Equity Assignment

Introduction

The equitable doctrine of a breach of confidence seeks to protect confidential information from being disclosed or used for unauthorised purposes.  Described as one of the most important juridical devices for controlling the flow of information,[1] the action serves the public interest by encouraging trust, candour and good faith in those relationships that are fundamental to society.[2]

There are however, a number of circumstances whereby the courts will refuse to grant a request to protect information that operates in contradiction to the prevailing public interest.[3]  In such exceptional circumstances,[4] the confidant may rely on the public interest defence as a means of justifying that which would otherwise constitute a breach of confidentiality.[5]

Australian courts, unlike England, have remained divided as to the application of a public interest defence to cases of confidentiality.  The Australian cases identify two differing approaches upon which the disclosure of confidential information should be permitted; narrow and the broad.[6]  Whilst there has been some support for the broad, on the whole, the Australian judiciary seems to prefer the more narrow approach as discussed below.

The UK Position – A Brief History of the Public Interest Defence

The UK public interest defence first developed out of the ‘iniquity rule’ as propounded by Wood VC in the case of Gartside v Outram.[7]  The Vice Chancellor said;

                “The true doctrine is that there is no confidence as to the disclosure of iniquity.’[8]

Here the plaintiff sought to restrain the defendant from disclosing information in relation to fraudulent business practices.  Despite the fact that there existed an implied contractual obligation,[9] His Honour held that in any case of iniquity, be it criminal or civil[10] and regardless of to whom the information was disclosed, there could be no breach of confidence, for a duty of confidence will not arise.[11]  The ability to therefore deny a duty seemingly prevented any bargaining between the parties to keep the iniquitous transaction secret.[12]

Lord Denning further broadened the principle proffered by Wood VC in the case of Initial Services Limited v Putterill.[13]  Factually similar to Gartside, the plaintiff sought to restrain the defendant, a former sales manager, from informing the press as to the plaintiff’s involvement in price fixing.  By introducing the notion of misdeeds as grounds for the disclosure of information,[14] Denning MR advancing the disclosure of confidential information in relation to both a continuing and proposed iniquitous activity.[15]  Furthermore he emphasised the need for a recognisable public interest when he said:

“The exception should extend to crimes, frauds and misdeeds, both those actually committed as well as those in contemplation, provided always – and this is essential – that the disclosure is justified in the public interest.”[16]

Inherently missing is the fact that neither the definition nor the scope of ‘misdeed’ was defined,[17] although arguably, where a misdeed is found to be ‘misleading’, it may be construed as undermining the public interest.[18]  Furthermore, Lord Denning suggested that the confidentiality exception should only apply in circumstances where the information has been disclosed in good faith and to ‘one who has a proper interest to receive the information’.[19] And to one who has a proper interest to receive the information’.[20]

Notwithstanding the above comment, he added;

‘There may be cases where the misdeed is of such a character that the public interest may demand, or at least excuse, publication on a broader field even to the press.’

This suggests that although relevant factors will determine whether the exception to confidentiality will apply, in circumstances where the public have been misled, there may well be support for disclosure to the media.

Subsequent cases in the English judiciary system have indicated a general support for this principle,[21] although not without its critics.[22]  In the case of W v Edgell, Bingham LJ sought to introduce the concept of reasonableness as an element to the public interest defence.[23]  A rather elusive concept, Koomen asserts reasonableness potentially undermines the pleading of a defence of public interest, rather than resting upon some ascertainable ‘public interest’.[24]

The Australian Perspective

The Australian courts struggle not with the existence of the public interest defence per se, but it’s inherent dynamism,[25] as to what may be in the public’s interest and not merely of interest to the public.[26]

The principle espoused in Initial Services, historically underpins the beginnings of what has been classically referred to as the broad public interest defence.[27]  First followed in the New South Wales case David Syme & Co Ltd v General Motors-Holden Ltd,[28] the defence found favour with Samuels J[29] before being approved by Kirby P (as he was then) in the New South Wales Court of Appeal Attorney-General (UK) v Heinemann Publishers (Aust) Pty Ltd[30] decision.

The decision to follow the English court illuminated Kirby P’s support for the freedom of the press to impart information that ignited issues of ‘serious concern and benefit to the public’.[31]  Citing the approach taken by Denning MR’s dissenting judgment in Schering Chemicals Ltd v Falkman Ltd,[32] Kirby P advocated for a less restrictive iniquity rule that sort to sufficiently support matters which whilst not iniquities, required disclosure.[33]

Kirby P’s support for the English public interest defence cemented its application in the jurisdiction of New South Wales.  The support has not been consistent in other jurisdictions.

Justice Gummow is arguably the most vocal in his opposition to the broad public interest defence.  In the case of Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) and Another,[34] Gummow J, when as a member of the Federal Court, described the development of the public interest defence within the English Court of Appeal as ‘picturesque but somewhat imprecise’.[35]

Corrs Pavey involved a firm of solicitors acting for the patentee of an Australian patent for the pharmaceutical drug, Naproxen.  The solicitors made an application under the Freedom of Information Act 1982 (Cth) for documents concerning the importation of Naproxen under an alleged infringement of the patent.  The request was denied on the grounds that the documents were originally supplied in confidence and were exempt from disclosure.  In his dissenting judgment, Gummow J admitted that even though the state of the law is unsettled with respect to the defence of public interest, the narrow iniquity rule, most consistent with the approach taken by Wood VC in Gartside, provided an insufficient basis for a public interest defence when applied to the facts at hand.[36]

His Honour elaborated further and clarified the principle for which Gartside is authority.  A ‘less striking and more readily understood basic principle’.[37] Gartside merely represented a case that was decided on the basis of unclean hands, rather then sowing the seeds for public interest or iniquity rule defences.[38]  Here His Honour said:

‘...Gartside v Outram may beunderstood as a case in which even if the plaintiff’s had valid rights they would have been denied equitable relief in the circumstances with general principles, by reason of unclean hands.’[39]

Prior to Corrs Pavey, the narrow iniquity rule had been reviewed in A v Haydon.[40]  In seeking out an approach that would provide the courts with a broader, more discretionary decision with respect to the need for disclosure, Gibbs J respectfully criticised the narrow approach as extended by Sheppard J in Allied Mill Industries Pty Ltd v Trade Practices Commission.[41]  Gibbs J noted that:

‘The public interest does not, in every case, require the disclosure of the fact that a criminal offence, however trivial, has been committed.’[42]

Gibbs J sought to express the view, by obiter dicta, that the scope of the iniquity rule in Gartside had ‘been expanded to mean misconduct generally’.[43]  His approach gained support from Wilson and Dawson JJ.  Mason J dissented, suggesting that it was:

‘...contrary to public policy for a minister or the executive government to be prevented [by a court] from revealing information which would assist in the investigation of a crime, whether great or less.’[44]

A v Hayden involved plaintiff secret service agents participating in a training exercise during which it was alleged that criminal offences occurred.  In order to conduct a criminal investigation, the Victorian Government requested their names.  The plaintiff’s sought to restrain the release by relying on a confidentiality clause in their service contracts with the Commonwealth. The High Court refused to grant the injunction.

In handing down his judgment, Gibbs J examined the obligation owed by the Commonwealth to the plaintiff’s and stated:

                ‘A person who owes a duty to maintain confidentiality will not be allowed to escape fromhis obligation simply because he alleges that crimes have been committed and that it is in the public interest that he should disclose information relating to them.’[45]

In 1990, Gummow J again asserted his reluctance in accepting the ‘flimsy historical and doctrinal foundations’[46] for the public interest defence in the case of Smith Kline & French Laboratories (Australia) Ltd and Others v Secretary, Department of Community Services and Health and Others,[47] the views of which were adopted by Gray J in the South Australian court of Sullivan v Sclanders.[48]  Although Gray J was unable to identify a case for iniquity, he stated:

‘However as a matter of strict legal principle I consider the application of the iniquity rule to be the correct approach.  Equitable principles are best developed by reference to what conscionable behaviour demands of the defendant rather that by balancing those demands with matters of public interest.  This approach avoids the ad hoc judicial idiosyncrasy associated with deciding whether on the facts overall it is better to respect or override the obligation of confidence.’[49]

In the Victorian Supreme Court case of Australian Football League v The Age Co Ltd[50] Kellam J adopted the conscionable behaviour view of Gray J in Sullivan v Sclanders.[51]  Kellam J held that the argument advanced by the Age in relation to iniquity being a crime, wrong or misdeed not recognised by the law as being confidential, was too wide.[52]  In seeking to explain the necessary steps required by the defendants to establish the iniquity rule, Kellam J distinguished between that which is merely of interest to the public and that which is in the public interest to publish.[53]

The disclosure of the names of players who tested positive to illicit drugs did not, in Kellam J’s opinion amount to an impropriety or iniquity of a ‘serious criminal nature’,[54] for which there existed a countervailing public interest.  Kellam J held that the disclosure was sought merely on the basis to sell papers to create gossip and scandal.

Government Cases

Although Mason J did not follow the English public interest defence to its strictest degree, he certainly referred to its existence in the case of Commonwealth of Australia v John Fairfax and Sons Ltd.[55]  His Honour found favour with public interest as he discussed the elements consistent in establishing a breach of confidentiality in the judgment of Megarry J in the 1968 case of Coco v AN Clark (Engineers) Ltd.[56]

Fairfax was a case involving the Government as the plaintiff, seeking to protect its own information, to which Mason J stated:

‘This is not to say that Equity will not protect information in the hands of the government, but it is to say that when the Equity protects government information it will look at the matter through different spectacles.’

Seemingly, the use of the public interest defence in relation to cases involving the Crown are treated differently to that of a private individual or corporation.[57]  The onus of proof is reversed and the ‘government must prove that the public interest demands non-disclosure’.[58]  In considering a somewhat broad view of the ‘public interest’ defence, Mason J said that in cases whereby the government sought to protect its own information it was necessary to tak into account the public interest in the course of establishing that the plaintiff would suffer the requisitie detriment to bring the action.[59]  Furthermore, it is the role of the court to determine such a claim.[60]  Drawing onthe importance of the fundamental democratic right within society, Mason J stated that”

‘...there should be a restraint on the publication of information relating to government when the only vice of that information is that it enables the public to discuss, review and criticise government action.’[61]

He further stated that:

                ‘unless disclosure was likely to injury the public interest, it will not be protected.’[62]

The relevance of detriment in relation to public interest and the publication of Government information was also considered in the High Court Spycatcher case.[63]  In a joint judgment, their Honours acknowledged the difference between circumstances enforcing confidentiality in relation to national security and the Australian public’s interest in publication.[64]

Remedies

The most common remedy to a breach of confidentiality is that of an injunction.[65]  Of course, this is hardly useful if disclosure has already occurred, although a permanent injunction could be enforced to prevent further disclosures.  Additionally an injunction will not be rewarded in circumstances where the public interest is successfully invoked.

In situations where disclosure has already occurred the confider may seek pecuniary relief, the approval of which forces the court to assess the public interest equation.[66]  Divided in their opinions, the courts must determine to apply the ‘higher duties’ test or the balancing public interest test?[67]

Unsurprisingly, Gummow J opposes the balancing test, as being an ‘invitation to judicial idiosyncrasy’.[68]  However Pizer argues in the alternative and believes that the balancing test forces the judiciary to examine why confidentiality should be protected, the question of which he believes is conveniently ‘side stepped’ under the higher duty test.[69]

Conclusion

Since much of ordinary life occurs in the public’s sight, it will be increasingly more difficult to distinguish public from private and therefore from confidence.  To this end, the public interest defence will most certainly play a role.  However this will means that the courts will continue to be faced with applying the most appropriate approach in dealing with breaches of confidentiality.

In advocating a hybrid approach via the broad iniquity rule, Koomen suggests that such an approach would promote a degree of certainty and protection, whilst allowing for the disclosure to the most appropriate authorities where it can be shown that there is an ascertainable public interest in doing so.[70]  Not all agree, arguing that this approach is no different from the broad view of public defence.[71]

The current state, although unsettled, leans towards the narrow iniquity rule, given its favour with the higher courts.  Prima facie, this rule provides a level of guidance, although commentators have suggested that the application of criteria based upon conscionable behaviour is inherently vague[72] and just as uncertain as that of balancing competing interests under the broad public interest approach.[73]

Ultimately, the decision will lie with the courts.  Victorian courts favouring the general defence of public interest are somewhat restricted however, on the reasoning of decisions handed down by the Appeal Courts higher in the hierarchy in order to follow suit.

BIBLIOGRAPHY

1. Articles/Books/Reports

    

   Graeme McEwan, ‘Three key Challenges in Strategic Public Interest Litigation’ (Paper presented at the Victorian Bar Law Conference, Torquay, 5 March 2011)

    

   Jason Pizer, ‘The Public Interest Exception to the Breach of Confidence Action: Are the Lights About to Change?’ (1994) 20 Monash University Law Review 1, 67

    

   Kaaren Koomen, ‘Breach of Confidence and the Public Interest Defence: Is it inthe Public Interest?’ (1994) 10 Queensland University of Technology Law Review 4.

    

   Trent Glover, ‘The Scope of the Public Interest Defence in Actions for Breach of Confidence’ (1999) 6 James Cook University Law Review 6, 109.

    

2. Case Law

    

   Attorney-General (UK) v Heinemann Publishers (Aust) Pty Ltd and Another (1988) 78 ALR 449

    

   Australian Football League v The Age Co Ltd [2006] VSC 308

    

   Coco v AN Clark (Engineers) Ltd [1969] RPC 41

    

   Commonwealth of Australia v John Fairfax and Sons Ltd (1980) 32 ALR 485

    

   Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) and Another (1987) 74 ALR 428

    

   David Syme & Co Ltd v General Motors-Holden Ltd [1984] 2 NSWLR 294

    

   Fraser v Evans [1969] 1 QB 349

    

   Gartside v Outram (1856) 26 LJ CH 113

    

   Initial Services Limited v Putterill [1968] 1 QB 396

    

   Malone v Metropolitan Police Commissioner [1979] 1 Ch 344

    

   Schering Chemicals Ltd v Falkman Ltd [1981] 2 All ER 321

    

   W v Edgell [1990] 1 WLR 471