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Application to injunct publication in public law context did not meet “exceptional circumstances” test

  • United Kingdom
  • Financial services disputes and investigations
  • Litigation and dispute management - Other

01-10-2018

 

Taveta Investments Ltd v Financial Reporting Council [2018] EWHC 1662 (Admin))

Facts of the case

– The Financial Reporting Council (the “FRC”) investigated alleged misconduct by an accountancy firm during the audit of Taveta Investments Ltd (the “Claimant”).

– The FRC subsequently decided to publish their decision to impose sanctions on the accountancy firm.

– The FRC and the accountancy firm agreed a settlement agreement, which included a statement detailing the particulars of the accountancy firm’s misconduct, and an accompanying press release (the “Sanction Documents”). These were originally scheduled for publication on 13 June 2018.

– Personnel of the Claimant were criticised in the Sanction Documents. The FRC emailed the Claimant on 8 June 2018 regarding the proposed publication of the Sanction Documents, requesting that they correct any factual inaccuracies by 12 June 2018.

– The Claimant issued a claim for judicial review, on the basis that the FRC’s decision to publish the Sanction Documents without first giving the Claimant a fair opportunity to answer any criticisms was unlawful. The Claimant’s solicitors stated that “insufficient time” had been given to respond to “unwarranted criticism” by the FRC in the Sanction Documents.

– The Claimant also sought an interim injunction restraining publication by the FRC of any part of the Sanction Documents, arguing that the publication would be unlawful due to criticisms of the Claimant and/or its directors and employees. This briefing focuses on this particular aspect of the judgment.

The decision

– The Court found that there was a serious issue to be tried as:

– the FRC owed the Claimant a duty of fairness, arising from their intention to publish the Sanction Documents. This arose as the Sanction Documents did make criticisms of the Claimant’s personnel, and these criticisms were capable of bearing a meaning which was capable of being defamatory; and

– the question remained as to whether the FRC had breached that duty of fairness, as the FRC had not provided the Claimant with a proper opportunity to respond to criticisms.

– However, the Court did not grant the injunction as:

– the defamatory meaning that the words in the Sanction Documents were capable of bearing was not of “the utmost seriousness”; and

– the Claimant had not shown that it was likely to suffer harm that was so serious as to mark it out as “exceptional”.

Analysis and practical advice

– The case is a reminder that the test for the grant of injunctions in public law cases is higher than in private law proceedings, with the relevant principles being:

– there is significant public interest in the publication of reports by public bodies, particularly when they are under a duty to publish;

– the grant of an injunction in such cases therefore requires “exceptional circumstances”; and

– where potentially defamatory allegations are to be restrained via injunctive relief, the Court should have regard to the fact that, if it were a private law case, relief can be denied if a defendant can successfully argue that the proposed publication was defensible (as was the case in this scenario).

– While the Court did not grant the injunction, it noted that the Claimant may still have a remedy if the FRC were to publish the Sanction Documents in an unamended form. This was on the basis that the defence of qualified privilege might not be sufficient to defeat a claim of malicious publication (in the legal sense of that word), given (i) the defamatory meaning the Court found that the Sanction Documents were capable of having and (ii) the FRC’s disavowal of any intention to publish criticism of the Claimant.

– Accordingly, where a third party receives notice of an intention by another party (e.g. a regulator) to publish material in which it is criticised, or which it otherwise considers to be defamatory, the duty of fairness may require the publishing party to give the third party a fair opportunity to respond. This may be the case notwithstanding any disclaimer in the material in question, e.g. that it does not make an findings against any individual or entity other than the direct subject.

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