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In Taveta Investments Ltd (Claimant) v (1) Financial Reporting Council (2) Conduct Committee of the Financial Reporting Council (3) Executive Counsel of the Financial Reporting Council (Defendants) & (1) PricewaterhouseCoopers LLP (2) Stephen John Denison [2018] EWHC 1662 (Admin) the High Court rejected an application for an interim injunction restraining publication of a decision to impose sanctions on an accountancy firm. The Court applied a high threshold test when considering the publication of the decision by a public body and concluded this case was not sufficiently "exceptional" to warrant an injunction.

Key Points

  • A higher threshold applies when considering whether to grant an injunction restricting publication of a report by a public body, as opposed to in private law proceedings.
  • The relevant test is whether the case is "exceptional" and the Court will have regard to whether there is evidence that the likelihood of harm as a result of publication is so serious that it marks the case out as exceptional.

Background

In June 2016, the Financial Reporting Council ("FRC") announced it was investigating the Interested Parties (PricewaterhouseCoopers LLP and one of its accountants) (the "Investigation"). The Investigation was carried out under The Accountancy Scheme, the framework which governs the FRC's functions in this area, and related to alleged misconduct by the Interested Parties in relation to the audit and financial statements of BHS Limited ("BHS") which, at the time, was part of the Claimant's group of companies. On completion of the Investigation in June 2018, the FRC imposed significant fines and sanctions on the Interested Parties and, following agreement on the nature of the misconduct, the FRC and Interested Parties entered into a settlement agreement. The agreement annexed a document containing particulars of fact and acts of misconduct (together the "Sanction Documents").

In line with its Publication Policy, which required a minimum of a three-day notice period, the FRC wrote to the Claimant five days before its planned publication of the Sanction Documents, informing the Claimant that certain corporate entities in the Claimant's group and the Chairman of BHS were identified in the Sanction Documents. The FRC informed the Claimant of its intention to publish and requested that the Claimant inform the FRC of any concerns over factual accuracy within four days. In advance of that deadline, the Claimant's solicitors raised "serious concerns" on behalf of their client in relation to aspects of the Sanction Documents, in particular regarding statements which they considered were "materially inaccurate". The Claimant, via their solicitors, sought additional time to prepare representations on the alleged inaccuracies and requested an undertaking that the FRC would not publish the documents in the meantime, neither of which were agreed by the FRC.

The Challenge

The Claimant proceeded to issue judicial review proceedings together with an urgent application for interim relief to restrain publication of any part of the Sanction Documents that contained or referred to any express or implied criticisms of the Claimant and/or its directors and/or employees (the "alleged criticisms"), until the judicial review claim was determined.

The Claimant alleged that the FRC's decision to publish the Sanction Documents was unlawful because the FRC had failed to give Claimant a fair opportunity to make representations as to the alleged criticisms. The Claimant argued that:

  1. The FRC owed a duty of fairness to the Claimant arising from its intention to publish the Sanction Documents;
  2. The FRC breached that duty in not providing a proper and fair opportunity for the Claimant to respond to what the Claimant argued were serious criticisms;
  3. If the Claimant had been given the opportunity to respond, this might have made a difference to the decision to publish which is sufficient for these purposes; and
  4. The breach had not since been cured by the FRC as the original decision-makers within the FRC had not considered the Claimant's representations and those individuals who had done did not do so with an open mind.

The Judgment

Nicklin J accepted that there was a serious issue to be tried as to whether the FRC owed the Claimant a duty of fairness. He also accepted that there was a serious issue to be tried as to whether there has been a breach of that duty. In concluding thus, the judge considered that the Sanction Documents were capable of bearing a meaning that is defamatory and that publications of the documents may adversely affect the interests of the Claimant and its personnel. The judge recognised that the remedies available after publication would be inadequate in circumstances where reputational harm had already occurred. It was also noted that the FRC did not contend that it was essential to include the criticisms of the Claimant in order to understand the allegations against the Interested Parties.

In considering whether to grant the interim order, Nicklin J accepted that the Claimant had shown that it was likely that it could succeed at trial in showing that publication of the criticisms was not allowed, which would be the applicable test in private law proceedings given that the FRC's right of freedom of expression under the Human Rights Act 1998 was engaged.

However, the judge confirmed that, when considering whether to grant an injunction restraining publication of reports of public bodies, the Court is required to apply a test which is higher than in private law proceedings and so can only grant such injunctions in "exceptional" circumstances. The judge found that the Claimant had not put forward evidence of the likelihood of harm being so serious that it would count as "exceptional".

Comment

This case demonstrates what an uphill struggle claimants will have to restrain publication of reports by public bodies.

In his judgment, Nicklin J sets out a number of reasons as to why he considered that this established principle of the high threshold for public law cases is no longer appropriate, for example, in light of the removal of the right to trial by jury in defamation claims (s.11 Defamation Act 2013) and more recent case law on how conflicting Article 10 (freedom of expression) and Article 8 (including right to reputation) rights should be dealt with.

Although Nicklin J felt unable to depart from the established line of authority he commented that he had "real misgivings" in doing so. Should a case dealing with these issues be heard in the Court of Appeal in the future, arguments on the points raised in this judgment could well be put to the Court in an attempt to lower the applicable test in public law cases.

Andrew Lidbetter
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Nusrat Zar
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Jasveer Randhawa
Of Counsel
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