When a Pre-trial ‘Gagging’ Order Will Be Granted by the Courts: Cream Holdings Ltd & Others v Banerjee & Another (2004)

November 2004

Artists, Record Labels, Press, Television

In this House of Lords decision it was held that the proper test for a court to use when looking at a prior restraint order preventing the publication of information before a trial was that the order would not be granted unless the court was satisfied that the applicant’s prospects of success at trial were sufficiently favourable to justify the order being in made in the circumstances. In general terms the applicant had to satisfy the court that he would probably succeed at trial although there might be circumstances where a lower threshold might apply. Where a real probability of success could not be proved then the court should look a where the balance of convenience lay. This case revolved around the publication of certain information to do with the business of the Cream nightclub which was provided to the Liverpool Daily Post and the Liverpool Echo by Ms Banerjee who had been the financial controller of one of the Cream group companies but had been dismissed. The information allegedly showed illegal and improper activities by the Cream group. The defendants admitted that the information was confidential. These allegations were published on June 13 and 14 by the two newspapers. The Cream group sought an injunction against any further publication(s). Their Lordships first looked at the existing criteria in American Cyanamid which held that the test that the court should apply is firstly to see if there was a serious issue was to be tried and provided the case was not frivolous or vexatious then look at the balance of convenience before grated an injunction. the House of Lords applied Section 12(3) of the Human Rights Act which provides that when asking for a pre-trial injunction “no such relief is to be granted so as to restrain publication before trial unless the court is satisfied that the applicant is likely to establish that publication should not be allowed”. Given that the principal happenings in this case the Post and the Echo wished to publish were of serious public interest the House of Lords was firmly of the opinion that the claimant’s prospects of success were not sufficiently likely to justify making an interim restraining order. This case reinforces the purpose of section 12(3) to buttress the protection afforded to the freedom of the press and the section raises the threshold for granting a interim injunction against the media.

The Times 15 October 2004
American Cyanamid Co v Ethicon Ltd (1975) AC396
COMMENT: from George Festing, Solicitor with the Simkins Partnership

The House of Lords last week handed down its judgment in the case of Cream Holdings Limited and Others v Banerjee and Others. A Merseyside publisher of the “Daily Post” and the “Liverpool Echo”, published allegations by Ms Banerjee, a former employee of part of the Cream Group, the nightclub promoters, regarding alleged corruption involving one of the directors and a local council official. The allegations were, to some extent, supported by documents that Ms Banerjee had copied without permission when she was dismissed from one of the Cream companies. These documents had been passed on to the newspaper. Cream claimed that Banerjee, as an ex-employee, was in breach of her duty of confidence and sought an injunction from the court to restrain the newspaper from publishing any further confidential information given to it by her.
The High Court granted the injunction, a decision that the newspaper appealed on the wording of section 12(3) of the Human Rights Act 1988 which states:
“No such relief [which might affect the exercise of the convention right to freedom of expression] is to be granted so as to restrain publication before trial unless the court is satisfied that the application is likely to establish that the publication should not be allowed.”
The Court of Appeal held that “likely” meant “more probable than not”. The claimant had to show a “real prospect of success, convincingly established” in order to be successful in its application for an interlocutory injunction. The Court of Appeal dismissed the newspaper’s application for the removal of the injunction.
The newspaper took this decision to the House of Lords who allowed their appeal, discharging the original injunction imposed by the first instance judge. With regard to the test to be applied by the courts on an interim injunction application Lord Nicholls said:
“There can be no single, rigid standard governing all applications for interim restraint orders. Rather, on its proper construction the effect of section 12(3) is that the court is not to make an interim restraint order unless satisfied the applicant’s prospects of success at trial are sufficiently favourable to justify such an order being made in the particular circumstances of the case. As to what degree of likelihood makes the prospects of success “sufficiently favourable”, the general approach should be that the court will be exceedingly slow to make interim restraint orders where the applicant has not satisfied the court he will probably (“more likely than not”) succeed at the trial.”
This decision raises the threshold higher than the conventional American Cyanamid case that required a claimant only to be able to show that the claim is “not frivolous or vexatious: in other words that there is a serious question to be tried.” In most instances, a claimant would now be expected to show that it is more likely than not that he will succeed at trial.
Despite this, the House of Lords indicated that the courts should retain an element of flexibility where it would be appropriate to allow a lesser degree of likelihood to grant the injunction. This might be appropriate where the adverse consequences of disclosure were particularly serious or where a significant injustice would be done to the claimant if no protection were offered pending trial.

George Festing 22 October 2004

This bulletin is for general guidance only. Legal advice should be sought before taking action in relation to specific matters. Where reference is made to Court decisions facts referred to are those reported as found by the Court.
© This comment The Simkins Partnership http://www.simkins.com

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