Polynesian Ltd v Samoa Observer Company Ltd [1999] WSSC 41 (19 February 1999)

IN THE SUPREME COURT OF SAMOA
HELD AT APIA

BETWEEN

POLYNESIAN LIMITED,
trading as Polynesian Airlines, a duly incorporated company
having its registered office at Beach Road, Apia.
PLAINTIFF

AND

SAMOA OBSERVER COMPANY LIMITED,
a duly incorporated company having its registered office at Vaitele.
FIRST DEFENDANT

AND:

AUMUAGAOLO ROPETI ALE,
of Toamua, Editor.
SECOND DEFENDANT

AND

SAVEA SANO MALIFA
of Vaitele, Publisher.
THIRD DEFENDANT

Counsel: Katalaina Sapolu for the Plaintiff
Patrick Fepuleai & Harry Schuster for the Defendants

Hearing Date: 19 February 1999

JUDGMENT OF JUSTICE WILSON

The defendants seek an order discharging the interim quia timet injunction granted by me on 15 February 1999. The injunction was to restrain the defendants, namely, the company publishing the 'Samoa Observer' newspaper, its editor and its publisher, from

"publishing or causing to be published any article or story relating to the salaries, remuneration, allowances and benefits paid to employees and higher ranking officers of the plaintiff (Polynesian Airlines) and other related details in the Samoa Observer issue of 16 February 1999 or any other issue without the prior approval of the plaintiff."

The defendants had come into possession of a 'leaked' document being a photocopy of journal entries of allowances paid to senior employees of the plaintiff for the period from 5 June 1997 to 17 August 1998. The defendants intended to have a story written and published about those allowances but, prior to publication, they wanted the authenticity of the documents to be verified and they sought a comment from a senior officer of the plaintiff There were some discussions between the financial secretary of the plaintiff and the second defendant and later between the chief executive officer and deputy chief executive officer of the plaintiff and the second defendant. Some allegations were later made by the plaintiff that the defendants had breached certain undertakings that had been given.

It is not necessary for me to determine any of the issues of fact arising out of those meetings and what occurred thereat. The allegations and counter - allegations are all set out in the affidavits. What is not in dispute is that the document was 'leaked' to the first defendant, that it is in the form of Exhibit A to the affidavit of Leaupepe Sanerivi Muliaumasealii sworn on 15th February 1999, that it contains details purporting to be allowances and benefits paid to the employees of the plaintiff and, in particular, to the high-ranking officers of the plaintiff, and that it contains excerpts from confidential records, and that the information contained in the document derives from the individual contracts and personal files of employees of the plaintiff, which information is private and confidential, according to the terms of the relevant Administration Manual.

The defendants have applied to this Court to discharge the injunction upon a number of grounds set out in the notice of motion, the first three of which having been extracted from the statement of principle in equity directed to the question of confidentiality enunciated by Megarry J in the English case of Coco v A.N. Clark (Engineers) Ltd. (1969) RPC 41, in which the learned judge identified the three essentials to found the duty of confidence by stating (at p7):

"... three elements are normally required if, apart from contract, a case of breach of confidence is to succeed. First, the information itself ... .must 'have the necessary quality of confidence about it'. Secondly, that information must have been imparted in circumstances importing an obligation of confidence. Thirdly, there must be an unauthorised use of that information to the detriment of the party communicating it."

In the earlier English case of Saltman Engineering Co. Ltd and Others v Campbell Engineering Co. Ltd. (1963) 3 All E.R. 413 Lord Greene MR. had defined confidentiality in these words (at p.415):

"I think that I shall not be stating the principle wrongly if I say this with regard to the use of confidential information. The information, to be confidential, must, I apprehend, apart from contract, have the necessary quality of confidence about it, namely, it must not be something which is public property and public knowledge ..."

(The emphasis is mine.)

More recently, in Moorgate Tobacco Co. Ltd. v Philip Morris Ltd. [1984] HCA 73; (1984) 56 ALR 193, the High Court of Australia reviewed the nature of the action for breach of confidence. In announcing the Full Court's unanimous decision that there was no obligation of confidentiality in the circumstances of that case, Deane J. said (at p.208):

"A general equitable jurisdiction to grant such relief has long been asserted and should, in my view, now be accepted...... Like most heads of exclusive equitable jurisdiction, its rational basis does not lie in proprietary right. It lies on the notion of an obligation of conscience arising from the circumstances in or through which the information was communicated or obtained. Relief under the jurisdiction is not available, however, unless it appears that the information..... has 'the necessary quality of confidence about it' and that is significant, not necessarily in the sense of commercially valuable but in the sense that the preservation of its confidentiality or secrecy is of substantial concern to the plaintiff."

(The emphasis is mine).

I first deal with each of those grounds in turn.

The necessary quality of confidence.

Irrespective of whether any of the principal participants in this dispute did or did not label all or part of the dealings with the document in question (i.e. the allowances list) the plain fact is that the document in question, when it was obtained by the defendants, had all the hall-marks of a confidential document. It 'exudes' confidentiality. I am satisfied that it had 'the necessary quality of confidence' about it and that it is inherently confidential.

These findings are made following an examination of the document itself and the necessary implications arising therefrom. A fortiori (even more so) when the affidavit evidence of Mr Henry Eugene De Silva sworn on 18 February 1999 (see, in particular, paragraph 12 and exhibits A, B and C to that affidavit.), which I accept, is taken into account. The details in the allowances list were, as I have already indicated, compiled after an examination of the terms and conditions of the employment contracts of the individual officers and employees of the plaintiff. According to the Administration Manual, there is an obligation upon the plaintiff to protect and secure the information it is in possession of with regard to inter alia the terms and conditions of service of its staff Mr De Silva is correct in stating that the details on the allowances list are private and confidential, and Ms Katalaina Sapolu's submission based thereon is convincing.

Situations in which 'the necessary quality of confidence' exists are not limited to those where there is a contractual relationship between the person seeking to uphold confidentiality (the confider) and the alleged discloser of confidential information (the confidant) (see the important House of Lords case of Attorney General v Guardian Newspapers Ltd and others (No.2) [1988] UKHL 6; (1988) 3 All E.R. 545 per Lord Griffiths at p.648); or to those where the document is labelled, whether prospectively or retrospectively, as 'confidential'; or to those where the divulgence of information has been by the party whose document is said to be confidential; or to those where a fiduciary duty not to disclose information co-exists. Lord Goff of Chieveley (in the Guardian case supra at p.658) expressed the view, which I find to be highly persuasive, that the circumstances in which the duty of confidence arises include those cases where a third party receives information from a person who is under a duty of confidence in respect of it, knowing that it has been disclosed by that person to him or her in breach of a duty of confidence. His Lordship went on to indicate that other such circumstances would include 'certain situations, beloved of law teachers, where an obviously confidential document is wafted by an electric fan out of a window into a crowded street, or when an obviously confidential document, such as a private diary, is dropped in a public place, and is then picked up by a passer-by'. His Lordship might well have added, in the context of the present case, the words: 'or where an obviously confidential document is 'leaked' by an employee to the press."

Information disclosed in circumstances imparting an obligation of confidence

An obligation of confidence arises when the confidentiality arises from a contractual or other such relationship between the parties or where the information is gained improperly or surreptitiously without the consent of the party claiming confidentiality.

In the Saltman Engineering case supra Lord Greene MR said (at p.414):

"If two parties make a contract under which one of them obtains for the purpose of the contract or in connection with it some confidential matter, then, even though the contract is silent on the matter of confidence, the law will imply an obligation to treat that confidential matter in a confidential way as one of the implied terms of the contract; but the obligation to respect confidence is not limited to cases where the parties are in contractual relationships.'

(The emphasis is mine)."

The Master of the Rolls accepted, as a correct statement of the law, the following formula:

"If a defendant is proved to have used confidential information, directly or indirectly obtained from the plaintiff, without the consent, express or implied, of the plaintiff, he will be guilty of an infringement of the plaintiff's rights."

If I may adopt and adapt the words of that formula to the situation in which this Court found itself when it was asked to make an interim quia timet injunction, it is the law that, if the defendants are shown to be likely, unless restrained, to use confidential information, directly or indirectly obtained from the plaintiff, without the consent, express or implied, of the plaintiff, they may be restrained by injunction from infringing the plaintiff's rights.

Ashburton v Paoe [1913] UKLawRpCh 80; (1913) 2 Ch 469 is English authority for the proposition that an obligation of confidence arises where the information is gained "improperly or surreptitiously". In that case Swinfen Eady LJ. suggested (at p.475) that equity would restrain the "publication of confidential information improperly or surreptitiously obtained."

One can hardly imagine anything more 'surreptitious' than when a company's private financial document is 'leaked' to the media. Counsel for the defendants conceded that 'the allowances list.... was handed by a third party to the defendants'. It has every appearance of a document that, in the hands of any officer or member of the staff of the plaintiff company, would carry with it an obligation of confidence.

I find myself quite unable to accept that either a thief who steals a trade secret, knowing it to be a trade secret, with the intention of using it in competition with its owner, or a party who comes into possession of a 'leaked' confidential document, knowing it to be confidential, with the intention of using it to the detriment of the owner, is less unconscionable than a traitorous servant or staff member. Both the thief and the party coming into possession of a 'leaked' confidential document are unconscionable because they plan to use the wrong conduct to place themselves in a better position than that of a person who deals consensually with the owner.

Unauthorised use of information to the detriment of (the plaintiff).

Ample evidence, which I accept, has been supplied (in affidavit form) to support the plaintiffs contention that the unauthorised use of the information contained in the document would operate to the detriment of the plaintiff, including an adverse effect upon high level allowance talks soon to take place between the plaintiff and Qantas, an adverse effect upon talks scheduled with Boeing regarding the acquisition of a new generation aircraft, the discouragement of the plaintiffs trading partners at a time of rehabilitation for the plaintiffs airline, and an adverse effect upon company morale. Exhibits A and C to the affidavit of Mr Leaupepe Sanerivi Muliaumasealii's affidavit sworn on 18 February 1999 show that the plaintiffs fears, held at the time the injunction was granted, were well-based. The plaintiff has shown that .the defendants were in the business of misuse of the information contained in the 'leaked' document and that such misuse was likely to operate to the detriment of the plaintiff

I now turn to the fourth and fifth grounds relied upon by the defendants.

The public interest in disclosure.

The defendants argued that, whatever the principle regarding confidentiality might be, the factors weighing in favour of upholding the confidentiality interests of the plaintiff may be outweighed where the public interest requires it.

Mr Fepuleai, for the defendants, submitted that 'the public interest in the information outweighs' any confidentiality 'that can be said to exist between the plaintiff and the defendants.' Ms Sapolu, for the plaintiff, argued that public interest could only constitute an 'exception to the implied obligation of a servant not to disclose information or documents received in confidence' where evidence was revealed of 'crimes, frauds, misdeeds or misconduct.'

I think counsel for the plaintiff must have had in mind the settled principle of the law of breach of confidence that there is a defence of public interest only where misdeeds of a serious nature (sometimes called 'iniquities') are exposed.

In the English case of Beloff v Pressdram Ltd. (1973) 1 All E.R. 241 Ungoed-Thomas J. said (at p.260):

"The defence of public interest clearly covers, and, in the authorities, does not extend beyond, disclosure of matters carried out or contemplated in breach of the country's security, or in breach of law, including statutory duty, fraud, or otherwise destructive of the country or its people, including matters medically dangerous to the public; and doubtless other misdeeds of similar gravity..... Such public interest, as now recognised by the law, does not extend beyond misdeeds of a serious nature and important to the country and thus, in my view, clearly recognisable as such."

In this instance and notwithstanding the earnest submissions of Mr Fepuleai, the defendants, upon whom the onus lies (see the Guardian case supra per Lord Griffiths at pages 649-650), have not proven that the document reveals that misdeeds have occurred, let alone misdeeds of a serious or grave nature and, accordingly, have failed to prove that disclosure is in the public interest. Notwithstanding the insistence by the third defendant that some skull-duggery was involved in the system of advances and allowances paid to the plaintiffs officials and senior staff, not one skerrick of evidence to substantiate his allegation has been adduced.

The absence of a duty of confidence owed by the defendants to the plaintiff.

The defendants, under this heading, repeated arguments already advanced under different headings.

Mention was made of the Constitution during the legal argument, and the third defendant referred to it in his affidavit sworn on 17th February 1999. Whilst freedom of speech and expression is guaranteed under Article 13 of the Constitution, it must be remembered that it is not an unrestricted right. Clause (2) of Article 13 provides that 'nothing in sub clause (a) of clause (1). [the subclause giving the right 'to freedom of speech and expression'] shall affect the operation of any existing law in so far as that existing law... imposes reasonable restrictions on the exercise of the right conferred under the provisions of that sub clause..... for preventing (inter alia) the disclosure of information received in confidence...... '
(The emphasis is mine.)

There is, in my judgment, nothing unconstitutional about what the plaintiff has sought to do in these proceedings.

For all these reasons the defendants' application to discharge the interim quia timet injunction is refused.

I will hear counsel as to the question of costs.

JUSTICE WILSON