October 31, 2018

Facts

The claimants, ABC & Others, were two companies in the same group and a senior executive of that group.  Five employees of the group companies made allegations of discreditable conduct by that executive.

In all five cases the complaints were compromised by settlement agreements (NDAs) under which substantial payments were made to the complainants.  The complainants in each case had independent legal advice in entering into the NDAs.  Both sides undertook to keep confidential the subject matter of the complaints and the amounts paid by way of settlement.  The NDAs safeguarded the complainants’ rights to make legitimate disclosures (including reporting any criminal offences) if they chose.

On 16 July 2018, a journalist from The Daily Telegraph contacted the claimants in relation to a story the newspaper was proposing to publish about the complainants’ allegations and about how they had been handled up to and including the concluding of the NDAs.

The claimants believed that the information had been disclosed to the newspaper by one or more of the complainants or by other employees who were aware of the information and of the NDAs, and they immediately commenced proceedings seeking an injunction to prevent the defendant publisher, Telegraph Media Group Ltd, from publishing what they said was confidential information disclosed in breach of confidence.

On 18 July 2018, the claimants applied for an injunction preventing disclosure on an interim basis.  The hearing took place in camera to protect the allegedly confidential information.

Mr Justice Haddon-Cave considered whether the claimants’ case was “likely” to succeed at a full trial (Cream Holdings Ltd v Banerjee [2005] 1 AC 253).  He decided that that was not the case and that, “in all the circumstances, the public interest in publication outweighs any confidentiality attaching to the information”.  Accordingly, the application was refused.  The claimants appealed.

Decision

The Master of the Rolls, Sir Terence Etherton, said that the judge’s analysis and the legitimacy of the exercise of his discretion in refusing to grant an interim injunction were undermined by various flaws in his reasoning.  Sir Terence therefore exercised afresh the discretion as to whether or not there should be an interim injunction.

The newspaper argued that the media had an important role to inform the public of matters of legitimate public interest.  It said that the public, including prospective employees of the claimants, had the right to know, not just about the alleged misconduct, but also the way in which senior management had “swept aside the complaints of employees”.  The media should inform and promote public debate about the way powerful men, including corporate managers and executives, treat employees and about the standards to be expected of those in public life, the newspaper argued.  Further, the challenge to the media’s watchdog role posed by NDAs was something about which the press generally was concerned.

The role of the media was “not in issue or in doubt”, Sir Terence said.  It was, however, only one side of the scales in determining where the balance of the public interest lay on the particular facts of the case.

Sir Terence found that there was a real prospect that publication by The Daily Telegraph would cause immediate, substantial and possibly irreversible harm to all of the claimants, which might have implications for their employees.  In accordance with Cream Holdings, when considering what was “likely” for the purposes of s 12(3) of the Human Rights Act 1998, the court should not ignore the seriousness of the possible adverse consequences of disclosure before trial, they said.  Therefore, a court should not make an interim restraint order unless satisfied that the applicant’s prospects of success at trial were sufficiently favourable to justify such an order being made in the particular circumstances of the case.

Sir Terence concluded that, on the material before him, it was likely that the claimants would establish at trial that a substantial part of the information was obtained through breach of duty of confidentiality to the claimants, either in breach of the NDAs, or by those with knowledge of the NDAs, and that The Daily Telegraph had acquired the information with knowledge both of the NDAs and the breach of confidence.

In addition, Sir Terence said, due to the NDAs, the claimants had lost the opportunity to contest the allegations in an independent judicial adjudication.  If the newspaper were permitted to publish all the information, the claimants would have to challenge the allegations through the media while, at the same time, being themselves bound, and so hamstrung, by the NDAs.

In these circumstances, Sir Terence said, the critical issue was the likelihood of the newspaper establishing at trial a public interest defence to the claim for breach of confidentiality.  The legal test was whether it was in the public interest that the duty of confidence should be breached.  There was no evidence that any of the NDAs had been procured by bullying, harassment or undue pressure by the claimants.  Each employee had received independent legal advice before entering into them, and each one contained provisions authorising disclosure to regulatory and statutory bodies.  Sir Terence said that the newspaper was therefore unlikely to establish a public interest defence.

There was also a public benefit in the enforcement of contracts that were freely entered into, Sir Terence said.  NDAs were often, in fact, for the benefit of all parties to them.

Sir Terence recognised that the case gave rise to “important and difficult policy considerations”, which were not resolved by the newspaper’s intention to anonymise the employees.  In his view, these policy considerations and their application would be best considered comprehensively following a trial.

Sir Terence granted the injunction, but said that he appreciated that any delay in the publication of matters of public interest was undesirable.  Therefore, he ordered a speedy trial.  He also said that the information intended to be covered by the injunction was expressed too widely.  Subject to any further submissions in writing from the parties, Sir Terence said that it should be limited to the allegations as to the individual incidents of alleged misconduct and to the negotiation and terms of the NDAs. (ABC v Telegraph Media Group Ltd [2018] EWCA Civ (23 October 2018) — to read the judgment in full, click here).