Cream Holdings Ltd and Others v Banerjee and another

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeLORD WOOLF,LORD HOFFMANN,LORD SCOTT OF FOSCOTE,LORD NICHOLLS OF BIRKENHEAD,BARONESS HALE OF RICHMOND
Judgment Date14 October 2004
Neutral Citation[2004] UKHL 44

[2004] UKHL 44

HOUSE OF LORDS

The Appellate Committee comprised:

Lord Nicholls of Birkenhead

Lord Woolf

Lord Hoffmann

Lord Scott of Foscote

Baroness Hale of Richmond

Cream Holdings Limited

and others

(Respondents)
and
Banerjee

and others

(Appellants)
LORD NICHOLLS OF BIRKENHEAD

My Lords,

1

The Human Rights Act 1998 introduced into the law of this country the concept of Convention rights. Section 12 made special provision regarding one of these rights: the right to freedom of expression. When considering whether to grant relief which, if granted, might affect the exercise of the Convention right to freedom of expression the court must have particular regard to the importance of this right: section 12(4). Additionally, section 12(2) set out a prerequisite to the grant of relief against a person who is neither present nor represented. The court must be satisfied the applicant has taken all practicable steps to notify the respondent or that there are compelling reasons why the respondent should not be notified. Further, section 12(3) imposed a threshold test which has to be satisfied before a court may grant interlocutory injunctive relief:

'No such relief [which might affect the exercise of the Convention right to freedom of expression] 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.'

2

On this appeal your Lordships' House is concerned with the meaning and application of the word 'likely' in this provision.

The factual context

3

The context in which this question arises on this appeal is as follows. The plaintiffs in this action are the Cream group of companies. These companies began as the Cream nightclub in Liverpool in 1992 and then expanded and diversified their business. They opened other clubs elsewhere and began to stage large events such as dance festivals. Now they also carry on a substantial business franchising their brand name and logo and merchandising clothes and other items. They are an important business in Liverpool featuring both on general news pages and financial pages of newspapers.

4

The first defendant, Chumki Banerjee, is a chartered accountant. She was the financial controller of one of the companies in the Cream group for three years from February 1998 to January 2001. Before then Ms Banerjee worked for a firm of accountants and was responsible for dealing with the Cream group's financial affairs between 1996 and 1998. The second defendant, which I shall refer to simply as the 'Echo', is the publisher of Merseyside's two long-established and leading daily newspapers, the 'Daily Post' and the 'Liverpool Echo'.

5

In January 2001 Cream dismissed Ms Banerjee. When she left she took with her copies of documents she claims show illegal and improper activity by the Cream group. She passed these to the Echo with additional information. She received no payments for this. On 13 and 14 June 2002 the Echo published articles about alleged corruption involving one director of the Cream group and a local council official. On 18 June 2002 the Cream group sought injunctive relief to restrain publication by the newspaper of any further confidential information given it by Ms Banerjee.

The proceedings

6

The defendants admitted the information was confidential. Their defence was that disclosure was in the public interest. Lloyd J held there were seriously arguable issues both ways on whether this defence would succeed. Cream had established the 'necessary likelihood' of a permanent injunction for the purposes of section 12(3): 'I do not say it is more likely than not, but there is certainly a real prospect of success'. The balance of convenience test favoured the grant of an interim injunction. Cream were likely to suffer irreparable loss of an unquantifiable nature if the story were published. Restraint of publication would delay the Echo's story but not necessarily preclude its publication altogether. Given the undoubted obligation of confidentiality inherent in Ms Banerjee's employment contract, the disputes of fact on some matters, and the possibility that Ms Banerjee's complaints of defaults by the Cream group might be met adequately by disclosure to certain regulatory authorities as distinct from publication at large by the press, the right course was to freeze the position and direct a speedy trial if desired. On 5 July 2002 Lloyd J granted an interlocutory injunction prohibiting the defendants until trial from publishing, disclosing or using information defined as confidential information in a confidential schedule. In order to prevent the immediate loss of confidentiality Lloyd J set out part of his judgment in a private appendix.

7

The defendants appealed. The judge, they said, had applied the wrong test under section 12(3), that of a 'real prospect of success' rather than 'more likely than not'. Further, on the basis of his factual conclusions the judge erred in deciding Cream were likely to succeed at the trial.

8

The Court of Appeal, comprising Simon Brown, Sedley and Arden LJJ, dismissed the appeal: [2003] EWCA Civ 103, [2003] Ch 650. Sedley LJ dissented. Again, in order to maintain privacy for the information separate confidential judgments were delivered by two members of the court.

9

All three lords justices agreed the judge was correct in his interpretation of 'likely' in section 12(3), although they differed in their reasoning. As to the facts, Simon Brown LJ held the judge was entitled to conclude Cream has a real prospect of success at the trial. The judge was also entitled to decide that in all the circumstances he should exercise his discretion in favour of making an order involving prior restraint. Simon Brown LJ, however, expressed reservations about the latter point. Not every judge would necessarily have reached the same conclusion as Lloyd J, and he himself might well not have done so. Arden LJ was also lukewarm in her view of the judge's decision, noting that in all the circumstances it could not be said to be perverse.

10

On this point Sedley LJ dissented. Lloyd J erred in his conclusion that there is likely to be no public interest justification for the disclosure of the story which Miss Banerjee gave the Echo and the Echo wishes to publish. The principal matter the Echo wishes to publish is 'incontestably' a matter of serious public interest. The essential story was one which, whatever its source, no court could properly suppress.

11

Ms Banerjee and the Echo appealed to your Lordships' House, raising arguments along the same lines as those they presented to the Court of Appeal.

Section 12(3) and 'likely'

12

As with most ordinary English words 'likely' has several different shades of meaning. Its meaning depends upon the context in which it is being used. Even when read in context its meaning is not always precise. It is capable of encompassing different degrees of likelihood, varying from 'more likely than not' to 'may well'. In ordinary usage its meaning is often sought to be clarified by the addition of qualifying epithets as in phrases such as 'very likely' or 'quite likely'. In section 12(3) the context is that of a statutory threshold for the grant of interim relief by a court.

13

The legal background against which this statutory provision has to be interpreted is familiar. In the 1960s the approach adopted by the courts to the grant of interlocutory injunctions was that the applicant had to establish a prima facie case. He had to establish this before questions of the so-called 'balance of convenience' fell to be considered. A prima facie case was understood, at least in the Chancery Division, as meaning the applicant must establish that as the evidence currently stood on the balance of probability he would succeed at the trial.

14

The courts were freed from this fetter by the decision of your Lordships' House in American Cyanamid Co v Ethicon Ltd [1975] AC 396. Lord Diplock said, at pages 407-408, that the court must be satisfied the claim 'is not frivolous or vexatious; in other words, that there is a serious question to be tried'. But it is no part of the court's function at this stage of litigation to try to resolve conflicts of evidence on affidavit nor to decide difficult questions of law calling for detailed argument and mature consideration. Unless the applicant fails to show he has 'any real prospect of succeeding in his claim for a permanent injunction at the trial', the court should proceed to consider where the balance of convenience lies. As to that, where other factors appear to be evenly balanced 'it is a counsel of prudence' for the court to take 'such measures as are calculated to preserve the status quo'.

15

When the Human Rights Bill was under consideration by Parliament concern was expressed at the adverse impact the Bill might have on the freedom of the press. Article 8 of the European Convention, guaranteeing the right to respect for private life,...

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