Corporate Confidentiality v Freedom of Expression – Court of Appeal Ruling

Disclosure of confidential information into the public domain is the worst nightmare of many businesses – but the freedom of journalists to report the truth is also of critical importance. The Court of Appeal struck a balance between those two interests in a case concerning a hedge fund’s communications with its prospective clients.

The fund had sent a package of documents to 36 professional investors. The documents contained price-sensitive information and elaborate steps were taken to ensure that they were not disclosed to others. They were individually password protected and recipients were reminded that they were strictly private and confidential.

After an international news agency notified the fund of its intention to publish a story, the fund obtained an interim injunction preventing publication. A judge found that aspects of the story were probably derived from the documents. They were impressed with the quality of confidence in that wider dissemination of their contents would be useful to the fund’s competitors and damaging to its business.

In challenging that ruling before the Court of Appeal, the agency argued that there was a clear public interest in publishing the story. There had been criticism of an alleged lack of transparency in fees charged by hedge funds and their activities, and their effect on the economy, were legitimate areas of journalistic inquiry.

In dismissing the appeal, however, the Court noted that striking the right balance between confidentiality and freedom of expression rights is necessarily fact sensitive and that different judges can legitimately reach different conclusions. In this case, the judge had not stepped outside the bounds of proper judicial competence in concluding that the fund’s confidentiality rights prevailed.