England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF J USTICE
CHANCERY DIVISION
The Hon Mr Justice Lightman
Deputy Master Lloyd

		Royal Courts of Justice Strand, London, WC2A 2LL
		14th October 2002

Lord Phillips MR :

Introduction

1. This is the judgment of the Court. On 4 June 2000 the News of the World published a salacious article about sexual encounters between the respondent, Miss Campbell, and the actor Mr Joseph Fiennes and the efforts made to keep secret the fact of these encounters – particularly from Mr Flavio Briatore, with whom Miss Campbell had established a stable relationship and to whom she was engaged to be married. Much of the information contained in this article had been provided to the News of the World by the appellant, Miss Frisbee. She had agreed to provide this information through the offices of an agent, Max Clifford. The News of the World paid Miss Frisbee £25,000 for the information and Max Clifford £5,000.
2. Miss Frisbee had been employed by Miss Campbell to provide management services under a weekly contract for services, agreed orally between Miss Frisbee and Miss Campbell’s agent, Mr Michel. It was a term of that contract that Miss Frisbee would keep confidential any information that she learnt about Miss Campbell in the course of her work and that she would enter into a written confidentiality agreement. This she did, in the form of a letter dated 9 February 2000 –‘the Confidentiality Agreement’. Under this Miss Frisbee gave a series of undertakings. She agreed, in particular, that (a) no information would be disseminated to the media without Miss Campbell’s express written consent; (b) information relating to Miss Campbell’s professional life and personal life had an inherent value in publication rights and that dissemination of such information in contravention of the agreement would pose a serious threat to Miss Campbell’s professional, economic, commercial and personal interest; (c) the duties imposed on Miss Frisbee under the agreement were of a fiduciary nature; and (d) the Confidentiality Agreement would continue beyond the duration of the professional relationship between the parties.
3. It is common ground on the pleadings (a) that it was an implied term of the Confidentiality Agreement that Miss Frisbee would not divulge to the media or any third party any information (whether true or false) about Miss Campbell which Miss Frisbee claimed to have learnt in the course of working for Miss Campbell and (b) that, by reason of the relationship between them, Miss Frisbee owed Miss Campbell a duty of confidence.
4. The disclosures made by Miss Frisbee to the News of the World were, on the face of it, in flagrant breach of the Confidentiality Agreement and the duty of confidence arising out of the relationship between Miss Campbell and Miss Frisbee.
5. By this action Miss Campbell claims damages or an account of profits arising from breach of the Confidentiality Agreement and the duty of confidence. By way of defence, Miss Frisbee claims that Miss Campbell so conducted herself as to discharge her from the duty not to disclose the information that she provided to the News of the World. She claims that on 7 April 2000 Miss Campbell physically assaulted her because she had failed sufficiently to cover up the fact that Miss Campbell was deceiving Mr Briatore with Mr Fiennes. Miss Frisbee claims that this assault was the culmination of a course of unacceptable behaviour on the part of Miss Campbell, that it constituted a repudiation of her contract which she accepted and that this brought their relationship to an end. She claims that the termination of her contract in these circumstances also discharged the Confidentiality Agreement and released her from the obligation to keep confidential the details of Miss Campbell’s relationship with Mr Fiennes.
6. By way of alternative defence Miss Frisbee contends that, if any duty of confidentiality subsisted, she was nonetheless entitled to disclose the information that she gave to the News of the World because it was in the public interest that this information should be published. Miss Frisbee seeks to add, by way of amendment to her Defence, further allegations of fact in support of this alternative defence.
7. Miss Frisbee counterclaims for damages in respect of the alleged assault upon her by Miss Campbell.
8. The article in the News of the World included a description of the alleged assault on Miss Frisbee. Miss Campbell denies that the assault took place and claims that the false description of the assault also constituted a breach of the Confidentiality Agreement.
9. On 2 August 2001 Miss Campbell obtained summary judgment against Miss Frisbee in respect of part of her claim. The judgment was given by Deputy Master Lloyd and was in relation to that part of Miss Campbell’s claim which related to the disclosure of details of her relationship with Mr Fiennes. Deputy Master Lloyd refused to give summary judgment in relation to the disclosure of the information which formed the basis of that part of the article which described Miss Campbell’s assault on Miss Frisbee. This was on the basis that it was arguable that there was a public interest in disclosure of the fact that Miss Campbell had committed a criminal offence, which justified what would otherwise have constituted a breach of confidence. The Deputy Master ordered that the remainder of the claim and the counter-claim should proceed to trial.
10. Miss Frisbee appealed to Lightman J. against the Order for summary judgment made against her. By a judgment handed down on 14 March 2002 Lightman J. dismissed her appeal. Against his decision Miss Frisbee now appeals, pursuant to permission granted on paper application by Brooke LJ., who remarked simply that the proposed appeal appeared to meet the criterion required for a second appeal.

The basis of the appeal

11. CPR Part 24.2 provides:

“The court may give summary judgment against a defendant on the whole of a claim or on a particular issue if-

(a) it considers that-

…. (ii) that defendant has no real prospect of successfully defending the claim or issue; and

(b) there is no other compelling reason why the case or issue should be disposed of at trial.”

Lightman J. correctly proceeded on the basis that, on an application for summary judgment, any arguable issues of fact should be assumed to be determined in favour of the defendant. On this basis he assumed that Miss Frisbee’s allegation that Miss Campbell had physically assaulted her, and the alleged reason for that assault, were established.

12. Lightman J. identified two issues of law on which he ruled that Miss Frisbee had no realistic prospect of success. The first was whether the obligation of confidence that she owed to Miss Campbell was discharged by Miss Campbell’s wrongful repudiation of Miss Frisbee’s contract. The second was whether there was a public interest in the disclosure of the information made by Miss Frisbee to the News of the World.
13. Mr Price, who appeared for Miss Frisbee, contended that Lightman J. was wrong to hold that Miss Frisbee did not have an arguable case on either issue. He submitted that Lightman J.’s finding on the first issue involved a departure from previous established law. It was not appropriate to determine an issue in such a manner on an application for summary judgment. He had come to argue that Lightman J. should have held that Miss Frisbee had a reasonable prospect of success on this issue. This was all that he should be required to do to succeed. It was not right that at the interlocutory stage he should be expected to answer a head-on attack on established law.
14. As to the second issue, Mr Price submitted that it was wrong to treat this simply as an issue of law. The test of public policy was fact specific and Lightman J. had failed to consider the argument advanced on behalf of Miss Frisbee as to the relevance of the material facts.
15. For Miss Campbell, Ms Rogers submitted that, even were we to conclude that the first issue involved a difficult question of law, we should determine whether or not Lightman J. had correctly resolved that issue. If he were held to have been correct, this might obviate the need for an investigation into the question of whether or not Miss Campbell had repudiated Miss Frisbee’s contract.

The effect of repudiation on a contractual duty of confidence

16. Mr Price submitted that it is a basic principle of the law of contract that an accepted repudiation brings to an end any contractual obligations on the part of the innocent party, including negative covenants such as a covenant not to disclose confidential information. In support of this proposition he relied upon two authorities. The first was the decision of the House of Lords in General Billposting Company Limited v Atkinson [1909] AC 118. Atkinson was employed by General Billposting on terms that included a covenant, in effect, not to compete with them for two years after the termination of his employment with them. They wrongfully dismissed him without notice, but sought to enforce the covenant. The House of Lords held that he was not bound by the covenant. The speeches were very short, but the following passage from that of Lord Collins contains what is generally considered to constitute the reasoning behind the decision:

“I think the true test applicable to the facts of this case is that which was laid down by Lord Coleridge C J in Freeth v Burr (2) and approved in Mersey Steel Company v Naylor (3) in the House of Lords. “That the true question is whether the acts and conduct of the party evince an intention no longer to be bound by the contract.” I think the Court of Appeal had ample ground for drawing this inference from the conduct of the appellants here in dismissing the respondent in deliberate disregard of the terms of the contract, and that the latter was thereupon justified in rescinding the contract and treating himself as absolved from the further performance of it on his part.”

17. The other case upon which Mr Price relied was Rock Refrigeration Limited v Jones [1997] 1 All ER 1. In that case the majority proceeded on the basis that General Billposting v Atkinson remained good law. Phillips LJ questioned, however, whether the principle underlying it could survive the development of contract law exemplified by Photo Production Limited v Securicor Transport Limited [1980] AC 827. He suggested, in particular, that a confidentiality clause might survive the wrongful dismissal of an employee.
18. Lightman J. cited at length from this part of the judgment of Phillips LJ, but he did not adopt its reasoning. Rather, he adopted a passage in the judgment of Morritt LJ. He, in a passage at 10G that was not cited by Lightman J., had observed:

“It is not in doubt that if one party repudiates a contract and that repudiation is accepted by the other the latter is discharged from all further performance of primary obligations of the contract in question in addition to acquiring a right to damages for compensation for the breach.”

19. The passage in Morritt LJ’s judgment that Lightman J. specifically approved was the following:

“It has been suggested that the application of the principle of General Billposting Co Ltd v Atkinson [1909] AC 118, may enable an employee to retain for himself that which he should not when his employment has been terminated even by his acceptance of his employer’s repudiation. For my part I doubt it. The employer’s rights of property will remain unimpaired even if the employment terminated as a result of the employee’s acceptance of his wrongful repudiation. As the employment will be at an end the employee’s licence to use the company car, for example, will have come to an end too. Similar situations will arise with regard to the employer’s trade secrets and papers and access to his property.”

He stated that he had no doubt that at any trial the law would be laid down as Morritt LJ confidently stated it. He concluded that:

“…the employee’s acceptance of the employer’s repudiatory breach cannot displace the employer’s established property rights and these include his rights in respect of confidential information.”

20. Lightman J. went on to hold:

“….this is not a case where the contractual relationship was under a contract of service between employer and employee: it was a contract for services between an independent contractor and a person engaging the services of that contractor. In the case of contracts for services, there can be no conceivable basis for the suggestion that a repudiatory breach by the client entitles the independent contractor to a release from obligations of confidentiality. It is plain beyond question that the obligation of confidence of e.g. a lawyer, doctor or security consultant survives acceptance by the service provider of the repudiation of his contract by the client. Indeed that is surely the premise upon which the relationship between client and service provider is created. Likewise the law protects marital confidence notwithstanding repudiation of the marital vows, adultery and a divorce: none of these events operate to release the “innocent” spouse from the obligation to preserve these earlier confidences: Argyll v Argyll [1967] Ch. 302 at 332-3. I may add that this conclusion supports the view which I have expressed as to the effect on confidentiality obligations of an acceptance by an employee of repudiation by his employer: there can be no logical or sensible reason (let alone any principle) which supports the view that a confidential adviser or agent (e.g. a solicitor or doctor) is released by his acceptance of a wrongful repudiation if he is engaged under a contract for services, but not if engaged under a contract of service. Accordingly the duty of the Defendant not to divulge or exploit confidential information acquired in the course of her engagement by the Claimant in this case survived any acceptance by the Defendant of the repudiation of the contract of Services by the claimant. I therefore hold that this first ground of defence cannot succeed.”

21. Thus, as we understand his judgment, Lightman, J. did not hold that the obligation in a contract of service or for services to keep information confidential survived as a matter of contractual duty after wrongful repudiation by the employer of the contract. However, he held that confidentiality remained binding in respect of confidential information that the employee or contractor had acquired in the course of his service. Nonetheless, when subsequently considering whether the duty of confidentiality justified restricting the right of freedom of expression in this case, Lightman J. emphasised repeatedly the fact that the source of the duty of confidentiality lay in contract. Thus, for instance, he held at paragraphs 41 and 42:

“But this justification may be afforded where the information is confidential and the vendor as a fundamental term of his or her contract for service or services has unequivocally agreed not to do so and where the protection of confidences is an essential element of the contractual relationship.”

22. We consider that it is arguable that a duty of confidentiality that has been expressly assumed under contract carries more weight, when balanced against the restriction of the right of freedom of expression, than a duty of confidentiality that is not buttressed by express agreement – contrast the observations of Walker LJ in London Regional Transport v The Mayor of London [2001] EWCA Civ 1491 at paragraph 46 with those of Lord Donaldson of Lymington MR in Attorney General v Barker [1990] 3 All ER 257 at p.260. It follows that the first issue considered by Lightman J. was of potential significance. We do not believe that the effect on duties of confidence assumed under contract when the contract in question is wrongfully repudiated is clearly established. While we do not consider that it is likely that Miss Frisbee will establish that Lightman J. erred in his conclusions in a manner detrimental to her case, it cannot be said that she has no reasonable prospect of success on the issue. This issue of law was not one that was suitable for summary determination under part 24 CPR.

Freedom of expression and the public interest

23. The right to confidentiality, whether or not founded on contract, is not absolute. That right must give way where it is in the public interest that the confidential information should be made public. This now has statutory recognition in the form of section 12(4) of the Human Rights Act 1998, which provides:

“(4) The court must have particular regard to the importance of the Convention right to freedom of expression and, where the proceedings relate to material which the respondent claims, or which appears to the court, to be journalistic, literary or artistic material (or to conduct connected with such material), to-

(a) the extent to which-

(i) the material has, or is about to, become available to the public; or

(ii) it is, or would be, in the public interest for the material to be published;

(b) any relevant privacy code.”

24. Lightman J. held that section 12(4) was in play in this case, in that the information that Miss Frisbee provided to the News of the World constituted ‘journalistic material’. He went on to hold, however, contrary to Mr Price’s submission, that the Code of Practice of the Press Complaints Commission (‘the Code’) was not a relevant privacy code, in that it had no application to Miss Frisbee and did not lay down standards in respect of compliance or otherwise with obligations of confidence on her part. Mr Price challenged this finding. He submitted that there was good reason to treat a newspaper and its source of information on the same basis in that it is often only through informants that the media obtain stories in which the public have a legitimate interest. Where the Code indicates that publication of a story is legitimate, this is of relevance when considering the legitimacy of the act of the informant in providing the story to the media.
25. We consider that Mr Price has an arguable point. The Judge held, however, that, even if the Code were of relevance, this would not affect the outcome. The provisions of s.12(4) did not give the right of freedom of expression a presumptive priority over other rights. What it required was a balancing of that right against the rights of others and, most particularly in the context of the case, the right to protection of confidentiality, privacy and the contractual rights to both confidentiality and privacy.
26. As to this, Mr Price made the point that the Code identified as being in the public interest ‘preventing the public from being misled by some statement or action of an individual or organisation’. The case that Miss Frisbee sought to bring was, in large measure, founded on this aspect of the public interest. Miss Campbell had voluntarily stimulated public interest in her private life. She had painted a false picture of herself to the public. She had ‘re-branded’ herself as a reformed and stable individual and her engagement to Mr Briatore was a fundamental part of this exercise. The article in the News of the World exposed the falsity of Miss Campbell’s public image. The Judge had failed to give any or sufficient weight to this aspect of Miss Frisbee’s case.
27. Lightman J.’s approach is evident from the following passage from paragraph 30 of his judgment:

“…when undertaking the necessary balancing exercise between the needs for preserving confidentiality and for disclosure, it is essential to bear in mind: (a) that there is a substantial public interest in requiring parties, who have with their eyes open and for valuable consideration contracted (most particularly in contracts of services or for service) not to disclose confidences, to comply with those obligations: see Attorney General v Guardian Newspaper No 2 [1990] 1 AC 109 at 254-6 per Lord Keith; Attorney General v Barker [1990] 3 All ER 257 and Adams v Attridge 8th October 1998 (Buckley J); and (b) though the Court may take into account that the public have an understandable and therefore a legitimate interest in being told information, (see A v B&C above para 11.xii), for the defence of public interest to override an express obligation of confidence, as a rule, the information must go beyond being interesting to the public and private matters which are of no real concern to them: there must be pressing public need to know: see e.g. Lion Laboratories v Evans [1985] QB 526 at 537.”

28. Mr Price submitted that to apply the ‘pressing public need to know’ test was too strict an approach. A test of proportionality fell to be applied when considering whether the freedom of expression recognised by Article 10 of the Human Rights Convention should properly be restricted to have regard to a right to privacy.
29. Mr Price submitted that it was not merely the Code which indicated the legitimacy of correcting a false impression that an individual had placed before the public. This principle was established by the decision of the Court of Appeal in Woodward v Hutchins [1977] 1 WLR 760. In that case the plaintiffs, who were ‘pop stars’, applied for an interlocutory injunction to restrain their former press agent from disclosing confidential information about their private lives and conduct and to restrain an alleged libel. In refusing the application Lord Denning MR said at pp.763-4:

“No doubt in some employment there is an obligation of confidence. In a proper case the court will be prepared to restrain a servant from disclosing confidential information which he has received in the course of his employment. But this case is quite out of the ordinary. There is no doubt whatever that this pop group sought publicity. They wanted to have themselves presented to the public in a favourable light so that audiences would come to hear them and support them. Mr Hutchins was engaged so as to produce, or help to produce, this favourable image, not only of their public lives but of their private lives also. If a group of this kind seek publicity which is to their advantage, it seems to me that they cannot complain if a servant or employee of theirs afterwards discloses the truth about them. If the image which they fostered was not a true image, it is in the public interest that it should be corrected. In these cases of confidential information it is a question of balancing the public interest in maintaining the confidence against the public interest in knowing the truth. That appears from Initial Services Ltd v Putterill [1968] 1 Q.B. 396; Fraser v Evans [1969] 1 Q.B. 349 and D v National Society for the Prevention of Cruelty to Children [1976] 3 W.L.R. 124. In this case the balance comes down in favour of the truth being told, even if it should involve some breach of confidential information. As there should be “truth in advertising”, so there should be truth in publicity. The public should not be misled. So it seems to me that the breach of confidential information is not a ground for granting an injunction.”

30. In agreeing with this judgment, Lord Bridge added at p.765:

“It seems to me that those who seek and welcome publicity of every kind bearing upon their private lives so long as it shows them in a favourable light are in no position to complain of an invasion of their privacy by publicity which shows them in an unfavourable light.”

31. Lightman J. pointed out that this decision was extempore and that there were a number of reasons for refusing the injunction other than the passages that we have cited. He added that the continuing applicability of the decision might be open to question on the ground that it did not accord with modern developments in practice in relation to breach of confidence claims. His conclusions appear from the following passages from paragraphs 40 and 41 of his judgment:

“I do not see how it is seriously maintainable that the public had any interest in the content of the disclosures (most particularly that the Claimant was cheating on her partner) or need to know or that the Defendant had any such reason or justification for making her disclosures as required that the Claimant be deprived of the protection of the confidentiality obligation which the defendant willingly, solemnly and for valuable consideration provided.

I do not think that there is any real prospect of the court holding at the trial that the disclosure by the defendant can possibly be justified, let alone that the claimant should be debarred from a claim in damages or for an account of profits.”

32. Mr Price submitted that the latter comment suggested that the judge contemplated that damages or an account of profits might be recoverable even were the publication to be justified in the public interest. This was unsound in law. If the publication was justified in the public interest, then this provided a defence to a claim for breach of confidence, whether or not founded in contract.

Conclusions

33. The courts are in the process of adapting the law of confidentiality in the light of the Human Rights Act 1998 in order to reflect the conflicting Convention rights of respect for private and family life and freedom of expression. In Campbell v Mirror Group Newspapers Miss Campbell largely resolved this conflict by conceding that the defendants were entitled to publish the fact that she was a drug addict in order to ‘set the record straight’. It seems unlikely that any similar narrowing of the issues will occur in the present case.
34. Some guidance can be derived from the judgments of this court in Douglas v Hello! Ltd [2001] 1 QB 967 and A v B [2002] EWCA Civ 337; [2002] 3 WLR 542. The latter was delivered after argument before Lightman J. and written submissions were submitted in respect of it. Lightman J. recorded that he had attempted to reflect that decision in his judgment. We do not find that that case provides a clear answer to the present dispute. Lightman J. may well be right to suggest that Woodward v Hutchins should no longer be applied, but on its face it lends support to Miss Frisbee’s proposed defence.
35. We have reached the reluctant conclusion that the answers to the issues raised on this appeal are not so clear as to entitle Miss Campbell to the summary judgment that she has obtained. We say ‘reluctant’ because, while this case may provide a valuable addition to the developing jurisprudence on the right to privacy if it proceeds to trial, the costs involved in the provision of that benefit are likely to be disproportionate to what is at stake in terms of damages or an account of profits.
36. Lightman J.’s resolve to attempt to restrict the scope of this dispute was praiseworthy, and in accordance with the overriding objective of civil procedure. Miss Frisbee would be well advised to reflect carefully on his conclusions in relation to the merits of the issues debated before him. The proceedings to date might bear comparison to those of early neutral evaluation. For the reasons that we have given this appeal must, however, be allowed.
Order: Appeal allowed with costs here and below summarily assessed in the sum of £17,922.46 not to be enforced until the end of the trial. Leave to appeal to the House of Lords refused.