Initial Services Ltd v Putterill
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE SALMON,LORD JUSTICE WINN |
| Judgment Date | 28 June 1967 |
| Judgment citation (vLex) | [1967] EWCA Civ J0628-4 |
| Date | 28 June 1967 |
| Court | Court of Appeal (Civil Division) |
[1967] EWCA Civ J0628-4
The Master of The Rolls
(Lord Denning)
Lord Justice Salmon and
Lord Justice Winn
In The Supreme Court of Judicature
The Court of Appeal
Civil Division
From Mr Justice Cusack
MR MICHAEL KERR, Q.C. and MR MICHAEL KEMPSTER (instructed by Messrs Herbert Smith & Co.) appeared as Counsel for the Appellants.
MR C. ROSS MUNRO (instructed by Mr K. Wyndham-Kaye) appeared as Counsel for the Respondent (First Defendant).
Initial Services Limited. are a firm of launderers who supply towels for use in machines and, after use, launder them end put them back into the machines. Mr Putterill was their sales manager. On the 17th August, 1966, he tendered his resignation to the general manager. On the 30th August he confirmed his resignation in writing. On the 3lst August he left the firm. Before he left he took with him a number of documents in the Company's file. He handed them to reporters of the "Daily Mail" and gave them information about the Company's affairs. So much so that the "Daily Mail" on the 1st September, 1966, came out on its front page with an article under a big headline: "Laundries in Price Shock". The article said that the "Daily Mail" had discovered a liaison system between a group of firms in the laundry business whereby they were keeping up prices. Furthermore, the article said that, after the selective employment tax was imposed, Initial Services increased their prices and issued a circular saying that the increased charges were mainly to offset the selective employment tax: whereas, according to the "Daily Mail" and the information they had had, they were getting a great deal of extra profit as well. That article was followed on the next day, the 2nd September, 1966, by an article headed: "Now the Board of Trade moves in", saying: "The Board of Trade began investigations yesterday into the confidential system of 'Inter-company liaison' operated by leading industrial laundries supplying linen-hire services".
As soon as those two articles appeared, Initial Services on the 2nd September, 1966, issued a writ against Mr Putterill and Associated Newspapers Limited. claiming an injunction, damages for breach of confidential information, and delivery up of confidential papers. Application was made for an interim injunction but an undertaking was given that nothing more would be published or disclosed pending trial. The pleadings then proceeded. The plaintiffs alleged that their servant, Mr Putterill, had broken his obligation to keep information confidential andthat the "Daily Mail".were parties to the breach. The "Daily Mail" put in a defence saying that they published the article in the public interest. That has to go to trial.
Mr Putterill put in a defence in which he seeks to justify or excuse his disclosures to the "Daily Mail". So far as the liaison system was concerned, he alleged that the plaintiffs entered into an agreement with other laundries regarding the supply of goods and services. It was an agreement to keep up prices. He says that it was an agreement to which Section 6 of the Restrictive Trade Practices Act applied. It should have been registered, but it was not. He also says that it should have been referred to the Monopolies Commission. So far as the circular was concerned, he says that it was misleading to the public. The plaintiffs stated in the circular that they increased their charges because of the selective employment tax: but Mr Putterill says that the plaintiffs made a considerable profit; in particular for the North London and North Region they would make £;17,000 more revenue.
The plaintiffs sought to strike out several of the paragraphs in Mr Putterill's defence. The Master and the Judge refused to strike them out. The plaintiffs appeal to this Court.
In support of the appeal, Mr Michael Kerr said that in the employment of every servant there is implied an obligation that he will not, before or after his service, disclose information or documents which he has received in confidence. Now I quite agree that there is such an obligation. It is imposed by law. But it is subject to exceptions. Take a simple instance. Suppose a master tells his servant: "I am going to falsify these sale notes and deceive the customers. You are not to say anything about it to anyone". If the master thereafter falsifies the sale notes, the servant is entitled to say: "I am not going to stay any longer in the service of a man who does such a thing. I will leave him and report it to the customers". It was so held in the case of Gartside v. Outram (1857) 26 Law Journal, Chancery, page 113.
Mr Michael Kerr suggested that this exception was confined to cases where the master has been "guilty of a crime or fraud". But I do not think that it is so limited. It extends to any misconduct of such a nature that it ought in the public interest to be disclosed to others. The Vice-Chancellor put it in a vivid phrase: "There is no confidence as to the disclosure of iniquity".
In Weld Blundell v. Stephens, 1919, 1 King's Bench, page 520 at page 527, Lord Justice Bankes rather suggested that the exception is limited to the proposed or contemplated commission of a crime or a civil wrong. But I should have thought that was too limited. 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. The reason is because "no private obligations can dispense with that universal one which lies on every member of the society to discover every design which may be formed, contrary to the laws of the society, to destroy the public welfare", see Annesley v. Anglesea (1743) 17 State Trials, pages 1223-46.
The disclosure must, I should think, be to one who has a proper interest to receive the information. Thus it would be proper to disclose a crime to the police; or a breach of the Restrictive Trade Practices Act to the Registrar. 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.
Let me apply these principles to the particular facts of this case, because we are only concerned to see whether the defence of Mr Putterill is arguable or not. Firstly, as to the Restrictive Trade Practices Act. If the allegations of the defence are correct, there was an agreement or arrangement between these laundry firms which should have been registered. If ithad been registered, particulars of it would have been entered in the register. Once on the register, any individual on paying the requisite amount, I think one shilling, could have obtained full particulars of that agreement or arrangement. Now I ask myself: Is this Laundry Company entitled to say that that information is confidential, seeing that they ought to have supplied it themselves to the Registrar, and it would then have been made public? There is an argument at least that such information was not within the realm of confidence to which the master could hold his servant.
I do not pause upon the Monopolies Commission. It is more difficult to pray that Act in aid than the Restrictive Trade Practices Act, but I would not say that the defence is so completely unfounded as to require it to be struck out.
Next, there is the circular which the plaintiffs issued saying they were increasing their charges owing to the selective employment tax. It seems to me that if that circular was misleading (because the plaintiffs were making a considerable profit), then it is at least arguable that it was in the public interest that it should be made known. I do not think that an employer can say to a servant: "I know we are issuing misleading circulars but you are to keep quiet about it, and if you disclose it, I shall sue you for damages". The servant may well be justified in replying: "I cannot stand such conduct. I will leave and let the public know about it, so as to protect them". I say nothing as to what the position would be if he disclosed it out of malice or spite or sold it to a newspaper for money or for reward. That indeed would be a different matter. It is a great evil when people purvey scandalous information for reward.
But that is not the point here. This servant says that his employers were issuing misleading circulars and that he could stand it no longer. He went to the newspapers and told them about it. They have published it on their own responsibility. I am not prepared to say that this defence is unfounded. I thinkthis matter should go for trial. I would dismiss the appeal.
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