CA prevents publication of confidential information covered by NDAs
The Court of Appeal (Sir Terence Etherton, Master of the Rolls, Underhill V-P LJ, and Henderson LJ) handed down judgment on Tuesday 23rd October 2018 granting an interim injunction and allowing the Claimants’ appeal, overturning the first instance decision of Haddon-Cave J (as he then was), refusing injunctive relief.
The anonymised Claimants and Appellants, known only as “ABC”, “DEF” and “GHI”, are two companies in the same group and a senior executive of that group. Five employees of the group companies have made allegations of “discreditable conduct” by the senior executive. Three of those individuals made those complaints through internal grievance procedures, two of whom then brought separate proceedings in the Employment Tribunal when those complaints were not upheld, as did another of the individuals, who had not employed the grievance procedure at all.
In all five cases the complaints were ultimately compromised by settlement agreements, under which substantial payments were made to the complainants. There were terms in each of the agreements under which both sides agreed to keep confidential the subject matter of the complaints themselves and other associated matters, including the amounts paid by way of settlement (the “NDAs”). The agreements safeguarded the complainants’ right to make legitimate disclosures (including reporting any criminal offences) if they chose.
On 16 July 2018 the Defendant’s journalist approached the Claimants with a view to obtaining their comments on a story it was proposing to publish about the complainants’ allegations and about how they had been handled up to and including the settlement agreements, and the inclusion of NDAs in those agreements. The Claimants commenced proceedings immediately, seeking an injunction on the grounds of a threatened breach of confidence, believing that the information obtained by the Defendant had been obtained from the complainants themselves in breach of the settlement agreements, or by other employees who were aware of the information and of the NDAs.
After a full consideration of the relevant principles applying to the grant of injunctive relief in the context of claims for breach of confidence, the Court of Appeal stated that it had “reached the contrary conclusion to Haddon-Cave J about whether the public interest in publication outweighs the confidentiality attaching to the information pending a speedy trial”. In summary the Court of Appeal concluded that:
(1) It was likely that “substantial and important parts of the information which the Telegraph wishes to publish were passed to it in breach of a duty of confidence to the Claimants and that it was aware of the breach, or the likelihood of breach, of confidence”.
(2) There were factors that needed to be balanced against the Telegraph’s claim that the allegations were “reasonably credible”, which included that some of the allegations were addressed and rejected in detail by the Claimant companies; that the most serious allegations had been denied and the settlement of the ET claims meant that the opportunity to have their truth determined by an independent tribunal had been lost; and that the NDAs created difficulty for the Claimants in rebutting the Telegraph’s allegations, given they were equally bound by them.
(3) The information currently within the public domain does not include the most serious elements within the complainants’ allegations.
(4) Whilst the Court of Appeal endorsed Haddon-Cave J’s comments as to the importance of freedom of political debate; the right of freedom of expression; and the essential role played by the press in a democratic society, including contributing to a debate on a matter of general interest and the important public concern about misbehaviour in the workplace, as well as the legitimacy of NDAs and other legal devices for “gagging” victims, Haddon-Cave J had entirely left out important countervailing factors. These included (i) the important and legitimate role played by NDAs in the consensual settlement of disputes, both generally but in particular in the employment field; (ii) that there was no evidence that any of the agreements had been procured by bullying, harassment or undue pressure by the Claimants; and (iii) that employees themselves may wish to maintain confidentiality in relation to the settlement of a dispute with an employer – in the current case two complainants confirmed through their solicitors that they supported the application, something apparently not taken into account by the Judge.
(5) Haddon-Cave J’s exercise of his discretion in refusing to grant the injunction was undermined by his failure to properly consider all of the above factors, and to recognise that a failure to grant the injunction might lead to “immediate, irreversible and substantial harm to the Claimant companies due to adverse customer reaction”. He also did not refer to Lord Nicholls’ speech in Cream Holdings as to how this might bear on the requirement in s12(3) of the HRA 1998 that the Claimants must satisfy the Court that they would be “likely” to establish at trial that publication should not be allowed.
(6) On the basis of the limited information currently before the Court: “it is likely that the Claimants will establish at trial both that the relevant information was acquired by the Telegraph with knowledge of the NDAs and of the general obligation of confidentiality owed by the employees of the Claimant companies, and also that the information was imparted to the Telegraph in breach of either the NDAs or by employees who were aware of the NDAs and that, in either case, there was a breach of the duty of confidentiality to the Claimants”. There was, the Court said, a “sufficient likelihood of the Claimants defeating a public interest defence at trial, to justify the grant of an interim injunction”.
The Court therefore ordered that an injunction be granted preventing disclosure of (i) the allegations as to the individual incidents of alleged misconduct particularised in the grievances and in the Grounds of Complaint to the ET; and (ii) the negotiation and terms of the settlement agreements.
The Court has also ordered that the trial of the matter be expedited, recognising that any delay in the publication of matters of public interest was “undesirable”, although no date has yet been fixed for the hearing.
5RB’s James Price QC and Chloe Strong acted for the Claimants, instructed by Schillings International LLP.
5RB’s Desmond Browne QC acted for the Defendant, instructed by Gordon Dadds LLP.
For coverage in the press see: