Barclays Bank Plc v Guardian News Media Ltd

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 Neutral Citation Number: [2009] EWHC 591 (QB) IN THE HIGH COURT OF JUSTICE QUEEN’S BENCH DIVISION 2009 Folio 353 Royal Courts of Justice Thursday, 19 th March 2009 Before: MR. JUSTICE BLAKE - - - - - - - - - - - - - - - - - B E T W E E N : BARCLAYS BANK PLC Claimant - and - GUARDIAN NEWS AND MEDIA LTD. Defendant - - - - - - - - - - - - - - - - - Transcribed by BEVERLEY F. NUNNERY & CO Official Shorthand Writers and Tape Transcribers Quality House, Quality Court, Chancery Lane, London WC2A 1HP Tel: 020 7831 5627 Fax: 020 7831 7737 - - - - - - - - - - - - - - - - - MR. C. HOLLANDER QC (instructed by Freshfields) appeared on behalf of the Claimant. MR. H. TOMLINSON QC (instructed by Olswang) appeared on behalf of the Defendant. - - - - - - - - - - - - - - - - - J U D G M E N T 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 MR. JUSTICE BLAKE: This is an application for the continuation until trial or further order of injunctive relief granted by Ouseley J. relating to seven documents produced by the claimant and apparently leaked by an employee of theirs to a Member of Parliament some time earlier. The documents relate to financial transactions that the claimant was proposing to set up between 2005 and 2007 using a series of interrelated transactions in the hope that these arrangements would lead to a saving of tax otherwise payable in the United Kingdom. The nature of the documents can be ascertained by the references in the first witness statement of Mr. Hurrell in support of this application. Paragraph 7 says: "The documents are five approvals papers in a final form as submitted by the Structured Capital Markets Division to the SCM Approvals Committee, the earliest of which is dated February 2005, the latest of which is dated 12th October 2007; one draft approvals paper marked up for internal comments dating from October 2007; one set of minutes of the SCM Approvals Committee. The minutes do not relate to any of the approvals above and are dated 13th July 2006. The SCM Approvals Committee is BCSCM's designated approvals forum for approving transactions originated by structured capital markets. Its quorum includes representatives from group tax, bar cap compliance, regulatory finance, legal, market risk and credit risk as well as representatives on the business side. The approvals papers follow a prescribed format which set out description of the transaction for which approval is sought, generally including details of the client; the economies of the transaction, including in some cases the amount of any provision against the risk that the transaction does not obtain the treatment expected; the treatment of the transaction for tax, accounting and regulatory purposes as well as analysis of the risk of the transaction covering credit and market risks, operational issues and tax risk. The approvals paper in question relates to transactions executed by members of the Barclays Group in 2005, 2006 and 2007 although in the case of one of the previous papers the transaction was not executed with the client specified in the paper. The documents were created in respect of transactions undertaken by BSCM and were intended for confidential internal distribution to necessary recipients only within Barclays with a view to the approval of each specific transaction. The documents are all confidential. In addition, all of the documents, other than the set of minutes, contain privileged material, in particular consisting of the advice obtained from external law firms as to the tax treatment of the transactions under consideration. After each of the 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 transactions was executed, Barclays voluntarily disclosed the relevant papers, including the documents, together with underlying legal documentation to HMRC [Her Majesty's Revenue and Customs]. Those communications with HMRC were confidential and made on the basis that the underlying confidence in any documents sent to HMRC was not being waived. The purpose of disclosing the documents was that HMRC could review the transaction and enter into discussion with Barclays to agree on the appropriate analysis of the transaction for tax purposes. The documents were released to HMRC in redacted form which removed the reference to the privileged material and certain other confidential items including the tax provisioning that Barclays was making in relation to the transaction. This material is extremely confidential and internal to Barclays Capital. It was clear to HMRC that this material was not being disclosed. The documents as published have not been redacted in any way so as to protect legally privileged material. The documents also contain sensitive client information and internal know-how of BSCM, both of which would materially harm our business if publicly made available." 3 It is worth noting, even at this stage of this judgment, that the law generally distinguishes between tax evasion which might be described as the dishonest evasion of tax by misrepresentation or material non-disclosure, and tax avoidance where an individual or a corporate body is free under the law to seek to arrange its affairs in the most tax-efficient way. It is not suggested by the defendant that the documents in question give rise to any suggestion of tax evasion. They do appear to be concerned with tax avoidance. But whether a scheme is successful in avoiding tax is itself a complex issue that does not fall for the assessment of this court, but it is likely to include the intent with which the scheme was set up in the first place. As the quotation from Mr. Hurrell's witness statement has already made clear, these documents were published by the defendant Guardian and the sequence of disclosure that emerges from the material before the court is roughly as follows. The employee of the claimant is referred to by the Guardian in its publications as a whistle blower, although usually one blows a whistle to denote a foul, and I have already observed that the distinction between evasion and avoidance needs to be borne in mind in this context. The documents were apparently sent to a well-known Member of Parliament with a particular interest in financial matters, Vincent Cable MP. It would appear that the next stage was that Mr. Cable provided the documents to another national newspaper, the Sunday Times, who published an article using 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 5 7 9 the documents on 15th March, and that was not the subject of restraint or injunctive proceedings. The Guardian newspaper, part of the defendant body in this case, was then running its own series of articles on the related questions of banks, financial institutions and the applicable tax regime, and was interested in obtaining the documents in order to publish material about them. They obtained the documents, it would appear, from Mr. Cable, and that then led to publication, both in print and on the web site controlled by the defendant. It seems that the documents came on to the web site about ten o'clock on the evening of 16th March. The article made reference to the documents and published a covering letter from the whistle blower and also expert commentary upon issues raised in the documents, was prepared and had gone to print on the evening of 16th March. The article itself has not been the subject of injunctive relief. At about 2.30 in the morning, Ouseley J. was contacted out of hours and spoke to a solicitor for the claimant and a solicitor for the defendant. This perhaps admirably demonstrates that justice in this country never sleeps. He granted an injunction essentially requiring the Guardian to remove the documents from their web site where they were published in whole and without redactions, and not to disclose them to third parties pending a further order, and so held the fort until the next day and the matter could be revisited by a judge in normal hours. The documents were promptly removed, upon service of the order, from the web site. However, it was apparent that it was too late to stop either the editorial or the news reporting, and the news story was published, making reference to the documents, although not, it seems, quoting extensively from them. That was a recognised exception in terms of the Guardian's duties. The matter came on before me at 3.30 on 17th March, and by that time some further information was available in terms of witness statements and other material, from which at least it was apparent that by twelve o'clock midday on 17th March there had been internet chatter - that is perhaps the best way of describing it - blogs on the Guardian's and other web sites discussing the injunction, the fact that the documents had been on the Guardian web site and were now removed, and reference to the fact that the documents were or may have been available elsewhere by this stage. The court has received over the course of the application submissions and some evidence to the effect that the documents have indeed been published by another source, which is not now or likely to be the subject of a restraint order in the future. The claimant may be able to establish that this further 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 publication was as a result of the brief period of some four hours when the documents were on the Guardian's web site, although it is not suggested that the Guardian or its staff have supplied the documents to another party. 10 Since the subject matter of this application is confidentiality, it has been necessary, pending the determination of the issue of whether any relief should be granted and, if so, what, to receive some of the evidence and submissions in the absence of the public to prevent the very harm that the claimant is seeking to prevent in this application. That is not a unique occurrence in cases of this sort. I should make it plain that the defendant and its legal team have been present in court throughout. However much that was necessary in order to understand the full position, it is, in my judgment, imperative that in the public interest that judgment is given in public and that is the course that I propose to take. Necessarily, that means that the resulting judgment will not review all the material that has been deployed in this case in the kind of detail that would normally follow. However, the parties who are principally concerned with this judgment will understand the court's reasoning process and will know the ambit of the debate and the material to which reference has been made. 11 The claimant's case is that this is a case of breach of confidence and it is a case in which damages would not be an adequate remedy and therefore, it is submitted, there is a good case for an injunction, applying ordinary principles of injunctive relief. The first three steps of this case are: (1) that the documents were disclosed by an employee or former employee of the claimant in breach of contract, and the detailed arrangements demonstrated by the defendant made to ensure that confidential material remains confidential. (2) Although the documents themselves are not stamped "confidential" or otherwise marked, it must have been apparent when they were received by the Guardian through the Member of Parliament that they had been disclosed by the original source in breach of a duty of confidence and the subject matter was material that was not intended to be in the public domain. In particular, it must have been apparent that there was reference to legal advice to which legal professional privilege would attach, although it has been observed that the full legal opinions were apparently in schedules, have not been disclosed or published. (3) It is submitted that although there has been some dissemination of the documents on the Guardian web site itself or as a consequence of that primary publication, these matters have not ceased to be confidential and can still properly therefore be the subject of an application for injunctive relief to preserve their confidential character. 12 The defendant does not, for the purpose of this application, take issue with the first two steps of the claimant's case - confidentiality and recognition that they had been disclosed in breach of confidence - but submits, first, that the level of dissemination that has already occurred in this case has removed any confidentiality in the documents and so removes the basis of this application altogether. Secondly, it is submitted that, even if that is not right, then this is a case where the rights of the defendant as an important public national newspaper to freedom of expression are engaged and that requires the court to apply the statutory regime identified by Parliament in section 12(3) and (4) of the Human Rights Act 1998 that I will treat as being read into this judgment. That regime requires the court to make an assessment of the proportionality of the justification for interference with a national newspaper's right to freedom of expression and it is required in particular to have regard to the extent to which the material has, or is about to, become available to the public. 13 The defendant further points out that the relations between major financial institutions established or operating within the United Kingdom and the UK Government representing the public are matters of acute controversy and legitimate public debate and concern today. Mr. Rusbridger, the editor of the Guardian puts it this way in his first witness statement: "I considered these documents to be of the highest significance in the debate about tax avoidance. They revealed at first hand the process involved in structuring extremely complex and artificial tax avoidance vehicles, how lawyers and accountants work together to exploit loopholes in Government legislation and the degree to which they are sanctioned at the highest level within Barclays." 14 The defendant accepts that the question is not here of criminal wrongdoing or indeed any breach of applicable regulatory standards by the claimant, but a debate as to whether huge banking institutions, now closely dependent on and connected with public support in various ways for various aspects of operations, should continue to be entitled to devise sophisticated regimes for conducting their trading that results in them avoiding tax. 15 The claimant responds to this that this debate is indeed important and legitimate, but that it can be conducted without disclosure of or publication of leaked documents that contain specialist know-how that is a commercial secret, betray the commercial confidences of those with whom the claimant was in discussion, and reveal legal advice that regulators and enforcement agencies such as Her Majesty's Revenue and Customs and would not be entitled to know. It is pointed out that legal professional privilege is regarded by the law as a very important interest that will be protected from disclosure and use unless and until Parliament has declared to the contrary in unambiguous words. 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 16 The claimant relies on the approach taken by Sir Andrew Morritt (as he then was) in the case of Imutran Ltd. v. Uncaged Campaigns Ltd. & Anor. [2001] 1 All ER 385. The relevant passage is para.26: "Of course, the defendants' right to freedom of expression is an element in their democratic right to campaign for the abolition of all animal xenotransplantation or other experimentation. But they may continue to do that whether the injunction sought by Imutran is granted or not. The issue is whether they should be free to do so with Imutran's confidential and secret documents. Many of those documents are of a specialist and technical nature suitable for consideration by specialists in the field but not by the public generally. Given the provisos to the injunction sought there would be no restriction on the ability of the defendants to communicate the information to those specialists connected with the regulatory bodies denoted by Parliament as having special responsibility in the field." 17 That decision and that passage has been commented on with favour by the learned author Toulson in his book Confidentiality, 2nd edition, London 2006 at p.155. It is common ground that when applying section 12(4) of the Human Rights Act I should have regard to the case of Cream Holdings [2004] UKHL 44, [2005] 1 AC 253, para.22, where essentially the test of probability of success at trial is identified as the issue to which the court must have regard when considering injunctive relief. 19 The claimant also relies upon the principles identified in what was known as the Spycatcher case, Attorney General v. Guardian (No.2) [1990] 1 AC 285 when considering whether confidentiality has been lost by reason of publication by a third party. I conclude, applying the Cream Holdings test that of course there is a sufficiently realistic possibility of the claimant establishing the first two steps in the application, which were not the subject of contest by Mr. Tomlinson QC, who appears for the defendant. The focus of the debate has been step three and whether confidentiality continues to exist to make this application. The claimant relies particularly on the speech of Lord Keith in Spycatcher at p.260E-H, and also the observations of Lord Goff who put it somewhat differently at p.282C-D and 285B-G. It is not necessary to repeat those passages in full in this judgment. Lord Keith essentially focuses upon the question of whether injunctive relief is now futile because there is no further damage that could be caused by further publication. Lord Goff drew attention 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 to the fact that there was no rule that it was only publication by the original possessor of the confidential information that would result in loss of confidentiality and in principle any third party publication of the material could result in that loss. 21 Of course the subject matter of that case was a book published elsewhere in the world, and I am conscious that there are real significant differences between the publication of books and publication of material by other means, particularly in the age of the internet, where there is very rapid global communication. This has meant that in general terms people who are sufficiently interested in a topic or material and have access to search engines and search for material of interest to them, can often find data that may be the subject of applications to this court by one means or another. I am satisfied that general availability of material upon the internet would mean that it would be likely to lose its confidential character. However, equally, there is guidance and observations that very limited dissemination and only partial dissemination, perhaps in some remote or expert site that is not generally available to the public without a great deal of effort, may not result in such a loss of confidentiality. 23 The claimant has drawn to my attention the observations of another learned commentator, Paul Stanley, in The Law of Confidentiality, A restatement, Oxford and Portland 2008, where, under the chapter "Loss of Confidentiality" and the subheading "Free Availability", the learned author discusses two opposing approaches to how much has to be published before confidentiality is lost. Having identified Lord Keith's approach on the one hand and a different approach suggesting that accessibility by informed experts may well destroy confidentiality on the other, he observes as follows: "How is one to reconcile these approaches? The answer, it is suggested, is that the question is one of degree depending upon the particular case. The key determining factors are the type of the information and nature of the confidentiality interest and the nature of the likely audience for it. If the question relates to the disclosure of information to the general public then only quite widespread publication will result in a loss of confidentiality, the general public is not expected to spend its time searching specialist archives and statistical data so that even republication may well amount to breach of confidence. That is perhaps is especially true where the information is personally sensitive, engaging privacy interests. On the other hand, if information is really of interest to a specialised group of people such as foreign intelligence agencies or trade competitors who can be expected to pursue it vigorously even in obscure places, much less extensive publication will be enough to destroy confidentiality. The test being applied in each case is the same: is the information so generally accessible that in all the circumstances it can no longer be regarded as confidential? But the application of the test depends upon the particular circumstances of the case." 24 Reliance is made by both the claimant and the defendant on the approach of Tugendhat J. in Northern Rock Plc v. Financial Times Ltd. (unreported) [2007] EWHC 2677, where at para.16 and 23 he contrasted publication briefly on a web site which would not be generally accessible or used by the general public, and more general publication. 25 The defendant points out that the Guardian's web site is a very widely used vehicle for information seekers. Indeed, the court was informed in argument that there are some 30 million users who have or have had access to the site, and that is far in excess of its printed circulation. But in the context of this case that means that unrestricted publication of these documents on that web site would have a very far-reaching audience and indeed reproduction of the documents in the printed paper, if that were the course that the Guardian should choose, would mean that it would arrive in the readers' hands without the reader having to actively search out or select a topic for further research and making connections to possibly one, two or three web sites before tracking down the document whose existence may not indeed have been known in the advance or only by contextual reference in the press. The Guardian's web site is therefore particularly well known, readily accessible and not an obscure, recondite or specialist site. Although of course Guardian journalists as specialist researchers would know about all such other sites and how to find them. I conclude that, applying the question of probability as to the prospects at trial, that the claimant has a sufficient realistic chance, as the evidence stands today, of persuading the trial court that the dissemination to date has not destroyed the confidentiality of the material contained in the documents so as to characterise this as now being freely available. I am influenced in this conclusion also by the consideration that such further availability of the complete unredacted documents as there may be in this case may well have been only as a result of the brief period that the documents were available to the public at large on the Guardian's web site. It is therefore somewhat unattractive for the defendant to rely upon publication by others if that publication was caused by their wrongful publication on their own web site in the first place. 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 27 Therefore, on the first issue that has been debated between the parties, I conclude that the absence of confidentiality is not a complete answer to this claim and the court must therefore go on to consider section 12 and proportionality. When it does so, the court must again revisit the question in a different context of the scale of existing publication of the material, when asking itself whether an injunction at all should be granted and, if so, in what terms. That is a different question, in my judgment, to the question of whether confidentiality has ceased to exist at all. 28 Applying that approach, I can say without hesitation that if the application for relief that had been made before me on 17th and 18th March had been in the original terms sought by the claimant, namely for delivery up of all copies of the documents by the Guardian and its employees, and not referring to the documents in any print or other form whatsoever, I would have rejected an application in those terms as both unrealistic and disproportionate in the light of all the circumstances known to the court. 29 Further, the public interest in understanding how these great financial institutions that are a part of the bedrock of our economy and society actually go about their business and the interrelationship between the benefits and burdens of this economic activity is acutely topical and a matter for the most serious public debate. Here the information that inspired the journalism came about through a prominent and responsible Member of Parliament. It had already been the subject of public ventilation in a Sunday Times article that quoted the issues, though not made quotations from the documents themselves. I can see no reason why the Guardian should not be able to make use of the contents of documents that they received from the MP to inform their opinions and to express them and to stimulate public debate (even if that meant selective quotations from the documents themselves to illustrate the point). Freedom of speech is a precious value in a democratic society that the courts must strive to protect and promote. 30 However, that does not mean that journalists should have complete freedom to publish in full confidential documents leaked in breach of a fiduciary duty, pursuant to the exercise of the right to freedom of expression. If the debate can flourish without the publication of the full documents themselves, that is a highly material factor. Responsible journalists must themselves consider whether publication of personal details that they may be in possession of, even about the affairs of corporations not alleged to have done any wrongdoing in the sense of violation of the laws, is appropriate. The more that is sought to be published, the more sensitive or confidential the data is, the self-direction of a responsible journalist is to consider whether the justification of full verbatim quotation as part of the exercise of freedom of expression is made out with particularity to the form of publication that is intended. 32 In this context, I recognise, as the claimant has submitted, and Mr. Tomlinson QC has not sought to argue otherwise, that legal professional privilege is a significant matter that the courts will protect and if they were to permit republication of legal advice which is otherwise confidential without restraint, that principle would be rapidly eroded and journalists would be able to achieve what other interested institutions or indeed opposing parties or competitors would not be entitled to. In this context, I am influenced by the fact that Mr. Tomlinson recognised that if no relief were granted at all, the Guardian would be free to publish in print and in full what they had previously been able to post for some four hours on the web, namely a reproduction, unexpurgated and unedited, of all the documents as they had done previously. In my judgment, they have no human right to do so, and their rights to freedom of expression are not materially promoted by the unexpurgated publication of the full documents. I therefore conclude that the claimants would probably be able to demonstrate at trial that any restriction on them doing so would not be a disproportionate interference with the freedom of speech, and therefore they have made out a case for continuation of restraint of publication of the full documents. 33 For those reasons, I am prepared to continue the injunctive relief sought, in the absence of any undertaking, in modest terms, preventing the publication in whole or in part of the documents without the consent of the claimant, the supply of the documents to a third party other than a public authority, or incitement of any third party to themselves publish the documents. All this will be subject to the proviso that the documents themselves are not published in whole or in part in the national media in the United Kingdom, and there must be a liberty to apply to vary or revoke this order in the light of further developments in this case. It may well be that the existing continuing confidentiality may evaporate without any further action by the Guardian in the course of the next few weeks, but on the evidence that the court has seen today there is a case for the relief in the terms I have sought to identify. 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36