, and the ensuing investigation, was reported in the media. In 2016, Bloomberg published two articles about the Claimant, ZXC, in connection with the investigation. The second, however, was based on a “confidential law enforcement document”, specifically a request for mutual legal assistance from the UKLEB to a foreign country which specified X Ltd and identified ZXC (the “Letter”). The article reported on what was stated in the Letter.

Nine days after publication of the second article, ZXC’s solicitors asked Bloomberg to take it down. Bloomberg declined the request and ZXC issued an application for an interim injunction for a mandatory take-down of the article based on misuse of private information. This application (covered in an earlier article here) failed as Garnham J concluded that the weight attached to Bloomberg’s Article 10 rights outweighed ZXC’s Article 8 rights under the Human Rights Act.

Despite the refusal of the injunction, ZXC pursued his claim for damages and a final injunction to full trial before Nicklin J.

The Law

An applicant seeking an injunction or damages for misuse of private information under UK law will need to show that he or she has a reasonable expectation of privacy in the circumstances. If it is determined that the applicant has a reasonable expectation of privacy, the court will then be required to balance the two competing rights in issue: the applicant’s right of respect for private and family life under Article 8 of the Human Rights Act and the publisher’s right to freedom of expression under Article 10. Neither right takes precedence over the other and resolution of the conflict requires an “intense focus on the facts” as per the decision in McKennitt v Ash.

The decisive factor at the second stage is an assessment of the contribution which the publication of the relevant information would make to a debate of general interest (as per von Hannover v Germany).

Judgment

(i) Re-assessment of the interim injunction

Before assessing the Claimant’s substantive claim, Nicklin J was unusually required to re-examine circumstances surrounding the application for the interim injunction and resulting judgment two years prior owing to two particular failings connected to the evidence provided by Bloomberg at the hearing of the application and subsequent to the judgment.

The Defendant’s article was based on a letter of request for mutual legal assistance made by the UKLEB to a foreign country. Bloomberg did not reveal its source in this respect. The Letter, as is the case with all such requests for mutual legal assistance of this type, was a formal and highly confidential document. Disclosure of such requests can potentially harm the ongoing investigation by identifying individuals under suspicion and the lines of inquiry being followed.

The Letter was not produced to the Court by Bloomberg at the hearing of the interim injunction. The journalist who had written the article did not exhibit the letter to his witness statement and there was no indication within the contents of that statement that he had actually been provided with a copy of the letter, merely that he had been “shown” it (a word specifically inserted by the journalist). In fact, the journalist had retained a copy of the Letter. Nicklin J concluded that the use of the word “shown” was misleading by omission and that it should have been disclosed to the Court at the time of the application. Without the Letter, ZXC was deprived of the ability to demonstrate that the harm that the UKLEB itself believed risked being caused by disclosing such a highly confidential document. Bloomberg’s solicitors (CMS Cameron McKenna Olswang Nabarro LLP) were expressly criticised by Nicklin J as having demonstrated “a lack of rigour” as there had been indications in the journalist’s witness interview with CMS that he had indeed retained a copy of the Letter and had not merely been “shown” it.

Linked to the above was Bloomberg’s failure to evidence the UKLEB’s objections to the publication of the Letter. One of the key factors in Garnham J’s judgment on the application was that the article “prompted no adverse reaction from the investigators” and that the UKLEB had “no fears” that the article would damage its investigation. In fact, prior to the publication there had been extensive correspondence from the UKLEB’s press officer which objected to the disclosure of the Letter precisely on the basis that it could harm the ongoing investigation. This evidence was not disclosed by Bloomberg to the Court at the application. Nor was it brought to the Court’s attention after Garnham J’s judgment was handed down. Nicklin J concluded that this factual inaccuracy should have been corrected as soon as Bloomberg’s solicitors were aware of the true position (which was several months later, at the disclosure phase of the proceedings).

Had the judge at the interim application been provided with a copy of the Letter and evidence of the UKLEB’s objections to the publication of the article, Nicklin J believed it likely that the Claimant’s injunction would have been granted.

(ii) Claim for misuse of private information

ZXC argued that he had a reasonable expectation of privacy in relation to his involvement in the UKLEB’s investigation. Bloomberg contended that allegations that an individual has committed an offence, and details of that offence, did not attract a reasonable expectation of privacy. The fact that a person was subject to an investigation by a law enforcement body was not, of itself, private.

In assessing whether ZXC had a reasonable expectation of privacy, Nicklin J concluded the following:

  • That there now existed a body of case law from which it was possible to say that in general a person has a reasonable expectation of privacy in a police investigation up to the point of charge.
  • ZXC held a senior position in X Ltd but he was not a director and discharged no public function.
  • ZXC was not asserting a privacy right over the alleged conduct of X Ltd, but over the confidential details of the UKLEB investigation, and in particular the UKLEB’s conclusions as to ZXC’s conduct as demonstrated by the evidence it had obtained.
  • The Letter, on which the article was based, was a highly confidential document which contained particularly sensitive information. It was in the public interest that the Letter not be published as it could damage the ongoing investigation. This was a “very significant factor” and was further strengthened by the fact that the Letter had been given to the journalist in what must have been a serious breach of confidence by the person who originally supplied it.

In relation to Article 10/public interest, Bloomberg contended that there was a strong public interest in the media reporting on UKLEB investigations, and specifically the investigation into X Ltd which concerned allegations of fraud, bribery and corruption over a lengthy period where senior officers of X Ltd were alleged to have been involved. There was also public interest in reporting on corruption in the foreign country to which the allegations against X Ltd were alleged to have occurred. Further, there already been public discussion about the activities of X Ltd and ZXC had been publicly identified as connected with the relevant transactions of X Ltd during the period of alleged wrongdoing. Finally, publication would also encourage witnesses to come forward which would aid the investigation.

In assessing the Article 10/public interest justification, Nicklin J concluded:

  • There was general public interest in corruption in the foreign country connected to the allegations against X Ltd and in X Ltd itself, but that had little or no bearing on whether there was a public interest justifying the publication of the information in the article.
  • The article was not presenting the fruits of Bloomberg’s investigation into the alleged corruption, it was only reporting on the contents of the Letter (which was highly confidential) and made no criticism of the UKLEB’s investigation.
  • The proposition that the article would encourage witnesses to come forward had no weight where the UKLEB was far better placed to decide whether to release confidential information from its investigation to achieve that outcome.
  • Interference with the Article 10 right was limited and proportionate in circumstance where Bloomberg’s ability to report generally on the issues of corruption in the foreign country or specifically into the activities of X Ltd and ZXC were not impinged.

Accordingly, it was held that ZXC’s claim for misuse of private information succeeded.

(iii) Injunction

The fact that the article had been continually available on Bloomberg’s website for two years and that an injunction would not prevent continued publication outside of England and Wales did not lead Nicklin J to a conclusion that an injunction should not be granted, taking into account the decision in PJS v News Group Newspapers. On the contrary, Nicklin J held that an injunction served a useful purpose because:

  • It was the remedy that naturally flowed from the decision that information in the article should not have been published by Bloomberg.
  • The extent of publication had been relatively limited, with the article only having 11,100 ‘hits’.
  • ZXC’s evidence on the impact of the publication on him had not been challenged by Bloomberg.
  • ZXC should have been granted his original interim injunction had Bloomberg properly disclosed the evidence discussed above.

(iv) Damages

Nicklin J assessed damages by reference to the five factors identified by Mann J in Richard v BBC:

  • ZXC had been caused “significant distress and anger” by the publication of the article.
  • Apart from the impact on his family life, there was no evidence of wider impact on ZXC’s lifestyle.
  • The nature of the information was highly confidential, and because it was never intended to have been published by the UKLEB it was by its nature entirely one-sided.
  • The extent of the publication was limited.
  • The presentation of the information was not sensationalist, but serious and measured. On the one hand that reduced the distress that might have been caused had the presentation been different, but on the other hand would be regarded as credible.

The appropriate figure for damages was held to be £25,000.

Comment

The decision in ZXC affirms the general rule that an individual who is investigated by a law enforcement body, but not charged, has a reasonable expectation of privacy. That does not mean that a reasonable expectation of privacy in such circumstances will always and inevitably outweigh a publisher’s freedom of expression under Article 10 as each case must be taken on its own particular set of facts. This case was no exception. The key factor in ZXC was that the offending article was entirely based on the information contained in the Letter, which was highly confidential and should never have been disclosed. However, it is possible to envisage circumstances which could have swung the balance back in favour of Article 10. Nicklin J cited the example of internal investigation documents being leaked to a journalist which suggested that the investigators had been subjected to improper political pressure not to pursue certain people or lines of inquiry. In such circumstances there could well be a strong public interest justifying publication, but in ZXC there was no such criticism or analysis in the article.

Perhaps the most salient lesson of this case is its reminder that solicitors must carefully scrutinise not only their client’s witness evidence in terms of the facts, but the language used to describe those facts in witness statements to ensure that the Court is not misled. Sometimes only one poorly chosen word may be enough to create a misleading impression. If the Court has been inadvertently misled, solicitors must correct this without delay once they become aware of the true position.

This post was originally publish on the Scandalous! blog and is reproduced with permission and thanks.


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