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The Court of Appeal has handed down a decision in ABC v Telegraph Media Group Ltd, in which it has granted an injunction against the UK newspaper, The Telegraph. The injunction prevented The Telegraph from disclosing allegations of misconduct against a senior executive. While the individual has now been named in Parliament, the case has brought into sharp relief the use of NDAs to settle disputes relating to allegations of sexual misconduct in the workplace.

Background

According to the judgment, five employees alleged that a senior executive of two companies had engaged in some form of “discreditable conduct”; three of the employees brought employment tribunal proceedings. All of the complaints were settled by way of settlement agreements, which included non-disclosure agreements (“NDAs”). The employees received “substantial payments” and received independent legal advice on the terms of the settlement agreements.

A journalist from The Telegraph contacted the claimants to seek their comments on a story it was planning to publish in relation to the allegations. It was clear to the claimants that the journalist was aware of the NDAs as well as the allegations. The claimants issued proceedings immediately, seeking an interim injunction restraining disclosure of the allegations and the NDAs pending trial.

First instance – injunction refused

At first instance, the judge refused to grant the injunction. He did so on the basis that he did not consider that the claimants were “likely” to succeed at trial, as required in free speech cases by virtue of s.12 of the Human Rights Act 1998.

The judge based his decision on findings that the information was reasonably credible, there can be no reasonable expectation of confidentiality or privacy in respect of the information, that much of the information was already in the public domain, that the claimants had not shown that the information had been obtained in breach of the NDAs and, crucially, that publication was not in the public interest.

Appeal – injunction granted

The Court of Appeal unanimously allowed the appeal, and granted the injunction pending trial. In particular, the court found that:

1. The claimants disputed the allegations and there had been no finding of a tribunal that the allegations had merit;
2. While there may be no reasonable expectation of confidentiality or privacy in allegations of this kind, the point was that there was an obligation of confidence by virtue of the NDAs;
3. What was in the public domain was not the most serious elements of the allegations;
4. It was likely that substantial or important parts of the information were passed to The Telegraph in breach of a duty of confidence;
5. The publication of the information (at least before trial) was not in the public interest.

This final public interest point is by far the most important. It is also the point which is likely to be most criticised by opponents of the decision. In order to consider it, we need to consider the main points that led the court to this conclusion, which were as follows:

1. While the court agreed with the first instance judge that there were genuine issues of public concern contained in the allegations, NDAs play an “important and legitimate role … in the consensual settlement of disputes, both generally but in particular in the employment field”;
2. The settlement agreements were not procured by bullying, harassment or undue pressure, and the employees each had independent legal advice in relation to those agreements;
3. The NDAs permitted disclosure to authorities, such as the police;
4. Some of the employees themselves wished to maintain confidentiality in relation to the disputes with their former employer, and two of those employees even supported the claimants’ application for an injunction;
5. The settlement agreements put an end to litigation and enabled the employees to receive substantial payments.

Granting the injunction – “Likely” to succeed

The court decided that it was likely that the claimants would establish at trial that the information that The Telegraph sought to publish was obtained in breach of confidence, including in breach of the NDAs, and that the claimants would defeat any public interest defence. The court then exercised its discretion to grant an injunction, bearing in mind the potentially “immediate, irreversible and substantial harm to the Claimant companies due to adverse customer reaction.”

There is much authority on the meaning of the word “likely”. The word requires more than “real prospect of success” but does not mean “more likely than not”, “probably” or “more probable than not”. It is not necessary to show that the claim has greater than 51% chances of success. The court cut through this and said that “At this interlocutory stage, it is enough for us to conclude, as we do, that there is a sufficient likelihood of the Claimants defeating a public interest defence at trial, to justify the grant of an interim injunction. It is not necessary for us to state the precise degree of probability of the Claimants’ success.” A clearly relevant consideration is that if the injunction was not granted, and the claimants won at trial, the victory would be pyrrhic.

So, in order to obtain an injunction restraining a publisher from publishing information pending a trial, a claimant needs to show that in the circumstances there is a “sufficient likelihood” to justify the injunction. This will inevitably be a balancing exercise that will be different in each case.

The implications for NDAs dealing with allegations of sexual misconduct

The first point is that the court will give significant weight to the fact that two parties have agreed to settle their differences confidentially and out of court. Settlement agreements are designed to bring disputes to a definite end, which may be impossible if the spectre of one party passing their story to the press remains. This principle will be welcomed by litigators and their clients alike.

The second point is that NDAs must be used responsibly. They should not be used to cover up illegal behaviour, or to prevent the reporting of conduct to the relevant authorities. It is inherently sensible to ensure that both parties have suitable, independent legal advice.

Thirdly, this case relates to an interim injunction. The court has directed a speedy trial, meaning that if The Telegraph is able to prove that it did not receive the information in breach of the NDAs, or that it is able to show that publication is in the public interest, the information can be published and the NDAs will be overridden.

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