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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> London Regional Transport & Anor v Mayor Of London & Anor [2001] EWCA Civ 1491 (24 August 2001)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/1491.html
Cite as: [2003] EMLR 4, [2001] EWCA Civ 1491

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Neutral Citation Number: [2001] EWCA Civ 1491
Case No: PTA+A 01/1843/A2

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION (MR JUSTICE SULLIVAN)

Royal Courts of Justice
Strand,
London, WC2A 2LL
Friday 24 August 2001

B e f o r e :

LORD JUSTICE ALDOUS
LORD JUSTICE ROBERT WALKER
and
LORD JUSTICE SEDLEY

____________________

(1) LONDON REGIONAL TRANSPORT
(2) LONDON UNDERGROUND LIMITED
Appellants
- and -

(1) THE MAYOR OF LONDON
(2) TRANSPORT FOR LONDON
Respondents

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(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)

____________________

Miss Elizabeth Appleby QC and Miss Janet Kentridge (instructed by the Solicitor to LRT for the appellants)
Lord Lester of Herne Hill QC and Mr Thomas de la Mare (instructed by Baker & McKenzie for the respondents)

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    LORD JUSTICE ROBERT WALKER:

    Introduction

  1. This is an application for permission to appeal, with the appeal to follow if permission is granted. The applicants are London Regional Transport ("LRT") and its wholly-owned subsidiary London Underground Ltd ("LUL"). LRT is a body corporate established by the London Regional Transport Act 1984 as successor to the London Transport Executive. LUL provides public passenger services, by the London Underground railway network, in Greater London.
  2. Public transport in London is in a process of fundamental change, and this litigation is concerned with one aspect of the debate about that process. This litigation has overlapped (both in time and in subject-matter) with more far-reaching judicial review proceedings. Sullivan J gave judgment in the judicial review proceedings on 30 July 2001 and on the following day he made the order in these proceedings from which LRT and LUL wish to appeal. It was in form an interim order, but for practical purposes it resembled a final order.
  3. The primary legislation under which the changes are taking place is the Greater London Authority Act 1999 ("the 1999 Act"). As is well-known, the 1999 Act provided for London to have an elected mayor to lead the Greater London Authority and the first defendant in the proceedings is the Mayor of London, Mr Kenneth Livingstone ("the Mayor") who was elected on 3 May 2000. The second defendant is Transport for London ("TfL"), a body corporate established when s.154 of the 1999 Act came into force on 8 May 2000.
  4. The Mayor is the Chairman of TfL. It employs as its Commissioner Mr Robert R Kiley, whose appointment in October 2000 received wide publicity. He is well known as having achieved success in improving the public transportation systems of New York and Boston and very many Londoners hope that he will have comparable success in London. From 8 May 2001 until 17 July 2001 Mr Kiley was also chairman of LRT. On the latter date the Secretary of State summarily removed Mr Kiley from that office. At that time he was about to present to the board of LRT a report prepared by Deloitte and Touche ("Deloittes") entitled 'Transport for London: London Underground Public-Private Partnership Emerging Findings' ("the Deloittes report").
  5. Mr Kiley sent a copy of the Deloittes report to his successor as chairman of the board of LRT but did not have the opportunity of presenting it to the board himself. Instead, on 18 July, the Mayor announced his intention of publishing the contents of the report at a press conference at 2pm that day. Very shortly before the press conference was to be held Burton J granted an interim injunction in what were then intended proceedings (the claim form was issued on 19 July) restraining the defendants from publishing or otherwise disclosing the contents of the Deloittes report, and requiring them to identify the passages which they wished to publish.
  6. This injunction (which was to restrain breach of confidence) was granted after a hearing at which both sides were represented but it is common ground that the hearing was severely limited by time constraints. The order of Burton J was to have effect for seven days. On 24 July Sullivan J continued the injunction until after a full hearing which was to take place on 30 or 31 July, after he had given judgment in the judicial review proceedings.
  7. On 31 July Sullivan J discharged the injunction on the defendants' undertaking not to publish any part of the Deloittes report except in a particular redacted version, identified by an exhibit to a witness statement of Mr Kiley. However Sullivan J stayed his order until close of business on 21 August 2001 and the stay has been extended by this court. It is from that order of Sullivan J that LRT and LUL wish to appeal.
  8. The Public-Private Partnership

  9. After that quick sketch of the course of the litigation it is necessary to go back to the 1999 Act and identify some of its main features, especially as regards the Public-Private Partnership ("PPP") proposed for the London Underground. This is a very complex and controversial subject which was fully considered by Sullivan J in his judgment in the judicial review proceedings (from which there is, it seems, to be no appeal). It is inappropriate to go far into the issues in the judicial review proceedings, although Sullivan J's judgment in those proceedings is required reading for a full understanding of the political background. It also provides a valuable introduction to the opaque provisions of Part IV, Chapter VII of the 1999 Act (relating to the PPP). It is necessary to give some explanation of the PPP in order to see how the issue of breach of confidence arises, and to form a view about the strength of the public interest defence.
  10. The general scheme of the 1999 Act, as regards the London Underground, was that LRT was at the end of a transitional period (beginning on 3 July 2000) to be replaced by TfL. The end of the transitional period was not a fixed date, but was to be when LRT ceased to provide public passenger transport services. LUL was not to disappear but its functions were to be restricted (from 1 April 2000) to the operation of underground railway services (as distinct from the provision, construction, renewal and maintenance of the track and all the other infrastructure of the underground railway system).
  11. The latter functions are to be the private element of the PPP, involving the investment of many billions of pounds from the private sector. In order to prepare for this separation of functions LUL in February 2000 established three wholly-owned subsidiaries ("the Infracos"). They are Infraco BCV Ltd, Infraco JNP Ltd and Infraco Sub-surface Lines Ltd. 'BCV' refers to the Bakerloo, Central, Victoria and Waterloo & City Lines. 'JNP' refers to the Jubilee, Northern and Piccadilly Lines. All these lines are together called the deep tube lines. The third Infraco covers the Circle, District, East London, Hammersmith & City and Metropolitan Lines, which run either close to the surface or on the surface. The establishment of the Infracos, the implementation of the London Underground Infrastructure Companies Asset Transfer Scheme 2000 and the making of three Infraco service contracts dated 28 March 2000 achieved, from 1 April 2000, a separation of functions, assets, workforce and management without (at that stage) any change in ultimate ownership or control.
  12. The separation of ownership will come when (as is intended) LUL sells the shares in the three Infracos to successful private-sector bidders. Negotiations with a view to these disposals will also cover renegotiation of the existing Infraco service contracts (running for a term of 30 years) and the grant to the Infracos of 30-year leases of the infrastructure assets to which their respective service agreements relate. In the terminology of Part IV, Chapter VII of the 1999 Act the Infracos will become PPP companies, the service agreements will become PPP agreements and the leases will be PPP leases.
  13. The revised timetable for the introduction of the PPP is set out in the particulars of claim (served on 30 July). In October 1999 prequalification of the bidders for the deep line competitions took place and invitations to tender were issued. Tenders were submitted in March 2000 and short-listing of bidders in the two deep line competitions took place in July 2000. In September 2000 a similar process began for the subsurface lines. Short-listed deep line bidders had to submit their best and final offers in November 2000, followed by a period of due diligence and the submission of re-priced proposals in January 2001. The preferred bidders in the two deep line competitions were announced on 2 May 2001, and the preferred bidder for the sub-surface lines is expected to be announced in the near future.
  14. Sullivan J has explained in his judgment in the judicial review proceedings that the Government had originally planned to have a timetable under which the competitions would have started before the end of 1998 and would have been completed, and finalised by completion of PPP contracts and leases, by April 2000 (that is, before TfL came into existence and before the new Mayor of London was in office). During the passage of the Bill it became apparent that that could not be achieved. That led to amendments, introducing the concept of the transitional period, which were enacted as Part IV, Chapter XVI of the 1999 Act (Sullivan J described ss.297 and 298, in Chapter XVI, as being of critical importance to the judicial review proceedings).
  15. Mr Kiley's appointment as chairman of LRT came within days of the announcement of the preferred bidders. He was appointed in order to lead negotiations with them as to the final terms of the PPP contracts (including PPP leases). In the negotiations he was required to observe 'key criteria' which were set out in a memorandum of agreement between the Government and TfL. But on 29 June Mr Kiley wrote to the Prime Minister stating that in his view the PPP project was not feasible:
  16. "With most considerable regret, I write to advise you that I have concluded it will not be possible to agree a contract structure with the PPP bidders consistent with the provisions of our 4 May Memorandum Agreement.
    Accordingly, I believe the only option consistent with sound public policy is to terminate the existing procurement. If this action is taken now, it need not lead to any delay in rebuilding the Underground. We can begin immediately to deliver new project specific procurements that maximise private sector involvement in the rebuilding of the Underground."

    The Prime Minister's reply dated 5 July indicated that the PPP was to proceed, and within a fortnight Mr Kiley was removed from office as chairman of LRT.

    The debate about 'Value for Money'

  17. Mr Kiley's removal from office may have come as a surprise to the general public, but it was a natural and perhaps even predictable outcome of the political controversy about the introduction of the PPP. This case is concerned with law, not politics, but the serious political issues about how to fund the modernisation of the London Underground are highly relevant to the legal issues concerned with breach of confidence. It is therefore appropriate to go back in time again and identify the salient features of the developing political controversy.
  18. The Government announced its policy of PPP for the London Underground in a statement in the House of Commons made by the Deputy Prime Minister on 20 March 1998, followed by the publication of the White Paper 'A Mayor and Assembly for London' (chapter 5 of which dealt with transport in London). LUL established a PPP team in June 1998. It published a notice about tenders in the Official Journal of the European Community, held a conference and took soundings. A summary of these was published in November 1998 and on 2 December 1998 the Bill (which after a good deal of amendment became the 1999 Act) was introduced into the House of Commons. It received the Royal Assent on 11 November 1999. The transitional provisions in Part IV, Chapter XVI recognised that the Mayor was going to be in office, and TfL was going to be in existence, before the PPP for the London Underground was fully in place.
  19. The Mayor had a statutory responsibility (under sections 41 and 142) to prepare and publish a transport strategy containing his policies (section 141(1) "for the promotion and encouragement of safe, integrated and efficient and economic transport facilities and services to, from and within Greater London". In October 2000 (the month in which Mr Kiley was appointed as Commissioner of TfL) the Mayor published the first draft of his transport strategy for consultation with a limited number of consultees. It was very critical of the PPP plan for the London Underground. It proposed an issue of bonds as an alternative means of financing capital expenditure.
  20. In December 2000 Mr Kiley reported to the Mayor. He too was critical of the PPP proposals. His report was published on 11 January 2001 as an annex to the second draft of the transport strategy for public consultation. In a foreword Mr Kiley stated:
  21. "You have asked me, as Commissioner of Transport for London (TfL), to review the London Underground's proposed PPP for the Underground railway system. I have concluded that the basic structure of the PPP is fatally flawed, that it is not an effective way to restore the London Underground to a state of good repair, and that it will not promote an improvement in the service being offered to Londoners."

    Mr Kiley elaborated his criticisms in a long and detailed letter dated 27 April 2001 to Sir Malcolm Bates, then chairman of LRT. That letter was in evidence before Sullivan J and is in the public domain. The transport strategy was finally published on 10 July, shortly before Mr Kiley's removal as chairman of LRT.

  22. Government policy has consistently required two fundamental conditions to be satisfied before the PPP for the London Underground is carried into effect. One is concerned with safety and the other with value for money (referred to in many of the documents as VFM). Both are of the utmost importance, but the Deloittes report is concerned solely with value for money. Mr Livingstone's witness statement records that when he (in common with other mayoral candidates) gave evidence to the House of Commons Select Committee on Environment, Transport and Regional Affairs he undertook to examine the PPP proposals with an open mind and to support them if the tests of safety and value for money were clearly satisfied.
  23. The process of securing value for money is described in a report by the Comptroller and Auditor General presented to the House of Commons on 15 December 2000. This report ("the NAO report") is entitled 'The financial analysis for the London Underground Public Private Partnerships'. Paragraph 13 of the NAO report gives a very simplified description of a very complicated process:
  24. "Value for money depends on a wide range of factors. Analysis of the financial implications of different options is one factor. This financial analysis typically involves three elements:
    The preparation of a Public Sector Comparator. A Public Sector Comparator is a benchmark against which value for money is assessed. It is typically a cost estimate based on the assumption that assets are acquired through conventional funding and that the procurer retains significant managerial responsibility and exposure to risk;
    an evaluation of bids, which produces estimated costs of the private sector option;
    and a comparison between the two sets of costs."

    An idea of the complexity can be obtained from the list of sixteen appendices to the Deloittes report (all but one of which were excluded from the redacted version prepared by Mr Kiley).

    The confidentiality agreements and the Deloittes report

  25. The competitions organised by LUL resulted in its receiving a large volume of information which was commercially sensitive and confidential. The arrangements made by LUL to protect this confidentiality are described in paragraph 16 of the particulars of claim:
  26. "All information and documentation pertaining to the PPP competitions, the bids and the bidders was kept in a room at LUL headquarters ("the LUL Bid Room"). The information and documents kept in the room included information which was highly confidential to the parties who had supplied the information and documents. LUL had concluded written agreements with the respective bidders recognising that such information is of a proprietary and confidential nature. The agreements obliged each party to receive and keep the relevant information in strictest confidence and precluded the parties from using the information other than for the agreed purposes of: (a) on the part of the bidders, conducting and concluding with LUL any necessary negotiation for the Infraco Service Contract; or (b) on the part of LUL, evaluating, negotiating and concluding an Infraco Service Contract with the bidder."
  27. LRT and LUL rely on two written confidentiality agreements. One ("the February agreement") was made on 8 February 2001 between (1) LUL and (2) TfL. The other ("the July agreement") was made on 6 July 2001 between (1) LRT (2) LUL and (3) TfL. Both agreements refer to section 298 of the 1999 Act and it is appropriate to set out subsections (3) to (5):
  28. "(3) In discharging their functions during the transitional period it shall be the duty of
    (a) the Mayor
    (b) London Regional Transport, and
    (c) Transport for London,
    to consult and co-operate with each other for any transitional purpose.
    (4) The following provisions of this section have effect for the purpose of facilitating the discharge of the duty of co-operation imposed on London Regional Transport and Transport for London by subsection (3) above.
    (5) London Regional Transport and Transport for London shall each provide to the other such information as may reasonably be required by that other for the purpose of discharging any of its functions during the transitional period."

    'Transitional purpose' is defined in subsection (1) as including the making of PPP agreements and the transfer of functions, property and rights to TfL.

  29. The February agreement was framed by reference to individual agreements signed by every individual who had access to the LUL Bid Room:
  30. "TfL agrees that any information it receives from Mr Robert Kiley or named members of his team with access to the LUL Bid Room in accordance with the Personal Confidentiality Agreement signed by the aforementioned persons shall be subject to the terms and conditions set out in this agreement attached hereto."

    The February agreement then set out three conditions:

    "1. All information related to the review of bids ("Relevant Information" ) being undertaken by Robert Kiley and named individuals of his team must be held in the strictest confidence and not used for any purpose other than for the purpose of enabling TfL and the Mayor to discharge their duties pursuant to Section 298(3) of the Greater London Authority Act 1999.
    2. All persons ("Relevant Persons"), who have access to the LUL Bid Room are required to sign an acknowledgement in the form attached to this agreement.
    3. TfL shall, and shall procure that Relevant Persons shall, use best endeavours at all times to ensure that in using the advice provided by Robert Kiley or named individuals of his team none of the current LUL PPP competitions are undermined by revealing information relating to the competition which, if revealed to bidders, could distort the competitions."

    The annexed form of individual agreement was in similar terms, together with practical details about notes, laptops, and so on.

  31. The July agreement was a more elaborate document but the claimants have not put it in the forefront of their case. The reason for that seems to be that although the July agreement contained (in clause 2.1) a lengthy and detailed definition of 'Confidential Information' (on which the whole agreement turns) that definition ends with the words
  32. "but for the purposes of this Agreement shall exclude all information relating to the review of the PPP bids, and the negotiations with bidders to conclude the PPP contracts."
  33. The Deloittes report was commissioned by Mr Kiley on behalf of TfL. There was an engagement letter dated 30 May 2001 followed by a formal consultancy agreement dated 20 June. Eleven individuals from Deloittes had access to the LUL Bid Room in the course of preparation of the report. They also had meetings with LUL and its financial advisers, Price Waterhouse Coopers ("PWC"). The report was delivered in an interim form, as its title ('Emerging Findings') indicates. In a letter accompanying the report Deloittes made clear that their work had been limited by the time and information available.
  34. In his first witness statement Mr Kiley referred to the report and to his redaction of it:
  35. "In order to prepare the Report Deloitte & Touche did indeed need to access LUL's "Data Room". The Data Room is the site where all information relating to the various bids as well as the PSC [Public Sector Comparators] models are kept. I believe that Deloitte & Touche signed the standard confidentiality undertaking that was prepared by LUL, as all other parties having access to the Data Room, including myself, routinely did.
    Necessarily, such detailed bidding information in the Data Room is highly confidential. As is obvious were, say, one competitor in the tendering process to learn of some details of a rival bid, it could 'trim' its bid accordingly. Any such unfairnesses could taint any selection process and lead to legal action against LUL or other parties. I have at all times been acutely aware of such sensitivities and have never proposed or considered disclosing information of this kind. I have never proposed to disclose any part of the Report that did not pay heed to and preserve such genuine commercial confidences. "
  36. The Deloittes report was very critical of the value for money exercise which LUL and its advisers had been conducting. The thrust of the criticisms appears from the 'bullet points' in the executive summary:
  37. "(1) Neither the 30 years nor the 7 year comparison provides a satisfactory basis for establishing VFM.
    (2) Highly material adjustments to the PSC are judgmental, volatile or statistically simplistic.
    (3) Some of the statistical analysis is arbitrary and could be misinterpreted by the reader.
    (4) Selection of preferred bidders too early in the process could lead to a materially adverse impact on VFM.
    (5) The financial advantages of selecting [deleted itself a code name for one of the bidders] as the [deleted] preferred bidder depends upon judgmental adjustments.
    (6) Public sector bond financing has been largely dismissed."

    PSC refers to Public Sector Comparators. The reference to 7 years reflects the fact that the PPP contracts were to be open to renegotiation after that period (and again after 15 and 22 years). I should perhaps add that it would be an understatement to say that much of the Deloittes report is not easy reading for anyone who lacks expert knowledge of statistics and probability theory, including the intriguingly named technique of Monte Carlo simulation.

  38. The Deloittes report has in turn been subject to strong criticism. In a commentary on the report exhibited to the second witness statement of Mr Martin Callaghan (LUL's PPP Director) PWC have described it as containing "inaccuracies, misunderstandings and apparently unsubstantiated statements", as selective and unbalanced, and as criticising adjustments as judgmental while failing to acknowledge "that judgement is an essential part of bid assessment".
  39. THE JUDGMENT OF SULLIVAN J

  40. Sullivan J gave judgment on the afternoon of the last day of term and it was not possible for him to set out the background at length. He had already covered it very fully in his judgment in the judicial review proceedings. He recorded the claimants' wish to restrain publication of the Deloittes report even in its redacted form, and their submission that because of the confidentiality agreements the court had no option but to prevent disclosure. The defendants' position was that even if (which was not accepted) there would be a breach of a duty of confidence in publication of a redacted version, there was a strong public interest in publication as a contribution to the important debate about PPP for the London Underground.
  41. The judge rejected the argument that he had no discretion. He referred to various authorities including the recent decision of Sir Andrew Morritt V-C in Imutran v Uncaged Campaigns [2001] 2 AER 385. That was a case in which the defendants, campaigners against animal experimentation, had received a large number of confidential documents relating to the claimant's research into xenotransplantation. These included laboratory reports, minutes of meetings, and correspondence in various categories. The Vice-Chancellor continued until trial interim injunctions restraining breach of copyright and breach of confidence (with an exception for disclosure to regulatory authorities).
  42. The Vice-Chancellor summarised the court's approach to this type of injunctive relief, apart from s.12 of the Human Rights Act 1998 ([2001] 2 AER at p.390, paragraph 15):
  43. "Until the decision of the House of Lords in American Cyanamid Co v Ethicon Ltd [1975] AC 396 it was generally considered that an applicant for interlocutory relief had to show a strong prima facie case (cf Hubbard v Vosper [1972] 2 QB 84 at 96). In the American Cyanamid case the House of Lords substituted for the strong prima facie case the concept of 'a serious question to be tried' or 'a real prospect of succeeding in his claim to a permanent injunction at the trial'. That threshold test is amplified in cases in which the grant or refusal of an interim injunction would have the practical effect of putting an end to the action. In such a case the strength or otherwise of the claimant's case (in excess of the threshold of a serious question to be tried) must be brought into the balance in weighing the risk of injustice to either party by the grant or refusal of the injunction sought (see NWL Ltd v Woods [1979] 1 WLR 1294)."
  44. The Vice-Chancellor then set out the material parts of s.12 of the Human Rights Act 1998:
  45. "(1) This section applies if a court is considering whether to grant any relief which, if granted, might effect the exercise of the Convention right to freedom of expression
    (3) No such relief is to be granted so as to restrain publication before trial unless the court is satisfied that the applicant is likely to establish that publication should not be allowed.
    (4) The court must have particular regard to the importance of the Convention right to freedom of expression "
  46. He concluded (as he had previously done in Ashdown v Telegraph Group [2001] 2 WLR 967 at p.980) that the language of s.12(4) required the court to consider the importance of the Convention right "specifically and separately" but not to accord it more weight than the considerable weight which the court has always placed on free speech. On the appeal in Ashdown v Telegraph Group, 18 July 2001, [2001] EWCA Civ 1142, this court did not find it necessary to comment on the Vice-Chancellor's view of s.12(4).
  47. In his judgment in Imutran v Uncaged Campaigns the Vice-Chancellor then turned to breach of confidence (pp.391-2, paras 20-1):
  48. "I have been referred to the well-known line of cases consisting of Initial Services Ltd v Putterill [1968] 1 QB 396, Hubbard v Vosper [1972] 2 QB 84, Francome v Mirror Group Newspapers Ltd [1984] 1 WLR 892, Lion Laboratories Ltd v Evans [1985] QB 526, Re a Company's application [1989] Ch 477 and A-G v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109. Each of them demonstrates that the public interest in disclosure may outweigh the right of the plaintiff to protect his confidences. They demonstrate that the court will also consider how much disclosure the public interest requires; the fact that some disclosure may be required does not mean that disclosure to the whole world should be permitted.
    In addition the 1998 Act requires the court, as a public authority, to take into account the right of freedom of expression conferred by art 10 of the convention. That provides:
    'Freedom of expression
    1. Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers. This article shall not prevent States from requiring the licensing of broadcasting, television or cinema enterprises.
    2. The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society, in the interests of national security, territorial integrity or public safety, for the prevention of disorder or crime, for the protection of health or morals, for the protection of the reputation or rights of others, for preventing the disclosure of information received in confidence, or for maintaining the authority and impartiality of the judiciary.'
    The effect of that article for present purposes is that any injunction, which by definition is a restriction on the exercise of the right to freedom of expression, must be justified as being no more than is necessary in a democratic society."
  49. After some other citations from the Vice-Chancellor's judgment Sullivan J referred to a textbook, Confidentiality, by Sir Roger Toulson and C M Phipps, published in 1996 (and so antedating the Human Rights Act 1998). Chapter 6 of that work contains a detailed examination of the public interest defence, and in particular the nature of the public interest justifying what would otherwise be a breach of confidence. The authors cite a passage from the speech of Lord Goff in the Spycatcher case, A-G v Guardian Newspapers (No 2) [1990] 1 AC 109, 282, which was also quoted (in part) by Sullivan J:
  50. " although the basis of the law's protection of confidence is that there is a public interest that confidences should be preserved and protected by the law, nevertheless that public interest may be outweighed by some other countervailing public interest which favours disclosure. This limitation may apply, as the learned judge pointed out, to all types of confidential information. It is this limiting principle which may require a court to carry out a balancing operation, weighing the public interest in maintaining confidence against a countervailing public interest favouring disclosure.
    Embraced within this limiting principle is, of course, the so called defence of iniquity. In origin, this principle was narrowly stated, on the basis that a man cannot be made "the confidant of a crime or a fraud": see Gartside v Outram (1857) 26 L.J.Ch. 113, 114, per Sir William Page Wood V-C. But it is now clear that the principle extends to matters of which disclosure is required in the public interest: see Beloff v Pressdram Ltd [1973] 1 All E.R. 241, 260, per Ungoed-Thomas J, and Lion Laboratories Ltd v Evans [1985] QB 526, 550, per Griffiths LJ. It does not however follow that the public interest will in such cases require disclosure to the media, or to the public by the media. There are cases in which a more limited disclosure is all that is required: see Francome v Mirror Group Newspapers Ltd [1984] 1 WLR 892. A classic example of a case where limited disclosure is required is a case of alleged iniquity in the Security Service."
  51. The authors of Confidentiality emphasise Lord Goff's repeated formulation of disclosure being required in the public interest. They submit (paragraph 6-11) that
  52. " the true principle is not (as dicta in some cases suggest) that the court will permit a breach of confidence whenever it considers that disclosure would serve the public interest more than non-disclosure, but rather that no obligation of confidence exists in contract or in equity, in so far as the subject matter concerns a serious risk of public harm (including but not limited to cases of "iniquity") and the alleged obligation would prevent disclosure appropriate to prevent such harm."
  53. Sullivan J described this (and the claimant's reliance on some observations of Sir George Jessel MR in Printing and Numerical Registering Co v Sampson (1875) 19 Eq 462, 465, a case concerned not with confidence but with an attempt to establish a new head of public policy) as the high water mark of the claimants' case. He went on to refer to other authorities, including the decisions of this court in Lion Laboratories v Evans [1985] QB 526 and Queen v Department of Health ex parte Source Informatics [2000] 1 AER 786.
  54. In Lion Laboratories v Evans the manufacturers of electronic breath-testing equipment sought to restrain breaches of confidence by former employees who had abstracted confidential internal documents casting doubt on the accuracy of the equipment and passed them to journalists. This court allowed the newspapers' appeal against an interim injunction. O'Connor LJ said at p.548:
  55. "Everything depends upon the facts of the case; thus the court will not restrain the exposure of fraud, criminal conduct, iniquity; but these are only examples of situations where the conflict will be resolved against the plaintiff. I do not think that confidence can be overridden without good reason to support the contention that it is in the public interest to publish. The plaintiff will not necessarily be seeking to prevent publication of matters derogatory to himself, but nevertheless there may be circumstances that make it just not to restrain publication."

    Griffiths LJ said at p.550:

    "I can see no sensible reason why this defence should be limited to cases in which there has been wrongdoing on the part of the plaintiffs. I believe that the so-called iniquity rule evolved because in most cases where the facts justified a publication in breach of confidence, it was because the plaintiff had behaved so disgracefully or criminally that it was judged in the public interest that his behaviour should be exposed. No doubt it is in such circumstances that the defence will usually arise, but it is not difficult to think of instances where, although there has been no wrongdoing on the part of the plaintiff, it may be vital in the public interest to publish a part of his confidential information."
  56. In Source Informatics the issue was whether pharmacists would be in breach of confidence in passing to a commercial organisation anonymised information as to doctors' prescribing habits. Simon Brown LJ (with whom Aldous and Schiemann LJJ agreed) reviewed the authorities on the four main areas in which the law has traditionally protected confidential information: trade secrets, personal confidences, government information, and artistic and literary copyright. He cited the judgment of Bingham LJ in the Spycatcher case (1990 1 AC 109, 215):
  57. "The cases show that the duty of confidence does not depend on any contract, express or implied, between the parties. If it did, it would follow on ordinary principles that strangers to the contract would not be bound. But the duty "depends on the broad principle of equity that he who has received information in confidence shall not take unfair advantage of it". Seager v Copydex Ltd [1967] 1 WLR 923 at 931 per Lord Denning MR. "The jurisdiction is based, not so much on property or on contract, but rather on the duty to be of good faith": Fraser v Evans [1969]1 QB 349 at 361 per Lord Denning MR."

    From this Simon Brown LJ derived the test (at p.796) of whether the confidant's conscience would (or should) be troubled by disclosure of the confidence. Simon Brown LJ also recognised (at p.800)

    "the importance of confining any public interest defence in this area of the law within strict limits lest, as Gummow J put it at first instance in Smith Kline & French Laboratories (Australia) Ltd v Secretary to the Dept of Community Services and Health, [1990] FSR 617 at 663, it becomes 'not so much a rule of law as an invitation to judicial idiosyncrasy by deciding each case on an ad hoc basis as to whether, on the facts overall, it is better to respect or to override the obligation of confidence.' "
  58. Sullivan J could not see why the conscience of a reasonable Mayor, or a reasonable Commissioner of TfL, should be troubled by publication of the Deloittes report in its redacted form. Moreover he felt no doubt that the public interest required the information to be published in a redacted form, even if an exceptional case had to be made out for breaching an express contractual provision as to confidentiality. His reasoning on these points is set out in paragraphs 40 to 43 of his judgment, which deserve to be set out in full:
  59. "Upon the basis that an exceptional case has to be shown by the defendants, have they surmounted that hurdle? The answer in my judgment is emphatically "yes". The reasons are as follows:
    1. It is genuinely in the public interest that this material should be made available. This is wholly unlike cases concerned, for example, with celebrity pictures in Hello. [see Douglas v Hello [2001] 2 AER 289] Undoubtedly the public would be interested in such pictures, but it could not sensibly be suggested that there is some public interest in them being revealed. One can think of many stories that are published in the newspapers in which the public are interested. But it would be difficult for a journalist to say with a straight face that there is a public interest in them being published. Whether the Government's PPP meets the VFM test is a matter of vital concern to Londoners. There can be no doubt whatsoever that it is a matter of very considerable public interest.
    2. Having conducted the judicial review hearing between TfL and LRT/LUL over a number of days, I am only too well aware of the existence of the hotly fought political debate over the merits and demerits of the Government's form of PPP and the elected Mayor of London's alternative. As I indicated in my judgment yesterday, that dispute is a political, not a legal dispute. It has to be resolved not by judges, but by politicians through the democratic process. There is a wealth of authority to the effect that the democratic process, if it is to be effective, must be informed by freedom of information. It is vital that the Government and LUL are not seen to control the flow of information about the PPP process.
    3. I take into account the nature of the document that is proposed to be produced. This is not some item of distasteful trivia. It is not the equivalent of paparazzi photographs. It is a serious report about a matter of very considerable public interest, prepared by a highly reputable organisation, Deloittes. I would also add that it is quite different from those cases where "moles" try to publish leaked documents. In the present case, what Deloittes have done is to peruse LUL's confidential documents, but the report is their own analysis. They are not seeking to leak LUL's documents. LUL would say that they are seeking to leak information which is contained in those documents. But in my judgment the redactions to the Deloittes report meet that objection. What remains, and what would be made public, is Deloittes analysis.
    PricewaterhouseCoopers, the advisers of LUL, disagree with Deloittes. They think that the report is inaccurate and incomplete in a number of respects. They are perfectly entitled to disagree. The fact that they disagree does not mean that the report should not be made public. There is no doubt that it is a serious critique by a serious player of a matter that is of very considerable public importance. That brings me to the next point.
    4. Much of the methodology of the PPP assessment process is already in the public domain. There have been discussions before the Select Committee, the National Audit Office has reported and there have been Government statements and statements from LRT/LUL and indeed the Mayor and TfL. Thus it is not as though Deloittes are revealing some matter of which otherwise people would simply not be aware. The only conceivable objection could be that these are commercial details which would be prejudicial to the bidding process. But the redactions have removed such detail as would be inimical to the bidding process.
    5. Those seeking to release the information are, firstly, the democratically elected Mayor of London and secondly, a public servant, Mr Kiley, who is Commissioner of Transport for London. It is plain that they are not seeking to release this information for private gain. They are seeking to have the information released because they conceive it to be their public duty as Mayor for London and as the person who is going to inherit the running of London's underground system.
    It is quite clear that the criticisms made in the report of the methods of VFM assessment have been foreshadowed in correspondence by Mr Kiley. He has set out his criticisms of the methodologies employed by London Underground. I do not suggest that those criticisms are justified. It is quite obvious that LUL say that they are wholly unjustified. That is part and parcel of the political debate and that leads me to the next point, which is linked with the identities of those who are seeking to release the information.
    6. I have mentioned that this is not a case where some employee is seeking to pass confidential information to someone else for commercial gain, or where someone is trying to use confidential information to steal a march on a commercial rival. What the Defendants seek to do is to disclose matters which are of genuine public concern. To that end they have agreed to the removal of commercially sensitive material. The court should have regard to the Defendants' wholly proper motives in seeking to make the redacted version of the report available.
    7. I am not concerned with the publication of the Deloittes report in its original form, with all of the figures and identities included. I am concerned with the redacted version, which I have read, where figures and identities are blanked out.
    Bearing in mind all of these factors, it seems to me that this is a most exceptional case. It could not possibly be described as the normal, run-of-the-mill breach of confidence case, whether it is breach of an implied duty of confidence or an express duty of confidence contained in an agreement such as we have in the present case. In all the circumstances, it seems to me that LRT would have to put forward a very persuasive case of harm to outweigh the factors which I have mentioned as justifying publication in the public interest."
  60. Sullivan J did not accept that publication of the redacted version of the Deloittes report would cause significant harm to LRT, LUL or successful or unsuccessful bidders. At worst it might give some encouragement to an unsuccessful bidder to challenge the competition process. The judge did not accept criticisms of the redaction process, or the submission that the redaction would have to be reversed if LUL or PWC was to be able to refute the criticisms in the Deloittes report.
  61. Towards the end of his judgment (para 54) the judge said,
  62. "This is not a finely balanced case as between the desirability in the public interest of upholding confidentiality agreements and the public interest in freedom of access to information. For all the reasons I have indicated, the balance comes down very firmly in favour of making this information available."

    He therefore discharged the injunction, on the undertaking as to redaction, and refused permission to appeal.

    The Grounds of Appeal

  63. There are five proposed grounds of appeal, elaborated in the claimants' skeleton arguments. The first and second grounds contend that the judge misconceived his decision as no more than an exercise of discretion, and wrongly dealt with the application, not as an application for interim relief, but as if he were hearing the trial of the action. These two grounds of appeal are mutually inconsistent: they cannot both be right.
  64. In my view these two grounds are not only inconsistent. Both are wrong. Although the judge did (in his short written reasons for refusing permission to appeal) refer to his decision as just an exercise of discretion, it is clear from his careful judgment that he was well aware that it was a discretion to be exercised on well-settled principles. Those principles include the way in which a judge should approach an application for an injunction which, although interim in form, would in practice have irreversible consequences (see para 15 of the Vice-Chancellor's judgment in Imutan v Uncaged Campaigns cited in para 31 above, and para 55 of the judge's judgment). That approach is also required by s.12(3) of the Human Rights Act 1998.
  65. The third and fourth grounds of appeal criticise the judge for his approach to the express, specific provisions as to confidentiality which bound TfL under the confidentiality agreements. It is contended that in the face of provisions of that sort the judge erred in his approach in embarking on a balancing exercise, and in his reliance on Article 10(1) of the Convention. On these points the claimants rely (as they did below) on the views expressed in Toulson and Phipps, Confidentiality (para 6-11) as to the importance of freedom of contract.
  66. Sir George Jessel MR's observations about the sacredness of freedom of contract in Printing and Numerical Registering Co v Sampson (1875) 19 Eq 462, 465 are an echo of the high Victorian age in which freedom of contract was regarded with a special awe. No authority has been cited to the court establishing that an apparent breach of a contractual duty of confidence is more serious, and is to be approached differently (as regards injunctive relief) than other apparent breaches. Indeed in many cases (of which Lion Laboratories is an example) the defendants include ex-employees who had been in contractual relations with the claimant, and representatives of the press who were not bound by contract, but the court adopts the same approach to both. That is in line with the principles stated in the judgment of Bingham LJ in Spycatcher (para 39 above); and see Saltman Engineering Co v Campbell Engineering Co (1948) 65 RPC 203.
  67. The respondents suggest that the judge may in any case have been applying too stringent a test by approaching the matter on the basis (para 39 of his judgment) that it was for them to make out an exceptional case to justify publication of even a redacted version of the Deloittes report. In my view it is not necessary to consider whether the judge should have applied a less stringent test. The facts of Source Informatics were very different from those of the present case. Simon Brown LJ formulated his 'conscience' test with those facts in mind, and he recognised the dangers of a wholly unstructured discretion. On the basis of the more demanding starting point which the judge took in paragraph 40 of his judgment, his conclusions were in my view amply justified.
  68. The fifth ground of appeal is that the judge's conclusions were unreasonable in that he gave insufficient weight to the February agreement and to the individual confidentiality agreements signed by Mr Kiley and others. For reasons already stated I regard that ground of appeal as hopeless. Although I have dealt with the matter at some length, I have really added little to the judge's admirable judgment.
  69. In her supplementary skeleton argument and her oral submissions Miss Elizabeth Appleby QC (appearing with Miss Janet Kentridge for the claimants) has accepted the need for proportionality in any restraint on freedom of expression if the restraint is to be justifiable under Article 10(2) of the Convention. But she has submitted that the express terms of the confidentiality agreements, and the express and limited purposes for which they authorised disclosure of information, provide the right framework for the test of confidentiality. Otherwise, she has said, the matter comes down to an ad hoc redaction exercise with no guiding principle.
  70. That submission calls for serious consideration, but I do not accept it. The guiding principle is to preserve legitimate commercial confidentiality while enabling the general public (and especially the long-suffering travelling public of London) to be informed of serious criticism, from a responsible source, of the value for money evaluation which is a crucial part of the PPP for the London Underground. That is a very important public interest which goes far beyond the transitional purposes of the 1999 Act, and it is the interest which must go into the scales on proportionality.
  71. The claimants' solicitor has in open correspondence put forward some further proposed redactions of the Deloittes agreement. These were discussed at some length during the hearing, although they are an obvious departure from the claimants' stance before the judge. They might be seen as a last-minute construction of a last-ditch defence. But I am impressed by Mr Kiley's evidence (in section D of his first witness statement) as to the logical and careful way in which he carried out his process of redaction. I am not persuaded that any further redaction is required in order to safeguard commercial confidentiality. I note that PWC came close to that view in their letter of 26 July 2001.
  72. For these reasons I would dismiss the application for permission to appeal.
  73. LORD JUSTICE SEDLEY

  74. I am in full agreement with the reasoning and conclusions of Robert Walker LJ. The discharge of the injunction by Sullivan J is justified on the straightforward ground that there is nothing of genuine commercial sensitivity in the redacted version of the Deloittes report and nothing therefore to justify the stifling of public information and debate by the enforcement of a bare contractual obligation of silence. All of this, as the authorities cited by Robert Walker LJ demonstrate, is grounded directly in equity and the common law.
  75. But equity and the common law are no longer the only relevant sources of law in this field. Both sides have predicated much of their argument on the impact of the Human Rights Act 1998. This is not the occasion to follow the arguments down their inviting byways, but it may be material to explain why I consider that the Convention rights which the Act introduces lend force to Robert Walker LJ's conclusion.
  76. Article 10 of the European Convention on Human Rights is not just about freedom of expression. It is also about the right to receive and impart information, a right which (to borrow Lord Steyn's metaphor in R v Home Secretary, ex parte Simms [2000] AC 115, 126) is the lifeblood of a democracy. The Deloittes report is on one view a set of contested opinions about the bidding process; but on another it is an expert and adverse evaluation of it, the very fact of which is of public importance. Whether or not undertakings of confidentiality had been signed, both domestic law and Art. 10(2) would recognise the propriety of suppressing wanton or self-interested disclosure of confidential information; but both correspondingly recognise the legitimacy of disclosure, undertakings notwithstanding, if the public interest in the free flow of information and ideas will be served by it.
  77. The difficulty in the latter case, as Miss Appleby's argument has understandably stressed, is to know by what instrument this balance is to be struck. Is it to be, in Coke's phrase (4 Inst. 41), the golden and straight metwand of the law or the incertain and crooked cord of discretion? The contribution which Art. 10 and the jurisprudence of the European Court of Human Rights can make towards an answer is, in my view, real.
  78. It lies in the methodical concept of proportionality. Proportionality is not a word found in the text of the Convention: it is the tool the metwand - which the Court has adopted (from 19th-century German jurisprudence) for deciding a variety of Convention issues including, for the purposes of the qualifications to Arts. 8 to 11, what is and is not necessary in a democratic society. It replaces an elastic concept with which political scientists are more at home than lawyers with a structured inquiry: Does the measure meet a recognised and pressing social need? Does it negate the primary right or restrict it more than is necessary? Are the reasons given for it logical? These tests of what is acceptable by way of restriction of basic rights in a democratic society reappear, with variations of phrasing and emphasis, in the jurisprudence of (among others) the Privy Council, the Constitutional Court of South Africa, the Supreme Court of Zimbabwe and the Supreme Court of Canada in its Charter jurisdiction (see de Freitas v Ministry of Agriculture [1999] 1 AC 69, 80, PC), the courts of the Republic of Ireland (see Quinn's Supermarket v A-G [1972] IR 1) and the Court of Justice of the European Communities (see Art. 3b, Treaty on European Union; Bosman [1995] ECR I-4921, 110).
  79. It seems to me, with great respect, that this now well established approach furnishes a more certain guide for people and their lawyers than the test of the reasonable recipient's conscience. While the latter has the imprimatur of high authority, I can understand how difficult it is to give useful advice on the basis of it. One recipient may lose sleep a lot more readily than another over whether to make a disclosure, without either of them having to be considered unreasonable. If the test is whether the recipient ought to be losing sleep, the imaginary individual will be for practical purposes a judicial stalking-horse and the judgment more nearly an exercise of discretion and correspondingly less predictable. So for my part I find it more helpful today to postulate a recipient who, being reasonable, runs through the proportionality checklist in order to anticipate what a court is likely to decide, and who adjusts his or her conscience and conduct accordingly.
  80. It may not be in every dispute that this formula is able to be adopted. The argument about the extent of horizontal application (or cascade effect as I would rather call it) of Convention rights under the Human Rights Act is not resolved. But there are two distinct reasons why both sides have rightly argued from the Convention in the present case.
  81. One is that all four parties are public authorities within the meaning of s.6 - LRT as a statutory body providing public passenger services, LUL probably by virtue of s.6(3)(b). This status may not matter in the case of the defendants (since private individuals will in principle enjoy the same protection), but it certainly matters in the case of the claimants, since s.6 makes it unlawful for them to act incompatibly with the Convention rights. That, as it seems to me and as Miss Appleby QC has accepted in argument, means that they may neither contract out of the Act nor use their powers to stifle the Convention rights of others. Rightly, Miss Appleby does not suggest that s.298(2) of the GLAA 1999, which places LRT under a duty to do whatever it considers appropriate for any transitional purpose, qualifies this proposition. On the contrary, as it seems to me, s.3(1) of the Human Rights Act 1998 produces an opposite effect: it qualifies what LRT may consider appropriate. It follows, in the absence of any meaningful threatened breach of confidentiality, that it is unlawful by virtue of s.6(1) of the Human Rights Act 1998 for either claimant to seek, whether by contract or by lawsuit, to interfere with Art. 10 rights whether those of the defendants or those of the public. I stress the latter because the illegality created by s.6 seems to me to be independent of the individualised provision for bringing or defending proceedings contained in s.7, and to carry one straight to the judicial obligation created by s.8(1) to make such order as the court considers just and appropriate in relation to any unlawful act of a public authority. That, in my judgment, is what Sullivan J did by discharging the injunction.
  82. Secondly, while it does not necessarily follow from the court's own status as a public authority (s.6(3)(a)) that all its judgments have without more to be Convention-compliant (the issue is a complex one), it does in my view follow that where it is deciding whether or not to grant an injunction its judgment must respect both the relevant Convention rights and their qualifications. S.12 of the Act would explicitly have this effect in Art.10 cases if it were not already the case by virtue of the earlier provisions of the Act and the existing doctrines of the common law. For the reasons which have been given I believe that Sullivan J acted in accordance with this principle and that this court would be lending itself to a breach of Art.10 if it were to restore the injunction.
  83. In the present case, as one would hope in most cases, the human rights highway leads to exactly the same outcome as the older road of equity and common law. But it may be that it is in some respects better signposted, and it is therefore helpful that it has played a central role in the argument.
  84. LORD JUSTICE ALDOUS

  85. I agree with both judgments. Although we are refusing permission to appeal, we are doing so after hearing full argument, and for the purposes of the recent Practice Direction (Citation of Authorities) [2001] 1 WLR 1001 we regard our judgments as making a modest extension of the law.
  86. Order
  87. Permission to appeal refused with costs to be subject to detailed assessment.
  88. Part 31.22(2) order to be made.
  89. Paras 1 and 2 of draft consent order prepared by counsel to be transposed.
  90. (Order does not form part of the approved judgment)


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