Ursula Cheer, Professor of Law, University of Canterbury, comments on confidentiality breaches, defamation, liability, publication, the internet and the recent HC case: Earthquake Commission v Unknown Defendants [2013] NZHC 708.

Remember the interim injunction EQC obtained earlier in the year prohibiting the publication of information  released by accident of spreadsheets containing details of repair plans and estimates for repair costs for thousands of Christchurch homes (Earthquake Commission v Unknown Defendants [2013] NZHC 708)? I previously blogged in an FAQ about the issue in April this year. In spite of that temporary injunction, the information was released online almost immediately by a Mr Marc Krieger, who published articles on his website with hyperlinks to five different websites that contained the spreadsheets in question.

EQC filed documents against Mr Krieger and obtained directions from the court that he serve the documents on the persons who had supplied the information to him and disclose who that was.  Mr Krieger responded to the court that he had served the documents but would not disclose the unknown parties involved.

In proceedings against Mr Krieger and these unknown defendants, the High Court has now found that he breached confidentiality, and issued a permanent order prohibiting any further disclosure except by EQC.

Mr Krieger turned out to be a disgruntled ex-EQC employee.  He started his website to give information about EQC processes to the public.  Mr Krieger has had some involvement at a distance in the litigation but is now living in Switzerland, maintaining that the High Court lacked jurisdiction in the matter.

Breach of confidence

To succeed in the claim, EQC had to establish three basic requirements: that the information was confidential in nature, that Mr Krieger had notice of its confidentiality and that he had used it in an unauthorised way. (R v X [2010] 2 NZLR 18 at [45] and Skids Programme Management Ltd v McNeill [2013] 1 NZLR 1 at [76]-[79], endorsing  Coco v A N Clarke (Engineers) Ltd [1969] RPC 41 at 46 ). Additionally, usually government plaintiffs have to demonstrate that prevention of publication is in the public interest. Collins J dealt with each of these requirements in turn.

Was the information on the spreadsheets confidential?

The Court decided that the information was made up of personal, commercial and governmental information. The personal information here was not particularly intimate – the spreadsheets identified addresses together with repairs required and estimated costs of the work.  However, that the information be intimate is not essential. The Court held that by analogy, information associated with insurance claims for damage to residential homes was like that traditionally classed as private.  This is not an obvious analogy and it is not well explained in the judgment.  However, certainly, personal and corporate financial information is regarded as being at the core of privacy or confidentiality, and so at least it might be said insurance  claims costings are similar.

Was the information received in confidence?

Here the Court answered with a resounding ‘yes’.  There was a plethora of evidence which demonstrated Mr Krieger knew when he received the information that it was confidential. For example, he had acknowledged this on his website a number of times. Being a third party in receipt of the information did not relieve him of the obligation of confidentiality worn by the disgruntled EQC employee he said had passed the information on to him. The law looks at the state of the knowledge of the third party when they receive the information and indeed, right up to the time they publish it.  Mr Krieger was found by his own words to have notice of the confidentiality of the information when he got it.

Was the spreadsheet information used in an unauthorised way?

Although there is some judicial divergence about the test to be applied here, Collins J applied a ‘reasonable recipient’s conscience test, and concluded Mr Krieger had failed this, again, because he had acknowledged at various stages that some of the information at least was private and sensitive.

Did EQC have to establish that restraining publication was in the public interest?

Here the judgment becomes much less predictable.  Earlier, the Court foreshadowed this by suggesting a qualification of the well-established rule that where government wants to take advantage of the protections offered by the private law of confidence, it must prove the public interest justifies this. The Court introduced a qualification based on the nature of the information in question (see paras [36]-[43]). Two examples given were genuinely commercial information that the law would readily recognise that a private enterprise could protect as confidential, and private information about citizens. The suggestion was that if the information held by government is of this kind, it is not really government-related and therefore government does not have to prove there is public interest in preventing publication of it.

The Court applied this approach by asking:

1. What is EQC’s proximity to central government - ie: is EQC close enough to core government activity to be equated with government? And:
2. What is the nature of the information in question - ie: if it is not government information, then there would be no need for EQC to establish public interest in restraining it.

The Court answered the first question in the affirmative by looking at EQC’s role as a Crown agent under the Crown Entities Act 2004 and at its board membership and accountability to a Minister. EQC is not a government department but it is an integral part of central government.  So far, so predictable.

On the second question, the Court used the views of the Chief Ombudsman in a 2012 ruling that EQC did not have to disclose estimated repair costs to a claimant (Dame Beverley Wakem Official Information Case Note: Request for EQC Cost Estimates (February 2012)) to hold that the spreadsheet had certainly originally contained commercially sensitive information and could still do so, as well as private information about claimants. So the Court concluded the information was not information ‘relating to government’ which carried an onus of establishing that restraint would be into the public interest.

I’m not sure this apparently new qualification is a real one, or what clear purpose it serves. This is because arguably there is very high public interest in government restraining publication of commercially sensitive information and private information it has collected. In the first case, the reason the information is commercially sensitive at all is because it directly impacts on how much public tax revenue will need to be expended. That is not like private sector commercial sensitivity. In the second case, private information does not cease to be private because it is collected and held by a government, but in being held, it becomes government –related because the government becomes custodian of it in a particular form and can use it for particular public good purposes.  And is there not huge public interest in governments protecting the masses of private information collected about their citizens for government purposes?  Would not release be outside of those purposes, thus supporting the public interest in restraint? And without a guarantee of protection, the government would be unable to collect this information and therefore  to govern. So, in my view, contrary to what the High Court suggests in the EQC case,  both sorts of information do ‘relate to’ government in a very direct way, the case for public interest in restraint was strong, and EQC could have met the requirement.

Furthermore, even if, as I argue,  there is very obvious public interest in restraining such information,  there is no reason why government should not still be called upon to establish this, in recognition of the fact that it should be rare for a private law claim to be exploited by a public claimant.

A public interest defence for Mr Krieger?

Returning to the judgment, as EQC had made its case without being required to show public interest in secrecy, the Court considered whether Mr Krieger had any sort of public interest defence. Mr Krieger had suggested he was genuinely motivated to disclose the information so people could discuss the activities of EQC and how it was doing its job. Here the Court found Mr Krieger failed because the information did not do that. It was not ‘government information’ in which the public would have a legitimate interest. Some members of the public might have  a prurient interest in checking the details of their neighbours’ properties, but otherwise, public understanding and discussion of government activities was not promoted. These arguments are convincing.

Justice Collins then goes so far as to say,(at paras [80]-[81]), that the real public interest was in preserving the private information of those who have dealings with EQC to settle their claims. In fact, this finding acknowledges the argument I make above that EQC should have been required to establish public interest in the commercially sensitive and private information being withheld and could have done so easily.

Ultimately, the Court held that the interests of EQC and the wider public interest in restraint outweighed any public interest in disclosure.

Freedom of expression defence?

The Court then addressed the possibility that Mr Krieger’s freedom of expression had been limited in breach of the New Zealand Bill of Rights Act 1990. This involved a thorough but orthodox consideration of whether a permanent injunction was demonstrably justified in a free and democratic society, incorporating an investigation of proportionality and rational connection to the objective of limiting Mr Krieger’s speech. After a careful and detailed analysis of these issues, Mr Krieger was once again declared the loser on the day.  Of importance was the fact that there were other ways of obtaining the information than breaching confidence and  Mr Krieger could have appealed the interim injunction before deciding to post links to the material on his website. This part of the judgment is a good example of our developing Bill of Rights jurisprudence done well.

Remedies

A declaration of breach and a permanent injunction restraining any further breach by Mr Krieger have been issued. EQC abandoned a damages claim because Mr Krieger is facing contempt charges as well.  He continues to reside in Switzerland and has indicated he will pay no costs.

Undoubtedly, the outcome in the case would have been the same if, as I suggest above, the public interest onus had stayed with EQC .  But I am inclined to think there is no such thing as a special category of private or commercially sensitive information collected by government that can be interpreted as devoid of any relationship to the very government collecting it. The onus in cases involving government plaintiffs should remain the same.

Article by Ursula Cheer, Professor of Law, University of  Canterbury,  Christchurch