Brevan Howard's gagging order against Reuters upheld by the Court of Appeal in breach of confidence case

The news agency, Reuters, has lost its appeal against an injunction, which prevented it from reporting leaked confidential and commercially sensitive information concerning a leading global alternative asset manager, Brevan Howard Asset Management LLP.

The case is an interesting reminder of how the public interest test is applied in breach of confidence cases, as distinct from other causes of action such as misuse of private information and libel.The Court of Appeal judgment can be found here.

The facts

In this case, an application by Brevan Howard for an interim non-disclosure order against Reuters had been heard and granted by Mr Justice Popplewell in March 2017. The commercial information at the heart of the dispute had been disclosed to 36 prospective professional investors in circumstances of strict confidence. Brevan Howard had taken several different steps to communicate and preserve the confidential nature of the information. For example, each recipient had been sent the documents with password protection, with the password being unique to each recipient.  The first page of the package of documents was headed "Private and Confidential" and "Not for Distribution”.  The package stated on its front page:

"Disclaimer and Important Information: 

This document has been provided specifically for the use of the intended recipient only and must be treated as proprietary and confidential.  It may not be passed on nor reproduced in any form in whole or in part in any circumstances without express prior written consent from Brevan Howard.  Without limitation to the foregoing any text and statistical or any portion thereof contained in this document may not be permanently stored in a computer, published, re-written for broadcast or publication or redistributed in any medium except with the express prior written permission of Brevan Howard.”

Reuters had obtained the information from a confidential source and approached Brevan Howard for comment prior to publication – which in turn triggered Brevan Howard's injunction application.

The decision to grant the injunction at first instance

In granting the injunction the Judge applied section 12 of the Human Rights Act 1998, which is relevant as the application sought to restrain the freedom of expression of Reuters protected by Article 10 of the European Convention of Human Rights. Thus Brevan Howard had to and did establish that, notwithstanding the importance of the Article 10 Convention right to freedom of expression and the extent to which the information was: a) already in the public domain (or about to be); and b) in the public interest, it was more likely than not to establish at trial that publication should not be allowed.

The Judge held that all of the relevant ingredients of a breach of confidence action had been made out: the information had the necessary quality of confidence about it and had been imparted in confidential terms. Reuters were on notice of the confidential nature of the information. Furthermore, although evidence of detriment was not a necessary ingredient, it was clear on the facts that the information would have the potential to be valuable to Brevan Howard's competitors and damaging to its business if disseminated more widely.

In terms of whether the identifiable public interest in the information met the relevant test, the Judge held that in all the circumstances, it was not in the public interest that the duty of confidence should be breached. In particular the Court (applying Associated Newspapers Ltd v HRH Prince of Wales [2002] Ch.57) impressed the importance of establishing not just that there is a public interest in publication; but also that there is a public interest in breaching the confidence which attaches to the information. That involves weighing the relative importance of the maintenance of confidentiality against the relative importance of the public interest in publication and is a fact specific exercise in each case.

In this case the Judge found that the maintenance of confidentiality outweighed the public interest.

The Judge also commented that a significant factor in the case was the fact that there was no evidence of iniquity – i.e. it was not necessary to correct any false impression created by Brevan Howard, or to reveal any illegal or immoral dealing, to expose hypocrisy or to expose some improper practice or concealment, nor even to demonstrate incompetence.  In this respect the Judge relied upon Lion Laboratories Ltd v Evans [1985] 1 QB 526 as establishing that there is no rule that it is necessary to demonstrate iniquity in order to justify a breach of confidence and that a balancing exercise falls to be performed on the facts. 

The appeal

Reuters appealed the decision. The basis of the appeal was that the Judge had erred by failing to conduct a proper balancing and proportionality exercise because he adopted (what the written grounds of appeal described as:) a “sliding scale of information by type or category”, with the disclosure of iniquity and hypocrisy and the correction of a misimpression by the claimant at the top. The complaint was that the Court's starting point had been wrong, as the fact that there was no evidence of iniquity should not have been a significant factor in the balancing exercise conducted by the Court. According to Reuters, this error led the Court to give insufficient weight to a range of important matters of public interest. 

However the Court of Appeal disagreed with Reuters and dismissed the appeal. The Court of Appeal held that the Judge at first instance made no error of principle or law.  His determination that the balance came down in favour of the preservation of the confidentiality of Brevan Howard’s information and that the grant of an injunction was a proportionate exception to Reuters’ right to freedom of expression under Article 10 were conclusions that he was entitled to reach.

The Court of Appeal held that the first instance decision merely followed the relevant common law: namely the Prince of Wales case, and relevant European jurisprudence, which emphasised the important public interest in the observance of duties of confidence and that this was a highly significant element to be weighed in the relevant balancing exercise. Further the Court of Appeal determined that Reuters' criticism of the Judge's reliance upon Lion Laboratories (and in particular Griffiths LJ's comment in that it will only be “an exceptional case in which a defence of public interest which does not involve iniquity on the part of the plaintiff will justify refusing the injunction”) was misplaced. The Court of Appeal felt that this statement was not inconsistent with the Prince of Wales case as it was merely an indication that, in carrying out the necessary balancing exercise, there must be sufficiently significant matters of public interest in favour of publication to outweigh the public interest in the observance of duties of confidence. In fact the importance of Lion Laboratories was that it made clear that in cases such as these, significant matters of public interest are not confined to the disclosure of iniquity. And in any event, the Court of Appeal said that the Judge had already completed the balancing and proportionality exercise in his judgment before he made any reference to Lion Laboratories. 

In short the Court of Appeal did not find that the Judge had made any error of principle or law and supported the balancing exercise that had been undertaken by the Court in considering the relevant public interest test.

Comment

Given the inherent nature of Brevan Howard's non-disclosure application much of the underlying facts in this case were heard and considered via private hearings. This prevents any qualitative assessment of the public interest balancing exercise that was carried out by the Court at first instance and then reconsidered by the Court of Appeal. However, it is clear from the Appeal judgment that this decision must be hugely frustrating for Reuters who submitted that the relevant underlying evidence supported "an exceptionally strong case of public interest, which engaged all the strands of the case law on public interest". 

Further, in contrast to how a public interest defence is often advanced in defamation, the Court of Appeal was unwilling to take into account Reuters' responsible journalism in providing Brevan Howard with considerable detail about the intended publication, seeking comment from and giving assurances to Brevan Howard that Reuters would fairly report any such comment. This unfortunately means that there is a clear disincentive for responsible news agencies like Reuters to contact subjects of public interest stories prior to publication. Whether or not publication without taking such steps is worth the risk may be determined in this case in the unlikely event that the claim continues to a full trial of the substantive issues.

For now the main takeaways from this case are that: 1) in the context of breach of confidence claims, any public interest balancing exercise must find "sufficiently significant matters of public interest" in favour of publication to outweigh the public interest in the observance of duties of confidence; 2) sufficiently significant matters of public interest are not confined to the disclosure of iniquity (for example: disclosure of some sort of wrong-doing, hypocrisy, deceit or concealment); and 3) as ever in the world of media litigation, the outcome of breach of confidence claims/applications for interim injunctive relief very much depends upon the individual (and often concealed to the public) facts of the case.