Full case report

In re a Company’s Application

Reference [1989] Ch 477
Court Chancery Division

Judge Scott J

Date of Judgment 1 Feb 1989


Summary

Confidential information – public interest – iniquity – proposal to disclose allegations to regulator


Facts

The Claimant was in the business of financial advice. The Defendant was its former head of compliance. His employment was terminated, but he continued to work for the company as a self-employed consultant. A conversation took place between the Defendant and a senior executive of the Claimant in which there was discussion of the Defendant’s claim to have been unfairly dismissed, and of various misdeeds which the Defendant claimed the company had perpetrated. This was interpreted by the Claimant company as attempted blackmail, and it obtained ex parte a search order and injunctions to restrain the Defendant from disclosing any confidential information obtained by the Defendant in his employment. The Defendant opposed the continuation of the injunction in its broad form, contending that he was entitled to disclose information to the regulator, FIMBRA, and to the Inland Revenue. He offered an undertaking not to make any wider disclosure.


Issue

Was the Claimant entitled to the continuation of injunctions prohibiting the Defendant from disclosing allegedly confidential information, without exceptions?


Held

Accepting the Defendant’s undertaking, and modifying the injunctions
(1) The Defendant should not be restrained from disclosing information to regulators about alleged wrongdoing, even if it was the Claimant’s confidential information. That would be contrary to the public interest. Disclosure would lead to investigation by the authorities, which would establish whether or not the allegations of wrongdoing were substantiated.
(2) It was not possible to determine whether the Defendant was acting maliciously, as the Claimant alleged. But even if he was, that would be found out upon any investigation. In that event the Defendant might be held liable for damages for libel. In the meantime, no harm would be done provided the public was not informed of the allegations or the fact of the investigation.


Comment

Scott J doubted that any employee had any duty of confidence which extended so far as to prohibit communications with regulators. It is also noteworthy that he declined the Claimant’s invitation to engage in ‘some sort of preliminary investigation into the substance of the allegations’, holding that this was not for him, but for FIMBRA and the Revenue. This approach is clearly defensible where disclosure is to be made to a competent authority. A different approach would have to be taken where the proposed disclosure was to the public at large: see Imutran v Uncaged Campaigns Ltd.