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URL: http://www.bailii.org/ew/cases/EWHC/Ch/2001/471.html
Cite as: [2002] 1 Lloyd's Rep 542, [2001] EWHC Ch 471, [2002] 1 Lloyds Rep 542

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Interbrew Sa -v- Financial Times & Ors [2001] EWHC Ch 471 (19th December, 2001)

Case No: HC 01CO3247

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL
19th December 2001

B e f o r e :

THE HONOURABLE MR JUSTICE LIGHTMAN
____________________

INTERBREW SA
Claimant
v
FINANCIAL TIMES LIMITED
INDEPENDENT NEWSPAPERS (UK) LIMITED
GUARDIAN NEWSPAPERS LIMITED
TIMES NEWSPAPERS LIMITED
REUTERS GROUP PLC
Defendants
____________________

Mr Charles Hollander QC & Mr Alan Maclean (instructed by Simmons & Simmons, CityPoint, One Ropemaker Street, London EC2Y 9SS for the Claimant)
Mr Michael Tugendhat QC, Mr Richard Parkes & Mr Jonathan Barnes
instructed by:
Farrer & Co, 66 Lincoln’s Inn Fields, London WC2A 3LH for the First Defendant.
Reynolds Porter Chamberlain, 278-282 High Holborn, London WC2 for the Second Defendant.
Ms Siobhain Butterworth, 119 Farringdon Road, London EC1 for the Third Defendant.
Ms Gill Philips, 1 Pennington Street, London E1 for the Fourth Defendant.
Clifford Chance, 200 Aldersgate Street, London EC1 for the Fifth Defendant

____________________

HTML VERSION OF APPROVED JUDGMENT
____________________

Crown Copyright ©

    Mr Justice Lightman:

    INTRODUCTION

  1. On the 20th November 2001 the Claimant Interbrew SA (“the Claimant”), a Belgian Company, received from its confidential advisers (“the Advisers”) Goldman Sachs International (“GS”) and Lazard Brothers & Co Ltd (“Lazards”) a presentation (“the Presentation”) containing highly confidential information relating to a possible takeover bid for South African Breweries (“SAB”). The existence of the Presentation itself constituted market sensitive information calculated to affect the share prices of the Claimant and SAB. Someone whose identity is unknown (“the Source”) obtained a copy of the Presentation, doctored it inserting false market sensitive information and sent doctored copies of the Presentation (“the Doctored Copies”) to (amongst others) the five defendants (“the Defendants”). The Defendants, who are substantial and reputable publishers of news, thereafter in one form or another published the existence and certain of the contents of the Doctored Copies. On the evidence before me the only likely object of the Source in doctoring the Presentation and distributing the Doctored Copies in this way was to create a false market in the shares of the Claimant and SAB, and in this he appears to have been successful. Certainly the shares in the Claimant fell in price and the price of shares in SAB and the trade in shares in SAB rose in consequence of his actions. His actions have also forced the Claimant to defer any decision whether to mount a takeover bid for SAB.
  2. There is no longer any confidentiality in the contents of the Doctored Copies. But the Claimant is anxious to obtain access to the original Doctored Copies sent to the Defendants and the envelopes in which they were sent to the Defendants and any enclosures (which I shall together refer to as “the Documents”), for it perceives there to be a pressing need to identify the Source and its professional investigators have advised that an examination of them may reveal leads in that direction. There is a pressing need because the Source poses a continuing threat so long as he remains unidentified both to the Claimant and to the security of the market in its shares and the shares in any company which may be the target of a possible takeover bid. He may be an employee of the Claimant, GS or Lazards. He may be none of these. The Claimant, GS and Lazards have each conducted internal investigations, but these have so far produced no positive results. The difficulties are accentuated by the wide circulation of the Presentation and the evolving drafts of that document within the Claimant and the Advisers. The Claimant is also conducting an investigation outside the Claimant, but this has yet to prove fruitful. On the 6th December 2001 the Claimant filed a criminal complaint with the Brussels Court of Justice (“the Belgian Proceedings”). A civil claim may be appended to these proceedings. These may or may not provide a lead. The Claimant has obtained a copy of a Doctored Copy from Lazard’s Public Relations Agency. On the 30th November 2001 the fifth defendant Reuters Group Plc (“Reuters”) provided the Claimant with a copy of their Doctored Copy. But the Claimant has yet to obtain an original Doctored Copy and none of the Defendants is willing to provide the original of what it received. The Claimant accordingly commenced this action against the Defendants on the 10th December 2001 and seeks on an interlocutory application an order for delivery up to the Claimant of the Documents for purposes of examination.
  3. On the 10th December 2001 on a without notice application the Claimant sought and was granted injunctions requiring the Defendants to preserve the Documents (together with other documents) and deliver them up for safe custody to the Defendants’ solicitors pending the return date on the 14th December 2001. On the 12th December 2001 on the application of the Defendants I discharged the order for delivery up. An expedited full hearing of the Claimant’s application took place on the 14th and 17th December 2001.
  4. The essential issue on this application is whether the Claimant’s interest in obtaining the Documents and its (and I would add the public) interest in identifying the Source is sufficiently compelling to override the Defendants and the public interest in protecting the media’s sources of information.
  5. It should be noted that, whilst GS and Lazards have stated in letters to the Claimant their support for the Claimant in this action and on this application, for undisclosed reasons they have not joined the Claimant as claimants in this action. Indeed they have given no evidence, though they could have assisted the Court by doing so and though they might be expected to have done so if their support was more than formal. Their attitude contrasts starkly with that of the Claimant, in particular when account is taken of their respective interests and causes of action. GS and Lazards surely have the highest interest in ensuring the security and freedom from leaks of the affairs of their clients as well as of their own affairs, for such security must be vital to the conduct of their business generally; and they would appear to be entitled to the copyright and accordingly the property in the Presentation and therefore the Doctored Copies. On the other hand the concern of the Claimant is limited to the security of their own affairs and their cause of action is not proprietary, but lies in the law of confidence. Though by joinder GS and Lazards could have substantially strengthened the Claimant’s case, they have not done so, and accordingly the Claimant’s case must stand on its own. I should perhaps add that in a letter to the Claimant’s solicitors Lazards offered to join as a claimant if the Court (but not if the Claimant) thought it desirable. That in my view is an empty gesture. It is not for the Court to have or express any desire one way or the other whether Lazards should sue the Defendants
  6. FACTS

  7. It is only necessary to set out a limited account of the crucial events and briefly to recount the involvement of each of the Defendants in the receipt of the Doctored Copies and their use of the contents.
  8. On the 30th October 2001 the Claimant’s Board asked for work to be carried out on a potential “rapprochement” between the Claimant and SAB. What was particularly in mind was a possible takeover bid by the Claimant of SAB. The shares in both companies were quoted on the Stock Exchange in London and Johannesburg. In answer to this request on the 18th November 2001 GS produced a preliminary document which formed the basis for a preliminary working analysis by GS and Lazards, namely the Presentation, which on the 20th November 2001 they submitted to the Claimant’s internal mergers and acquisitions department. The very existence of the Presentation and its contents were confidential in so far as they disclosed the fact that the Claimant was considering a possible takeover bid for SAB. This information was market sensitive, being calculated to affect the market price of the shares of both companies.
  9. At some time shortly thereafter a person whose identity is unknown (namely the Source) obtained a copy of the Presentation and prepared “doctored” copies of it (namely the Doctored Copies) inserting (most importantly) a fabricated offer price and timetable for the bid. It is not certain whether the Doctored Copies were all identical or differed in any material respect. On the 27th November 2001 the Source sent by DHL from Belgium the Doctored Copies to various publishers of news. On the material before me I am satisfied that his only purpose can have been (through the medium of the news publishers and their publication of the contents of the Doctored Copies) to create a false market in the shares in both the Clients and SAB and in this undoubtedly he was successful. (I refer to the effect on the market in paragraphs 13 and 18). The Defendants have suggested that his actions may have been some innocent kite flying and indeed that the Source may have acted as he did on behalf of the Claimant or one of the Advisers. This suggestion is totally improbable and any involvement on the part of the Claimant or the Advisers in such an exercise is contrary to the evidence before me.
  10. On the afternoon of the 27th November 2001 Le Figaro received from the Source a Doctored Copy. At 1600 GMT that day a journalist with Le Figaro telephoned Lazards to inform them that she was in possession of a presentation for a planned purchase of SAB for a Board Meeting of the Claimant scheduled for the 3rd December 2001 and to be followed by a bid for SAB. (The journalist’s account of the conversation accords with the Claimant’s pleaded case in the Belgian Proceedings to which I refer in paragraph 10). At about 1700 GMT Mr Thys of the Claimant spoke to the journalist saying that her claims were inaccurate, and that Mr Thys had never seen any GS/Lazards document. Le Figaro in the light of this denial published nothing about any proposed bid by the Claimant.
  11. The first defendant Financial Times Limited (“the FT”) received from the Source a Doctored Copy at the same time as Le Figaro. At about 1700 GMT on the 27th November 2001 a FT journalist Mr Adam Jones (“Mr Jones”) telephoned Mr Van Praag of GS and told him that he had received the document. This was Mr Van Praag’s recollection of what Mr Jones said as recorded in the first affidavit of Mr Vaughan, the Claimant’s deponent. In Mr Vaughan’s second affidavit, Mr Van Praag is recorded as no longer being certain that Mr Jones did state that he had received the document. It is however clear that the Claimant’s pleaded case in the Belgian Proceedings accords with the contents of Mr Vaughan’s first affidavit. Indeed it states that the journalist from Le Figaro had likewise stated that she had received a copy. It must surely be expected that the Claimant has made every effort and inquiry to ensure that the contents of its criminal complaint in the Belgian Proceedings were correct. In the circumstances I think that I should proceed on the basis that the Claimant through the Advisers knew on the 27th November 2001 that the FT and Le Figaro were in possession of doctored copies of the Presentation. The Claimant neither took nor threatened any action to recover them or to prevent publication of their existence or contents.
  12. Mr Van Praag reported his telephone conversation to the Claimant’s Chief Executive Officer Mr Powell, and at about 1800 GMT Mr Powell telephoned Mr Jones and told him that the Claimant had been looking at a bid for SAB, that the Claimant had carried out research into SAB, but that it was not true that a bid was imminent. This information was plainly not intended to be confidential. Mr Powell made no request that the FT refrain from publishing anything and made no threat of any legal proceedings. At about 2200 GMT the FT published a story on its web site and the same night published an article in the same terms in its 28th November 2001 edition. The article stated that the Claimant had been plotting a bid for SAB; referred to unidentified documents seen by the FT; gave accurate details of the codenames used for the Advisers in the Presentation; stated that the documents indicated that an approach to SAB “could” be made on the 3rd December 2001 with an offer closing on the 7th January 2002; quoted from the Presentation on the likely positive market reaction and with reference to potential rival bids; and quoted Mr Powell’s conversation with Mr Jones. The article did not identify the proposed offer price or GS or Lazard.
  13. At about 1730 GMT on the 27th November 2001 the fourth defendant Times Newspapers Ltd (“The Times”) received from the Source a Doctored Copy, and in its second edition (which reached the news stands at about 5 a.m. on the 28th November 2001 after the FT story had been published on its web site) carried an article referring to the “confidential” document which it had seen; a supposed approach to SAB “this weekend”; a plot to bid £4.6 billion for SAB; and an offer expected to be pitched at up to 590 pence a share; and identified GS and Lazard as the Claimant’s advisers.
  14. The same day Reuters at 0051 GMT (and later) in its wire service reported the FT story and the rise in the share price of SAB on the Johannesburg Stock Exchange, and in a further article at 1444 GMT referred to its receipt of a Doctored Copy, sent anonymously to it which it identified as prepared by GS and Lazards.
  15. At 0830 GMT on the 28th November 2001 GS and Lazards contacted the Takeover Panel and the Takeover Panel asked the Claimant to make a statement. In pursuance of this request at 1215 GMT the Claimant issued a press release confirming that it had undertaken a preliminary analysis of SAB as part of its routine annual review of the leading brewers of the world; that the analysis was at a very preliminary stage which may or may not lead to an offer at some time in the future; but that no approach had been made. On the 29th November 2001 the Claimant agreed with the Takeover Panel to make a further statement the following day which it did. This statement referred to the doctoring of the Presentation and the fact that the Doctored Copies contained fabrications. The Claimant issued a further press release on the 6th December 2001.
  16. The third defendant Guardian Newspapers Ltd (“the Guardian”) received from the Source a Doctored Copy on the 28th November 2001. The Guardian published an article referring to the “secret document” prepared by GS and Lazards, which it stated had been “couriered” to a “large chunk” of the business press and referred to the leaking of previous bids by the Claimant.
  17. The position regarding receipt by the second defendant, Independent Newspapers (UK) Ltd (“the Independent”), of a Doctored Copy or a copy of a Doctored Copy is obscure. The evidence filed on behalf of the Independent is to the effect that their journalists received material on undertakings not to reveal their sources. This would appear to indicate that the Independent did not (unlike the other defendants) receive a copy by DHL from the Source. On the 29th November 2001 the Independent published an article based upon this material referring to a £4.6 billion bid by the Claimant for SAB.
  18. Thereafter each of the Defendants continued to published articles on the topics of the Doctored Copies and a possible bid.
  19. The impact of actions of the Source on the market in the shares of the Claimant and SAB on the 28th November 2001 was significant. The Claimant’s share price at market close on the 27th November 2001 was £29.40; at midday on the 28th November 2001 prior to the press release it fell to £27.20; and after the press release at market close it was £28.25. The SAB share price at the market close on the 27th November 2001 was 442.74 pence; and at the market close on the 28th November 2001 was 478 pence. The volume of SAB’s shares trade on the 27th November 2001 was less than 2 million; on the 28th November 2001 it was more than 46 million.
  20. On the 28th November 2001 the Claimant’s board of directors resolved to conduct an investigation into the leak and circulation of the Doctored Copies. Pursuant to this resolution on the 30th November 2001 the Claimant instructed solicitors and the same day those solicitors retained Kroll Europe (“Kroll”) to carry out the investigation. The Claimant gave no warning to the Defendants and made no complaint of breach of confidence and uttered no threat of legal proceedings before making a without notice application for interlocutory relief and issuing a claim form on the 10th December 2001. On that application they sought and obtained from Stanley Burnton J over the 14th December 2001 injunctions in the following terms:
  21. “1. The Defendants must not alter, deface, dispose of or otherwise deal with the documents referred to in Schedule 3 at paragraph 1 thereof

    2. The Defendants must not alter, deface, dispose of or otherwise deal with the documents referred to in Schedule 3 at paragraph 2 thereof

    3. The Defendants must within 24 hours of service of this Order deliver up the two categories of documents referred to at Schedule 3 (“the Documents”) to the custody of solicitors appointed on their behalf to be held until further Order herein. The Defendants shall be at liberty to take copies of the Documents

    4. The Defendants must within 48 hours of service of this Order serve on the Claimant’s Solicitors a list of

    4.1 the Documents within their control

    4.2 those of the Documents which were formerly in their control but are no longer in their control, explaining what has happened to them

    and confirm the facts set out in this paragraph by means of a signed witness statement containing a Statement of Truth also within 48 hours of service of this Order

    PROVIDED THAT this Order shall not require the Defendants to provide any information which would disclose the source of information contained in a publication for which the Defendants are responsible

    ...

    SCHEDULE 3

    The Documents

    1. Documents including draft documents and copy documents (whether received by the Defendants as copy documents or copies by the Defendants) provided to the Defendants by any third party subsequent to 23 November 2001 containing or relating to an analysis of South African Breweries plc (“SAB”) prepared by Goldman Sachs International (“Goldman Sachs”) and/or Lazard Brothers & Co Ltd (“Lazard”).

    2. Documents evidencing or containing discussions with any journalistic source subsequent to 23 November 2001 relating to an analysis of SAB prepared by Goldman Sachs and/or Lazard, together with the envelopes or packaging in which they were delivered to the Defendants and any additional documents contained therein.”

  22. On the 12th December 2001, the Defendants applied to me to discharge injunctions 3 and 4. I was not satisfied that the Claimant had any sufficient grounds for seeking these injunctions on an application without notice: most certainly they had adduced no evidence in support of a contention that there was any compelling reason why the Defendants should not have been notified of that application. I accordingly discharged those injunctions.
  23. CLAIMANT’S BASIS OF CLAIM

  24. The Claimant’s notice of application sought the relief set out in paragraph 19 of this judgment. This relief appeared to me far too wide and in the course of his opening submissions Mr Hollander QC for the Claimant confined his claim to the preservation and delivery up of the Documents. In respect of the Independent, who may not have received a Doctored Copy from the Source, he was content that the Independent be required to satisfy solicitors (whether its own or those of other parties) that any copy which it held was merely a copy of one held by one of the other Defendants and to deliver up its copy only if it was not such a copy.
  25. The Claimant’s claim to relief is made on two grounds, namely (1) breach of an equitable obligation of confidence owed by the Defendants to the Claimant; and (2) invocation of the Norwich Pharmacal principle. I must consider each of these heads of relief in turn.
  26. But before I do so, I must refer to the fact that the application before me is for mandatory interlocutory relief. The significance of this fact is that before I grant such relief I must feel a high degree of assurance as to the strength of the Claimant’s claim, for in granting such relief at the interlocutory stage there is a greater risk of the Court making the wrong decision and mandatory orders are a more intrusive exercise of the coercive powers of the state: in short the onerous nature of the relief sought is highly relevant: see Zocoll Group v. Mercury Communications [1998] FSR 354 at 365-6.
  27. BREACH OF CONFIDENCE

  28. The Claimant contends that the Presentation and the Doctored Copies (so far as they reproduce the Presentation) contained confidential information when sent to and received by the Defendants and that the Defendants wrongfully used this confidential information in their publications. To establish a claim against the Defendants for breach of an equitable obligation of confidence, the Claimant has to establish a breach of confidence first by the Source in supplying a Doctored Copy to the Defendants and second by the Defendants in publishing confidential material extracted by them from the Doctored Copy.
  29. The Claimant has in these proceedings followed a course which has created problems in establishing the two breaches and most particularly the second breach: it has failed at any time prior to the hearing, despite requests from the Defendants, to particularise what information contained in the Doctored Copy or the Defendants publications is alleged to have been confidential. It is not sufficient for a claimant to allege (as the Claimant had contented itself with alleging) that the Source passed to the Defendants a confidential document and the Defendants used that document. The requirement to identify the confidential information is the greater when the “confidential document” has (as it has in this case) been doctored. There can be no right of confidence on the part of the Claimant in respect of the doctored information i.e. the false information e.g. as to the proposed bid price introduced into the Doctored Copy by the Source. A claim in passing off may lie in respect of that part of the Doctored Copy at the instance of GS or Lazards, but not in confidence by them or the Claimant; and even in proceedings by GS or Lazards it would be necessary to distinguish the elements in respect of which there is alleged to have been committed a breach of the equitable obligation of confidence and in respect of which the tort of passing off is alleged.
  30. In respect of the allegation of breach of confidence by the Source nonetheless I am satisfied that two facts to be derived from the Presentation did constitute confidential information. The first was that the Claimant was considering a takeover bid for SAB and the second was that the Claimant had instructed GS and Lazard to prepare the Presentation. Mr Tugendhat QC for the Defendants effectively conceded this. It is therefore clear that, in sending copies of the Doctored Copies to the Defendants without the authority of the Claimant, the Source was acting in breach of his duty of confidence owed to the Claimant. This must be so whoever the Source was, whether or not employed by or connected with the Claimant, GS or Lazard. A document containing confidential information reached his hands, a duty of confidence thereupon attached to him and in breach of this duty he sent the document on (in a doctored form) to the Defendants.
  31. I do however think that the failure of the Claimant to particularise the confidential information alleged to have been wrongfully used by the Defendants is fatal to a claim in confidence against the Defendants on this application. The Defendants were entitled to know when they prepared for the hearing of this application exactly what was the allegation made against them and in particular what information included in their publications was alleged to have been confidential at the date of such publications. The preparation and existence of the Presentation was plainly no longer confidential: Mr Powell of the Claimant on the 27th November 2001 prior to any publication, knowing of the possession by Le Figaro and the FT of a copy of the Presentation or a Doctored Copy, confirmed to the FT that the Claimant had been looking at a bid for SAB and had carried out research into SAB. There could be no confidence in the doctored information relating to price and timetable. It was not obvious what else might be alleged to have been confidential. (This is confirmed by the absence of any claim in confidence made by the Claimant to the Defendants prior to the 10th December 2001). When I intimated the seriousness of my objection to the claim to relief based on this ground, Mr Hollander QC for the Claimant, whilst not conceding that the objection was sound, did not make any serious efforts to disabuse me of my view. For these reasons I refuse to grant the Claimant relief on the ground of breach of duty of confidence on the part of the Defendants.
  32. NORWICH PHARMACAL

  33. I turn now to the alternative basis for the Claimant’s application. The Norwich Pharmacal principle (as stated by Lord Reid in Norwich Pharmacal v. CCE [1974] AC 133 at 175 and restated by Lord Phillips in Ashworth v MGN [2001] 1 WLR 515 (“Ashworth”) at para 42) provides that, where a person through no fault of his own gets mixed up in the wrongful acts of others (for which purpose it is irrelevant whether the wrong is tortious or a breach of an equitable obligation) so as to facilitate their wrongdoing, though he may incur no personal liability, he comes under a duty to assist the person who has been wronged by giving him full information and disclosing the identity of the wrongdoer. Justice requires that he should cooperate in righting the wrong if he unwillingly facilitated its perpetration. There are two implicit limitations upon the application of the principle. First the obligation does not extend to mere witnesses or persons who merely happen to have possession of relevant evidence: the obligation extends only to those who are involved in or facilitated the wrongdoing: Ricci v. Chow [1987] 1 WLR 1658. Secondly there may be a rule of public policy which precludes application of the principle in the circumstances of a particular case.
  34. It is in my view quite clear on the facts of this case that the Defendants through no fault of their own got mixed up in the wrongful acts of the Source so as to facilitate the Source’s wrongdoing. The Source set out to feed the Defendants in the form of the Doctored Copies with confidential information (that the Claimant was considering a takeover bid and had prepared a report on the project) mixed with deliberately false information regarding bid price and timetable. The aim was to manipulate the press and through the press to make a false market in the shares of the Claimant and SAB. The Defendants were not and are not mere witnesses. Their receipt of the Doctored Copies and their publication of articles based on it were essential parts of the Source’s scheme. The Defendants accordingly fall within the ambit of grant of Norwich Pharmacal relief.
  35. PRESS PRIVILEGE

  36. The order sought by the Claimant in this case is that the Defendants provide to the Claimant the indirect means for identifying the Source as the source of the information published in their publications. Such a claim to relief (as much as a claim for a direct order for identification of press sources) brings into play Article 10 of the European Convention on Human Rights (“Article 10”) and section 10 of the Contempt of Court Act 1981 (“Section 10”). Article 10 provides as follows:
  37. “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 ...

    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.”

    Section 10 provides as follows:

    “No court may require a person to disclose, nor is any person guilty of contempt of court for refusing to disclose, the source of information contained in a publication for which he is responsible, unless it be established to the satisfaction of the court that disclosure is necessary in the interests of justice or national security or for the prevention of disorder or crime.”

  38. In respect of these provisions, Lord Phillips in Ashworth said:
  39. “Comparing these two provisions, it is apparent that section 10 sets out to give effect to the general requirements of article 10 in the narrow context of protection of the sources of information of the press. Article 10 permits the right of freedom of expression to be circumscribed where ‘necessary in a democratic society’ to achieve a number of specified legitimate aims. Section 10 provides that the freedom of expression of the press may not be circumscribed by a requirement to disclose sources of information except where necessary for a number of specified purposes.

    It seems to me that the approach to the interpretation of s 10 should, in so far as possible: (i) Equate the specific purposes for which disclosure of sources is permitted under section 10 with legitimate aims’ under art 10. (ii) Apply the same test of necessity to that applied by the European Court when considering article 10.”

  40. The interrelation of these provisions and the approach which they require of the Court on an application for the grant of the discretionary relief claimed in these proceedings has been the subject of judicial consideration in a series of decisions of the Court of Appeal, to all of which (though cited to me) I need not refer, and may be expected to be the subject of authoritative exposition by the House of Lords in Ashworth on an appeal which is due to be heard by the House of Lords on the 13th and 14th March 2002. The principles to be derived from the cases so far as relevant on this application may be stated as follows:
  41. i) the protection of journalistic sources is one of the basic conditions for press freedom. Without such journalistic freedom sources may be deterred from assisting the press in informing the public on matters of public interest and the vital public watchdog role of the press may be undermined. Having regard to the importance of protection of journalistic sources for press freedom and the potentially chilling effect an order for source disclosure has on the exercise of that freedom, such an order cannot be compatible with article 10 of the Convention unless it is justified by an overriding requirement in the public interest: see Goodwin v UK (1996) 22 EHRR 123 at 143, para 39;

    ii) there is present the potential vice or chilling effect in court orders requiring the disclosure of press sources whatever the value of the information published in the press and whatever the motive of the source. The public interest in the non-disclosure of press sources is constant, whatever the merits of the particular publication and the particular source. It is an important principle that the public perception and the perception by potential press sources of the confidentiality of press sources are preserved and that occasions for derogation from this principle shall be limited and reasonably predictable. The Court must always start with a presumption that it is contrary to the public interest to require disclosure of press sources and will only require disclosure when an overriding public interest amounting to a pressing social need requires otherwise (see Ashworth para 101 at p.537e-h per Laws LJ) or in exceptional circumstances where vital public or individual interests are at stake (see Ashworth at para 98 at p.537a per Lord Phillips MR).

    iii) but the strength of the presumption and the weight of the competing interests required to displace that presumption must depend on the circumstances of the particular case. For this purpose it may be relevant to consider (amongst other factors) the nature of the confidence (if any) placed by the source in the press, whether his communication to the press can reasonably be considered by him and by the public at large as having been made in the expectation of the preservation of confidentiality, the apparent purpose for his communication to the press and the public interest in shielding that source from exposure: consider Camelot v Centaur [1999] QB at 139-140 per Schiemann and Mummery LJJ;

    iv) the fact that an order for disclosure is necessary to enable the claimant to identify a disloyal employee or mole and the threat of continuing dissemination of confidential information by him is not without more sufficient: see Goodwin at para 45. The order for disclosure can only be “necessary” for this purpose both if necessary on the facts of the particular case to achieve the legitimate aim of the claimant of eliminating the risk of future damaging breaches of confidence, and if the achievement of the legitimate aim on the facts of the instant case is so important that it overrides the public interest in protecting journalistic sources in order to ensure free communication of information to and through the press: per Lord Phillips MR in Ashworth at para 90 p.535h-536a. For this purpose it is necessary to have regard to the perceived implications that non-disclosure of the source has for the claimant: ibid at para 97. The fact that an otherwise than trivial crime has been committed and that non-disclosure may result in its repetition is a very weighty and no doubt often a decisive consideration: see X v. Morgan Grampian (Publishers) Ltd [1991] AC 1 at 8h per Lord Bridge;

    v) regard should be had to the likely value and effectiveness of a court order in identifying the source and the probability (with the aid of the court order) of the source being identified. For the Court will not willingly cause damage to the public interest in protecting confidential sources by making an order for disclosure of sources when no compensating benefit to the competing public or private interest will be achieved: John v Express [2000] 3 All ER 257 (“John”) at p.265 para 27 per Lord Woolf MR;

    vi) the guiding principle is that an application for an order for disclosure against the press should be a recourse of last resort. The Court requires the claimant to go beyond establishing the pressing social need or exceptional circumstances: the claimant must also satisfy the Court that it should exercise its discretion to take the very serious step of granting the relief. The Court will not ordinarily be so satisfied if the information sought can be obtained in other ways. In John, Lord Woolf MR (delivering the judgment of the Court of Appeal) held that the failure to explore or fully to explore other avenues does not preclude the Court making orders against the press, but the failure can be a powerful, even a decisive, factor against the intervention of the Court. In Ashworth at para 93 p.536c Lord Phillips MR stated that the claimant must show that all other means have been employed unsuccessfully to identify the sources, but John was not apparently cited in that case. As it seems to me every reasonable effort should be made by the claimant to explore other available avenues, but if in the course of exploring them it is apparent that there is no reasonable likelihood of their proving successful within a period that allows meaningful action to be taken by the claimant to secure protection of his legitimate interests, the Court may intervene and grant the relief sought where it considers it necessary and just to do so without awaiting further developments.

    APPLICATION OF PRINCIPLES TO FACTS

  42. I turn now to the application of the principles which I have stated to the facts of this case.
  43. I shall do so on the assumption that the Independent did receive a Doctored Copy from the Source. I shall in paragraph 40 consider separately the position of the Independent on the assumption that it obtained its copy from someone else. The starting point is that the Defendants can invoke the privilege of the press conferring on them legal protection from orders such as are sought in this case. To displace that protection the onus is upon the Claimant to establish both that it has the legitimate aim of using the Documents to identify the Source as the means of removing the continuing threat of damage to its business by the dissemination of confidential information, and that the achievement of this legitimate aim on the facts of this case is so important that it overrides the public interest in protecting journalistic sources. It is not sufficient merely to establish that there is “a mole” or disloyal employee. It is essential to have regard to the seriousness and character of the damage already suffered and threatened to be repeated in the future. The damage in this case goes beyond the mere dissemination of confidential information wrongfully obtained. (The threat posed by such activity alone is serious indeed for the Claimant: it has an adverse effect on its ability to pursue business opportunities in the future). What the Source has done is deliberately to admix with that confidential information false information (a lethal concoction) to create a false market in the shares of the Claimant and SAB, a serious criminal offence. There must be a real risk of repetition, if the Source is not identified. Beyond the substantial private interest of the Claimant, there is a substantial public interest in identifying the Source and taking all necessary steps to prevent any repetition. As it seems to me, the circumstances of this case are exceptional: vital public as well as individual interests are at stake in securing the integrity of the share market. There is an overriding need for the disclosure sought in the interests of justice and for the prevention of crime.
  44. Whilst the privilege and presumption in favour of refusing relief subsists notwithstanding the clear purpose behind the Source’s communications with the Defendants, the strength of the presumption is substantially weakened and its rebuttal greatly eased by the facts that: (a) the Source has sought to deceive and manipulate the press to achieve his criminal objective, namely to rig the market; (b) the Source obtained from the Defendants no express promise of confidentiality from any of the Defendants; and (c) no such obligation could reasonably be implied on the special facts of this case from his conduct in sending the Doctored Copies to the Defendants (and others) to achieve his nefarious object.
  45. The important principle that the public perception that the press will in any ordinary circumstances keep confidential its sources cannot sustain any real or serious damage where it is encroached upon in the exceptional circumstances of this case. No fair minded observer could reasonably take the view that a person acting as the Source has in this case would be protected from identification by press privilege. Indeed it might be thought to bring the privilege into disrepute and be an affront to justice and common sense if it was to be available to preclude the pursuit of enquiries necessary to prevent a repetition of this fraud on the public.
  46. As it seems to me the Claimant has sufficiently explored other avenues before having recourse to this application for relief against the press. The Defendants complain that the Claimant did not ask the Defendants for voluntary assistance in identifying the Source before instituting the proceedings. Whether or not the Claimant should have done so, it would have been an idle gesture: as is apparent from the stance adopted in these proceedings, most certainly the Defendant would have refused. At best the Claimant’s default in this respect was purely technical and cannot carry any weight on this application. There have been internal investigations conducted at the Advisers’ and the Claimant’s businesses; the Claimant is conducting inquiries further afield. The Claimant is using investigators of the highest international calibre. The Defendants complain that full details of all the Claimant’s inquiries are not given in the Claimant’s evidence and that this is necessary in order to establish how thorough they have been, but there is no substance in this complaint. The evidence establishes to my satisfaction that full and proper investigations have been made and are continuing. To require disclosure of more details of these investigations is unnecessary even as such a course may prejudice the ongoing inquiries. The inquiries so far conducted have proved unsuccessful. The evidence before me (and most particularly a report by Kroll) establishes that the Claimant needs the information which production of the Documents ought to provide to further and give impetus to these investigations. I consider that the outstanding inquiries and ongoing investigations, though they may possibly lead to identification of the Source without any help obtained by the Court order sought, do not need to grind to a halt before the order sought is made. I must take into account the possibility that at some date in the future the Claimant in the course of its investigation might be able to identify the Source even if the order sought is not made. But I am satisfied that the order is required if progress is to be made whilst the trail is still warm and if an identification is to be made within the time frame necessary to safeguard the interests of the Claimant and the public. Complaint is made by the Defendants as to decisions made by the Claimant as to the course to be followed in its investigations. It is not however for this Court to second guess decisions made in this regard on competent advice.
  47. There can be no certainty that the assistance afforded by discovery by the Defendants will lead to identification of the Source. But the evidence before me satisfies me that the disclosure sought should ensure a real advance in the investigatory process e.g. by leading to identification of the offices from which the Doctored Copies originate and that there is a real possibility that with the benefit of this advance the Source will eventually be identified.
  48. I may add that save in respect of the Independent a special factor in this case removes one potential obstacle to the grant of relief which is present in many cases. Often the document of which disclosure is sought may be the property or in the possession of a journalist as opposed to the publisher. In those cases regard may be necessary to the question whether it is legally possible, and if legally possible, whether it is desirable, to impose by court order upon the publisher the invidious task of obtaining that property from the journalist or securing that he complies with the court order. In this case it is clear (save in case of the Independent) that the Documents were sent to, are in the legal possession of and belong to the Defendants themselves.
  49. I must turn to the special position of the Independent which arises if the Independent obtained a Doctored Copy (or a copy of a Doctored Copy) otherwise than directly from the Source. As it seems to me, I should only order the Independent to produce such copy if and so far as it is within the power, custody or control of the Independent. This may not be the case if it was obtained by a journalist. The Independent alone knows whether this is so. There are or may be two special considerations in respect of such an order against the Independent, namely the undertakings given by its journalists and the possible difficulties occasioned by an order in securing compliance by its journalists. After anxious consideration I have reached the conclusion that notwithstanding these special considerations the compelling need to identify the Source in this case requires me to order the Independent to make such an order against the Independent. Such order will however be subject to the proviso that its copy need not be delivered up if it is a mere copy of the other Defendants’ Doctored Copies.
  50. CONCLUSION

  51. In all the circumstances, with the requisite high degree of assurance, I am satisfied that in the exceptional circumstances of this case the requirements of Section 10 are complied with and that in the exercise of my discretion I ought to order the Defendants who received the Documents from the Source to deliver them up to the Claimant for use in tracing the Source. In the case of the Independent, if it has in its power, custody or control a Doctored Copy or a copy of the Doctored Copy, it should likewise deliver up that document in case it may independently contain relevant information in the search for the Source. If however its copy is merely a copy of a Doctored Copy in the possession of any of the other Defendants, since that copy will not assist the Claimant in its search, it should not be required to produce it. The necessary comparison of the copy with the Doctored Copies may be effected (at the option of the Independent) by a solicitor of any of the parties, and that solicitor, if he finds that it is a mere copy, should so certify in writing. If such certificate is forthcoming, no order for delivery up is to apply to the Independent.
  52. As a protection to the Defendants and the Source, the Claimant has offered to me an undertaking not to use the Documents disclosed by the Defendants in the Belgian Proceedings without the permission of this Court. They do not accept that any such undertaking is called for or required in this case, and I do not hold that it is. But in view of the essentially criminal character of the Belgian Proceedings and in the absence of argument before me on the permissible use of documents disclosed on discovery pursuant to Norwich Pharmacal orders in foreign criminal proceedings, I think it sensible for the Claimant to proffer the undertaking and I accept it. Any argument on this question may be deferred until the hearing of any application to discharge the undertaking.
  53. *****


© 2001 Crown Copyright


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