Whistleblowers' rights and breach of confidence: Pharmagona v Taheri

When a breach of confidence case has a 'whistleblower' dimension, things can get complicated. The history of Pharmagona Ltd v Taheri and Anor [2020] EWHC 312 (QB) (17 February 2020), which came before Mr Justice Nicol on 30 January (the judgment appearing on 17 February) is complicated - a sorry-looking tale of orders made and arguably not complied with - considering that it was nothing more than a simple breach of confidence action brought by an employer against a couple of employees, who happened to be husband-and-wife.

The defendants, IT manager and office manager respectively, had been summarily dismissed for stealing money by the claimant on 2nd February 2018, after which date they allegedly criminally hacked into the complainant's computer system and downloaded "various materials". The first defendant did the hacking, but communicated information to his wife who knew or ought to have known that she had confidential information.

The defendants maintained in their defence that the claimants had engaged in unlawful and criminal activities, including exporting goods to Iran. This, they argued, was why they were accused of theft and dismissed, although a police investigation had found no evidence against them. They claimed the protection of the Public Interest Disclosure Act 1998 and the Employment Rights Act 1996. Many elements make this a rather unusual breach of confidence case.

The defendants say that their hacking was to collect evidence of wrongdoing, and whistle-blowing would of course be immensely difficult if an injunction could be obtained to prevent information being passed on - indeed, to prevent the whistle being blown (or perhaps to remove its pea before blowing took place).

The claimant sought (so the judge inferred - the pleadings seem to have been somewhat unorthodox) an interim injunction. This would normally be dealt with according to the American Cyanamid principles, but the judge decided that s. 12 of the Human Rights Act applied: publication is not to be restrained before trial unless the court is satisfied that the applicant is likely to establish at trial that publication should not be allowed. The purpose of this provision is to protect the Convention right to freedom of expression (Article 10, of the European Convention on Human Rights of course). "Likely" means more likely than not, according to the House of Lords in Cream Holdings v Bannerjee [2004] UKHL 44, [2005] 1 AC 253, although this ordinary meaning might have to be applied flexibly sometimes.

The claimant argued that s. 12(3) did not apply, relying on the carve-out in Article 10(2) which allows freedom of expression to be curtailed to protect the rights of others - here, the claimant's proprietary rights in its confidential information. Counsel for the claimant pointed out that there had been no reference to Article 10 or s.12 in the key earlier Court of Appeal case Tchenguiz and Ors v Imerman (Rev 4) [2010] EWCA Civ 908 (29 July 2010) but the judge reckoned that the point about likely success at trial had been fully considered, even if the provisions had not been mentioned in so many words.

The judge was satisfied that unless the defendants were restrained, the claimant would be able to show at trial that the defendants would be likely to use the confidential information. However, the judge was also satisfied that the defendants should be free to co-operate with public authorities investigating the claimants' activities. They had, in short, to be allowed to blow their whistle. In the end, an injunction to prevent disclosure with a suitable public interest proviso, allowing the defendants to answer questions and provide documents, seems a very sensible (and in the circumstances quite simple) solution, and that is what the judge granted.

Arbitrating licence agreements: interim relief

The mysteriously-named  AB v CD [2014] EWHC 1 (QB) (03 January 2014)  concerns not, as one might expect, a badly-behaved professional footballer or television presenter but two businesses with a licensing agreement. The agreement concerned an electronic marketplace, but no software was supplied. The claimant faced big problems when threatened with termination the licence to use a facility which was an essential part of their business, and sought an interim injunction to stop the termination until arbitration had been completed. Because the dispute was subject to arbitration, and there were obligations of confidence in addition to what one would normally expect to be inherent in arbitration proceedings, the names of the parties were not disclosed.

Why was the agreement going to be terminated? First, because in breach (it was alleged) of the licence the claimant had failed to stick to a sales and marketing plan which the licence required it to agree with the defendant (the licensor). But no such plan had actually been agreed, so there was at least an issue to be tried there. Likewise the second ground, that the claimant's business had developed in a different direction from that of the defendant, because the judge (Stuart-Smith J) thought it was arguable that the core business remained the same.

Would damages be an adequate remedy? The judge, perhaps slightly surprisingly, thought so. It looks like a clear case of a situation in which the claimant will suffer too much damage if the defendant is allowed to do what they propose to do. The situation is further complicated by the fact that the parties had agreed to limit the damages available for breach. The case-law left the judge feeling somewhat uneasy with the result, and consequently have gave leave to appeal. So, an interesting case which highlights a legal issue that's novel to me, but not, I suspect, the last word on it.