Earthquake Commission v Krieger
[2013] NZHC 3140
•27 November 2013
For a Court ready (fee required) version please follow this link
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2013-485-000530 [2013] NZHC 3140
BETWEEN EARTHQUAKE COMMISSION Plaintiff
ANDMARC ALLEN KRIEGER First Defendant
UNKNOWN DEFENDANTS Second Defendant
Hearing: 13 November 2013
Counsel: P R Jagose and R M Dixon for Plaintiff
No appearance for First Defendant
Judgment: 27 November 2013
JUDGMENT OF COLLINS J
Introduction
[1] The two principal questions raised by this proceeding are:
(1)Is the Earthquake Commission (EQC) entitled to a declaration that Mr Krieger disclosed information in circumstances that constituted a breach of confidence; and
(2)Should I issue permanent orders prohibiting any further disclosure of the information in question by anyone other than EQC.
EARTHQUAKE COMMISSION v KRIEGER [2013] NZHC 3140 [27 November 2013]
[2] I shall address these questions by explaining:
(1) The context in which the questions arise. (2) Mr Krieger’s role in the litigation.
(3) The principles that govern the law of breach of confidence. (4) The application of the law to the facts of this case.
(5) Whether relief is necessary. (6) My conclusions.
Context
[3] EQC is a statutory body established by the Earthquake Commission Act 1993 (the Act). EQC administers insurance against damage caused by natural disasters.
[4] Those who have fire insurance for residential buildings and personal property are deemed to be insured under the Act against damage that is caused by natural disasters to residential buildings,1 residential land,2 and personal property.3 There are limitations and exceptions to the insurance cover provided under the Act but they are not relevant to the questions I have to consider.
[5] Premiums are paid to EQC by insurance companies, which provide fire insurance in relation to residential buildings and personal property. The premiums are set by regulations and become a debt due to the insurance company by the insured person.4 The commercial sensitivity of EQC’s business is illustrated by the fact that all information about the premiums which insurers pay to EQC is subject to
strict secrecy provisions, set out in s 25 of the Act.
1 Earthquake Commission Act 1993, s 18.
2 Section 19.
3 Section 20.
4 Section 23.
[6] On 4 September 2010 and 22 February 2011 Christchurch and its surrounding areas were devastated by powerful earthquakes. The second of those earthquakes caused the deaths of 185 people. Thousands of aftershocks accompanied both earthquakes which were New Zealand’s most expensive natural disasters and amongst the most costliest natural disasters to insurers world-wide.
[7] By September 2012 Fletcher EQR, an EQC contractor, had collated information relating to approximately 83,000 claims. This information was condensed by EQC into a spreadsheet which contained 30 “fields” of information about each claim. For present purposes, it is convenient to describe those fields under three headings:
(1)Information about individual claims. This information includes information that could easily lead to the identification of individuals. It includes a claimant’s suburb, street name and street number and it includes information about each individual insurance claim, including the estimated value of those claims and the progress that was being made to remedy the damage suffered by each claimant.
(2)Information of a commercial nature. This information includes confidential information relating to the costs of repairing damage suffered by claimants, including assessments of the damage, and the amount quoted to repair the damage.
(3)Administrative information. This information relates to EQC’s administrative processes and the systems put in place to administer each claim.
[8] On 22 March 2013 an EQC employee included the spreadsheet as an attachment to an email and inadvertently sent the spreadsheet to an earthquake repair contractor (the contractor) in Christchurch. EQC took steps to secure the information that had been accidentally sent to the contractor.
[9] On 4 April 2013 an article appeared on a website called “EQC Truths” (the
website). In that article the author5 said that he had received “an email ... from a
‘disgruntled EQC employee’ containing what appears to be the same spreadsheet” that had been sent to the contractor on 22 March 2013. The article said the author was discussing with his lawyers “... how to get [the] information [in the spreadsheet] into the public domain whilst complying with all legal requirements”. The author also said that he had:
... no compunction about releasing the information because [he believed] that each customer [of EQC was] entitled to know the value that EQC had assigned to their claim, which in many cases [was] an inaccurate figure.
[10] On 6 April 2013 the author of the website published instructions on the website about how EQC claimants could access information contained in the spreadsheet. The author explained that he was enabling individual EQC claimants to access their EQC records so as to enable claimants to understand the value EQC had assigned to their claim. The author said the system he had put in place was designed to protect individuals’ privacy and “to prevent information from potentially falling into the wrong hands”. The author also said:
I do not want to release information indiscriminately because of the Privacy Act, and more importantly, common decency. It would be hypocritical for me as a blogger who anonymously does good work to compromise the privacy of other people.
[11] EQC is subject to the Official Information Act 1982. Claimants could therefore apply to EQC for information held by EQC in relation to their claim.6
Claimants who were dissatisfied with any response from EQC to a request for information could ask the Ombudsman to review EQC’s decision.7 This course was followed when in 2012 the Chief Ombudsman ruled that EQC was not required to provide a claimant with information relating to the estimated cost of repairing the claimant’s property. The Ombudsman decided that EQC could withhold that information in order to enable it to discharge its functions in a commercially prudent
manner.8
5 At the time his identity was not known but it later emerged that it was Mr Krieger.
6 Official Information Act 1982, s 24.
7 Section 28.
8 Dame Beverley Wakem Official Information case note: Request for EQC Cost Estimates
(February 2012).
[12] On 8 April 2013 I issued orders prohibiting disclosure of the spreadsheet pending the hearing on 9 April 2013 of an application for an interim injunction sought by EQC. Later on 8 April 2013 an article appeared on the website in which the author said that he became aware of my orders through a news website.9 The author said that he “... steadfastly [b]elieved in the principle that upholding the law is sacrosanct and that [he would] abide by the High Court ruling” even though it was
“personally disagreeable” to the author.
[13] On 9 April 2013 I heard EQC’s application for an interim injunction. At the
end of the hearing I issued interim orders prohibiting:
(1)recipients of the information in the spreadsheet from disclosing it to any other person; and
(2) the author of the website from disclosing information about identifiable EQC claimants to others.
Later, on 9 April 2013, the author of the website said he rejected my interim orders and he urged me to lift the interim injunction to give him sufficient time to prepare “a proper legal defence”. However, the author did not file any applications at that time and no lawyer has ever advised the Court that they have received instructions to act for the author.
[14] Instead, the author of the website published articles on the website with hyperlinks to five different websites which contained the spreadsheets. As at
22 October 2013 the spreadsheet could still be found on three of those websites.
[15] The steps taken by the author of the website enabled anyone to access information about individual claims that were administered by EQC. An example of the unfortunate consequences of the author’s actions can be found in the messages
on the website which include:
9 April 11
Whoops. Addresses included. My asshole neighbour got ripped off! Lol10
However, it is also appropriate to acknowledge that almost all of the messages
posted on the website supported the author’s actions.
[16] EQC’s investigations led it to discover Mr Krieger was the author of the website. However, the person or persons who supplied the spreadsheet to Mr Krieger and others who assisted him have not been identified and therefore remain “unknown second defendants”.
[17] The Solicitor-General has now informed the Court that he has brought contempt proceedings in relation to Mr Krieger’s disclosures of the spreadsheet. As a consequence, EQC has elected to no longer seek damages from Mr Krieger.11
Mr Krieger’s role in the litigation
[18] On 16 May 2013 EQC filed an amended statement of claim in which it named Mr Krieger as the first defendant and alleged that he was the person who had disclosed the information in the spreadsheet.
[19] On 22 May 2013 EQC sought and obtained directions requiring Mr Krieger to serve on those from whom he had obtained the spreadsheet the same documents which EQC had served on him. Mr Krieger was also required to file an affidavit specifying, amongst other things, who had provided him with the spreadsheet.
[20] On 25 June 2013 Mr Krieger filed an affidavit in which he said, amongst other things, that he had provided the documents served on him to an unnamed second defendant and that he had received from an unnamed source “a spreadsheet containing identical or similar information to the one mistakenly released to [the
contractor]” on 22 March 2013.
10 Laugh out loud.
11 Relying on Daniels v Thompson [1998] 3 NZLR 22 (CA); W v W [1999] 2 NZLR 1 (PC).
[21] On 26 June 2013 Mr Krieger filed a memorandum which I have treated as
being a statement of defence. Mr Krieger’s statement of defence:
(1)contains an acknowledgement that he is the author of the website and that he received a spreadsheet “similar or perhaps identical” to the one sent to the contractor;
(2)included an assertion that the information in the spreadsheet was not confidential information. In particular, Mr Krieger pleaded the information belongs to individual claimants and is easily accessed “on the internet and therefore not confidential”;
(3)contains an acknowledgement that he was aware of the interim orders issued on 9 April 2013, but claims this interim order exceeded the High Court’s lawful authority because the information in the spreadsheet contains public information and that the interim order breached Mr Krieger’s right of freedom of expression guaranteed by the New Zealand Bill of Rights Act 1990;
(4)contains an acceptance that after 8 April 2013 he published information on the five websites where the contents of the spreadsheet could be found; and
(5) set out the reasons why he objected to any relief being granted to
EQC.
[22] On 30 June 2013 Mr Krieger filed a further memorandum which appears to be a strike-out application. In that memorandum Mr Krieger explained that he formerly worked at EQC and “performed [his] duties exemplarily” and in 2012 was voted by fellow employees as meriting an award for his services to EQC. He also explained that he had a number of “personality clashes” with his managers whom he described as being “incompetent”. Matters came to a head when Mr Krieger left EQC after he had been threatened with dismissal for approaching the Minister
responsible for EQC (the Minister) “to discuss ways to improve processes and rectify problems”. Mr Krieger explained that he created the website:
[to] provide claimants with actionable information that might enable them to navigate through an often complex and opaque process, create a historical record of the debacle at EQC, and perhaps even foment enough public outcry that might become the impetus for enacting positive political change.
[23] In his memorandum of 30 June 2013, Mr Krieger:
(1)Reiterated he was not liable for breach of confidence because the information was, from his perspective, not confidential and was widely available within EQC and to private insurers.
(2) Said release of the information was in the public interest.
(3)Said permanent orders should not be issued in favour of EQC because the information in question belongs to claimants and it is in the public interest that it be disseminated.
Mr Krieger also asked that I order EQC and its lawyers to disclose how they identified him, that I dismiss the proceedings against him on the grounds that the proceeding was frivolous and meritless and that I award him costs of $3,540.12
[24] Mr Krieger also sent emails to the High Court Registry on 19 September
2013 and 8 and 10 October 2013. Those emails included a request for trial by jury. When Mr Krieger’s memorandum of 30 June 2013 and his emails were referred to me on 16 October 2013, I issued a minute explaining Mr Krieger would have to file and serve proper applications if he wished to pursue a strike-out application and an application for trial by jury.
[25] Mr Krieger’s emails to the Court say that he is now residing in Switzerland and that he is “boycotting this proceeding because the High Court lacks jurisdiction”.
12 Based on his hourly billing rate of $59.
[26] In the meantime, I had approved a timetable on 18 September 2013 to have EQC’s application for a declaration and permanent orders heard as soon as possible. The parties were advised of the 13 November fixture on 21 October and 29 October
2013. On 29 October 2013 Mr Krieger again told Court staff that the High Court lacks jurisdiction and that he is no longer living in New Zealand. Mr Krieger said that his assets were safe but that he “would avenge any misdeeds done against [him]”. Mr Krieger also spoke about approaching EQC’s reinsurers to inform them about the deficiencies in the way in which he says EQC has conducted itself.
Breach of confidence
Origins
[27] In Coco v AN Clarke (Engineers) Ltd Megarry J explained the origins of the law of breach of confidence in the following way:13
The equitable jurisdiction in cases of breach of confidence is ancient; confidence is the cousin of trust. The Statute of Uses, 1535, is framed in terms of “use, confidence or trust”; and a couplet, attributed to Sir Thomas More, Lord Chancellor avers that “Three things are to be ... in Conscience; Fraud, Accident and things of Confidence.” ... In the middle of the last century, the great case of Prince Albert v Strange ... reasserted the doctrine.
[28] In Prince Albert v Strange, Prince Albert obtained an injunction restraining the defendant from publishing a catalogue of etchings that had been made by Queen Victoria and Prince Albert because the etchings in question had been obtained in “breach of trust, confidence, or contract ...”.14 The principles articulated in Prince Albert’s case provided the platform for the development of the law of breach of confidence in commercial settings and in particular, to protect trade secrets and business information.15 In Saltman Engineers Co Ltd v Campbell Engineers Co Ltd,
the Court of Appeal of England and Wales reaffirmed the equitable doctrine of
13 Coco v AN Clarke (Engineers) Ltd [1969] RPC 41 (Ch) at 46.
14 Prince Albert v Strange (1849) 41 ER 1171 (QB) at 1178-1179.
15 See Mark Warby, Nicole Moreham, Eain Christie (eds) Tugendhat and Christie: The Law of Privacy and the Media (2nd ed, Oxford University Press, Oxford, 2011) at [4.03]-[4.07]; RG Tulson and CM Phipps (eds) Confidentiality (3rd ed, Sweet & Maxwell, London, 2012) at [1-001]-[1-059].
breach of confidence in a trade secrets case.16 In that case Lord Greene MR said in order for the information in question to be confidential it must:17
... have the necessary quality of confidence about it, namely it must not be something which is public property and public knowledge. On the other hand, it is perfectly possible to have a confidential document, be it a formula, a plan, a sketch, or something of that kind, which is the result of work done by the maker upon materials which may be available for the use of anybody; but what makes it confidential is the fact that the maker of the document has used his brain and thus produced a result which can only be produced by someone who goes through the same process.
[29] From the Saltman case the law of breach of confidence evolved to protect personal information18 and government secrets.19 More recently there has developed the concept of breach of confidence where commercial confidentiality attaches to personal information.20
[30] While in the United Kingdom, breach of confidence is treated as an equitable cause of action,21 the Supreme Court of Canada has suggested that the action should be characterised as a hybrid that derives from multiple roots in equity and the common law. In Lac Minerals Ltd v International Corona Resources Ltd, Sopinka J said:22
The foundation of action for breach of confidence does not rest solely on one of the traditional jurisdictional bases for action of contract, equity or property. The action is sui generis relying on all three to enforce the policy of the law that confidences be respected.
Elements required to establish breach of confidence
[31] In Coco Megarry J explained that the following three elements are normally required to establish breach of confidence:23
(1) that the information has the necessary quality of confidence about it;
16 Saltman Engineers Co Ltd v Campbell Engineers Co Ltd (1948) 65 RPC 203 (CA).
17 At 215.
18 See Argyll v Argyll [1967] Ch 302.
19 See Attorney-General v Jonathan Cape Ltd [1976] QB 752.
20 Douglas v Hello! Ltd [2005] EWCA Civ 595.
21 Warby, Moreham and Christie (eds), above n 15, at [4.11] contrast Douglas v Hello! Ltd, at [96]- [97], where the Court of Appeal suggested breach of confidence could be considered as a restitutionary claim for unjust enrichment.
22 Lac Minerals Ltd v International Corona Resources Ltd [1989] 2 SCR 574 at 615.
23 Coco v AN Clarke (Engineers) Ltd, above n 13, at 47.
(2)that the information has been imparted in circumstances importing an element of confidence; and
(3) that there has been an unauthorised use of the information.
This approach was endorsed by the House of Lords in Campbell v MGN Ltd24 and has been described as “the conventional starting point for considering the nature and scope of the duty of confidentiality”.25
[32] In New Zealand, the ingredients of breach of confidence were considered by the Court of Appeal in R v X where Hammond J said:26
... the basic principle in the civil law is now (as a matter of substantive law) that information of a requisite character will be protected as confidential where the complainant has a reasonable expectation of confidentiality or privacy and the defendant has agreed to keep the information confidential or has notice of its confidentiality.
[33] As the authors of Media Law in New Zealand have noted, the difficulty with the approach taken by Hammond J is that it provided little guidance in identifying when a reasonable expectation of confidentiality exists.27
[34] Since R v X the Court of Appeal has had the opportunity to again consider the ingredients of a claim in equity for breach of confidence. In Skids Programme Management Ltd v McNeill the Court of Appeal cited with approval the three ingredients required to establish breach of confidence that were articulated by
Megarry J in Coco.28
[35] I shall therefore determine EQC’s claim by first referring to the three
ingredients of breach of confidence set out in [31] of this judgment.
24 Campbell v MGN Ltd [2004] UKHL 22, [2004] 2 AC 457.
25 R v Department of Health ex parte Source Informatics Ltd [2001] QB 424 (CA) at [14].
26 R v X [2009] NZCA 531, [2010] 2 NZLR 181 at [45].
27 John Burrows and Ursula Cheer Media Law in New Zealand (6th ed, LexisNexis, Wellington,
2010) at [5.3.2].
28 Skids Programme Management Ltd v McNeill [2012] NZCA 314, [2013] 1 NZLR 1 at [76]-[79].
Public interest considerations
[36] Where a plaintiff who seeks to establish a breach of confidence is part of government the Court “... will look at the matter through different spectacles”29 from those used when the plaintiff is a private individual or entity.
[37] Where the information in question relates to the workings of government and the plaintiff is part of government, the plaintiff needs to establish that restraining disclosure of the information is in the public interest. The rationale for this was explained by Mason J in Commonwealth of Australia v John Fairfax & Sons Ltd when he said the purpose of an action in breach of confidence is:30
... to protect the personal, private and property interests of the citizen, not to protect the very different interests of the executive government. It acts, or is supposed to act, not according to the standards of the private interest, but the public interest.
[38] Since the formation of New Zealand as a colony, central and local government in this country has embarked on a number of commercial undertakings that in other jurisdictions were left to private enterprise.31 Today, a number of government departments, crown entities and local authorities undertake activities which are commercial and which, if carried out by a private entity would unquestionably be protected by commercial confidentiality. Where a public body
wishes to protect information on the grounds of commercial confidentiality it may not be necessary to establish that restraining publication is in the public interest. Distinguishing between governmental and genuine commercial information may not be an easy task.32
[39] Similarly, many government departments, crown entities and local authorities collate vast quantities of private information about citizens. In acquiring private
information agencies of government may also have a duty to protect the information
29 Commonwealth of Australia v John Fairfax & Sons Ltd (1980) 147 CLR 39 at 51-52 per
Mason J, cited with approval by the House of Lords in Attorney-General v Observer Ltd [1990]
1 AC 109 (HL) at 258 per Lord Keith, at 270 per Lord Griffiths and at 283 per Lord Goff.
30 Commonwealth of Australia v John Fairfax & Sons Ltd, above n 29, at 51.
31 See Farnell v Bowman (1887) 12 App Cas 643 (PC) at 649 referring to colonial government in
New South Wales. The same observations applied to New Zealand.
32 See London Regional Transport Ltd v The Mayor of London [2001] EWCA Civ 1491, [2003] EMLR 4.
in question33 and through that duty have grounds in equity to prevent others from using that information without the authority either of the individuals concerned or the government agency.
[40] Where, because of the nature of the information in question, a plaintiff that is part of government does not have to establish that it is in the public interest to protect the information, a defendant may still successfully raise a public interest defence.
[41] No public interest considerations were brought to my attention at the time I was asked to issue the interim injunction. This was because when Courts are asked to consider urgent applications for interim injunctions the focus is upon protecting the confidentiality of the information in question, and it is incumbent on a party resisting a claim of breach of confidence to identify the public interest relied on. Establishing a public interest is often difficult in the context of an interlocutory application where the Court does not have the benefit of full evidence, cross- examination, or as in this case, a defendant, and therefore matters of public interest
are often left to the substantive hearing.34 Ordinarily, that would occur soon after the
interlocutory hearing.
[42] Since the interim orders were issued in favour of EQC on 9 April 2013, Mr Krieger has raised a public interest defence. I will therefore:
(1)consider whether EQC, because of its role within government and because of the nature of the information it wishes to protect, needs to establish that disclosure of the information in question is not in the public interest; and, if not,
(2) whether Mr Krieger has a public interest defence.
33 Privacy Act 1993, s 6 Principles 5(a)(ii) and 11.
34 See European Pacific Banking Corp v Fourth Estate Publications Ltd [1993] 1 NZLR 559 (HC) at 564-565 and M v R HC Auckland CP590/97, 24 April 1998. See also Attorney-General v Observer Ltd, above n 29, at 222-223 where the Court identified that the public interest or iniquity exception is subject to two rules, the second being that the allegations of iniquity must be substantiated.
[43] Mr Krieger has also raised the argument that EQC’s proceeding attempts to unlawfully breach his right to freedom of expression guaranteed by s 14 of the New Zealand Bill of Rights Act 1990 (NZBORA). I shall examine this suggestion when considering Mr Krieger’s defences.
Application of legal principles to the facts
Does the information in the spreadsheet have the quality of confidence?
[44] The subject matter of the information must have the necessary quality of confidence to be protected by a duty of confidence. The categories of information that are generally protected by breach of confidence are trade secrets, personal confidences, government information, and artistic and literary confidences.35 At this stage I address the personal nature of the information in the spreadsheet, and the commercial and governmental elements are addressed at [68]-[74].
[45] The information collated in the spreadsheet contains personal details of individual claimants. The fields of information contain precise addresses, the status of the claim, and the estimated costs of carrying out repairs as assessed by EQC.
[46] Personal information is often characterised as intimate aspects of a claimant’s personal life, such as their medical information or details of their personal relationships.36 However, personal information does not have to be about a particularly intimate subject matter to qualify as confidential. I consider that details associated with insurance claims for damage to a person’s residential home is personal information that is analogous to the traditional categories of private information that have been classed as confidential.37 Although the claimants are not identified by name, a reader can access information about the extent of repairs that are necessary at each address, and the estimated costs of carrying them out. It quantifies the value of loss and property damage that claimants have sustained as a result of the earthquakes, as well as the estimate a contractor has quoted for repairing
that damage.
35 Warby, Moreham, and Christie (eds), above n 15, at [4.31].
36 See Stephens v Avery [1988] 1 Ch 449 at 454 and Douglas v Hello! Ltd, above n 20, at [169].
37 Warby, Moreham, and Christie (eds), above n 15, at [4.66].
[47] I accordingly conclude that the information in the spreadsheet was confidential because of the nature of the details it contained, it was not in the public domain, and it was the product of work done by EQC or its contractors.
Was the information supplied to Mr Krieger in circumstances that import an obligation of confidence?
[48] Mr Krieger acknowledged that he received the spreadsheet from a “disgruntled EQC employee”. Mr Krieger must have known at that point he was not authorised to receive the spreadsheet.
[49] Mr Krieger has refused to identify the person who released the spreadsheet to him. He has not done so because he appreciates that the person within EQC who released the spreadsheet to him did so without authority.
[50] When Mr Krieger received the spreadsheet he said on his website that he appreciated the spreadsheet contained information that was confidential to claimants and that he did not want to compromise the privacy of claimants. These words demonstrate Mr Krieger knew the spreadsheet contained information that was confidential.
[51] Mr Krieger also said before the interim orders were issued that he was seeking legal advice to see what lawful means were available to release the spreadsheet “while protecting the privacy of all property owners”. These words also show Mr Krieger knew the information in the spreadsheet was confidential.
[52] Mr Krieger now submits that the information in the spreadsheet is not confidential because it belongs to individual claimants. Again, the acknowledgement that Mr Krieger knew the spreadsheet contained information of a private nature is a factor which indicates he also knew it was confidential and as such he had a duty under the Privacy Act 1993 not to disclose it.38
[53] When Mr Krieger received the spreadsheet he would have appreciated the confidential nature of the information in the spreadsheet. It contains information that
38 Privacy Act 1993, s 6 Principles 5(a)(ii) and 11.
clearly identifies individual claimants through their street numbers, and the likely costs of remedying the damage to residential property, land and personal property.
[54] The fact that Mr Krieger is a third party recipient of the spreadsheet does not relieve him of a duty of confidence. All that is required for a duty of confidence to arise is for the recipient of the information to be on notice that it is confidential.39 As the Supreme Court of Canada has said:40
Equity, as a court of conscience, directs itself to the behaviour of the person who has come into possession of information that is in fact confidential, and was accepted on that basis, either expressly or by implication. Equity will pursue the information into the hands of a third party who receives it with the knowledge that it was communicated in breach of confidence (or afterwards acquires notice of that fact even if innocent at the time of acquisition) and impose its remedies.
[55] The six factors I have referred to in paragraphs [48] to [53] lead inexorably to the conclusion Mr Krieger must have known that the information in the spreadsheet was confidential and that he received it in circumstances that imported an obligation on him not to disclose the information he had received.
Was there an unauthorised use of the information?
[56] The conventional test to determine whether confidential information has been misused is whether the conscience of the recipient of the confidential information should have been troubled by disclosing the information in question. This test was confirmed by the Court of Appeal of England and Wales in R v Department of Health ex parte Source Informatics Ltd and in London Regional Transport Ltd v The Mayor
of London.41 However, in the latter case, Sedley LJ said that the conscience of the
defendant was not a reliable indicator of whether or not there had been a misuse of confidential information and that a proportionality test may be more appropriate.
Sedley LJ said:42
39 Attorney-General v Observer Ltd, above n 29; Hunt v A [2008] 1 NZLR 368 (CA);
Royal Brunei Airlines v Tan [1995] 2 AC 378 and Thomas v Pearce [2000] FSR 718 (CA).
40 Cadbury Schweppes Inc v FBI Foods Ltd [1999] 1 SCR 142 at [19].
41 R v Department of Health ex parte Source Informatics Ltd, above n 25; London Regional
Transport Ltd v The Mayor of London, above n 32.
42 At [58].
One recipient may lose sleep a lot more readily than another of whether to make disclosure, without either of them having to be considered unreasonable. If the test is whether the recipient ought to be losing sleep, the imaginary individual will be for practical purposes a judicial stalking horse and the judgment more nearly an exercise of discretion and correspondingly less predictable. So for my part I find it more helpful today to postulate a recipient who, being reasonable, runs through the proportionality checklist in order to anticipate what a court is likely to decide, and who adjusts his or her conscience and conduct accordingly.
[57] It is clear Mr Krieger believes he was acting with a clear conscience when he disclosed what at the time was commercially sensitive information about the costs of repairing individual claims. However, Mr Krieger appears to have had some appreciation that releasing the spreadsheet involved disclosing private information that should only have been disclosed with the consent of the claimants concerned. In any event, the test is not the actual state of Mr Krieger’s conscience but what his conscience should have been telling him.
[58] Those who were affected by EQC’s decision and who had a legitimate interest in knowing how their claims were being assessed by EQC had the option to apply to access the information through the Official Information Act 1982. Even if all information held by EQC in relation to a claim did not have to be released to a claimant, the appropriate course was to pursue disclosure through an Official Information Act request. It was not for Mr Krieger to take it upon himself to tell the world at large about the details of individual claims.
[59] In Wilson v White, where the defendant raised a public interest justification for releasing information in breach of an implied undertaking, the Court of Appeal observed that someone in possession of such information is not entitled to decide unilaterally that public interest warrants disclosure, and instead the proper course is to put the issue to the Court.43 As the Court noted in Solicitor-General v Miss Alice,
“self help is the very antithesis of the rule of law”.44 If Mr Krieger still felt he was
justified in releasing the information he had the right to appeal the interim injunction.
43 Wilson v White [2005] 3 NZLR 619 (CA) at [63].
44 Solicitor-General v Miss Alice [2007] 2 NZLR 763 (HC) at [64].
[60] Before he disclosed the contents of the spreadsheet through hyperlinks to the five websites that contained the spreadsheet, Mr Krieger acknowledged that I had issued interim orders forbidding the unauthorised disclosure of the information in the spreadsheet. Mr Krieger chose to disregard the interim order and to devise means through hyperlinks to disclose the contents of the spreadsheet.
[61] I do not consider it necessary to try and apply a proportionality test of the kind postulated by Sedley LJ because “... the reasonable recipients’ conscience is a standard well established in determining the existence and scope of a duty of confidentiality ...”.45
[62] Applying the reasonable recipients’ conscience test I have no hesitation in concluding Mr Krieger disclosed the information in question without authority and in doing so he misused the information he had received.
Does EQC have to establish that restraint of publication is in the public interest?
[63] I propose to answer this question by examining two sub-questions: (1) What is EQC’s proximity to central government?
(2) What is the nature of the information in question?
[64] In posing these questions I do not believe it is necessary to focus on the nature of EQC’s activities and determine if they are of a private commercial nature or governmental nature.46 Focusing on the nature of the function that EQC performs could be potentially misleading because when it performs its functions EQC could obtain information that is private and commercial, and also obtain information that is governmental and to which a high level of public interest is attached. For these
reasons, I believe the better inquiry involves an examination of the two sub-
questions posed in paragraph [63] of this judgment.
45 RG Tulson and CM Phipps (eds), above n 15, at [6-058].
46 The approach adopted in I Congreso del Partido [1983] 1 AC 244 (HL) to determine the scope of state immunity and in Lawson v Housing New Zealand [1997] 2 NZLR 747 (HC) to determine whether a decision of Housing New Zealand was amenable to judicial review.
What is EQC’s proximity to central government?
[65] Government departments and organisations that are in close proximity to the executive branch of government are more likely to possess information that relates to the workings of government than organisations that are remote from the executive branch of government.
[66] EQC is a Crown agent within the meaning of the Crown Entities Act 2004. As such, EQC’s board members are appointed by the Minister47 and are accountable to the Minister.48 The board of EQC is paid at a rate determined by the Minister49 who may also remove a member of the board at any time and entirely at the Minister’s discretion.50 EQC must also give effect to government policy when directed to do so by the Minister.51
[67] The statutory mechanisms through which EQC is accountable to the executive and can be directed by the executive lead me to conclude that while EQC is not a government department as defined in s 27 of the State Sector Act 1988 it is nevertheless an integral part of New Zealand’s central government.
What is the nature of the information in question?
[68] The Chief Executive of EQC has explained that the information in the spreadsheet includes sensitive information relevant to the costs of repairing properties which needs to be kept confidential to avoid skewing market conduct and consequences.
[69] It is apparent from the fields of information on the spreadsheet that it contains amongst other information, the status of claims in respect of each damaged property, the relevant dates when repair work will commence and is estimated to be completed, EQC’s original assessment of the value of the claim, and the value of the
contractor quote. In these circumstances it is easy to understand EQC’s concern that
47 Crown Entities Act 2004, s 28(1)(a).
48 Section 26(2).
49 Section 47(1).
50 Section 36(1).
51 Section 103.
making this information public could enable contractors to price their work in a way that distorted the market.
[70] EQC’s concerns on this point were previously upheld by the Chief Ombudsman when she considered a request under the Official Information Act 1982 to release to some claimants the scope of works documents held by EQC. In concluding EQC could withhold the information under s 9(2)(j) of the Official Information Act 198252 in order not to prejudice or disadvantage EQC’s commercial negotiations, the Chief Ombudsman noted that EQC has a responsibility to negotiate a fair assessment of cost, and it would be more difficult for it to do so if contractors have access to EQC’s estimates. The Chief Ombudsman therefore concluded that
withholding the estimates was necessary to enable EQC to carry on negotiations with contractors, without prejudice or disadvantage.
[71] The Chief Ombudsman also considered whether the need to withhold the information was outweighed by any public interest consideration favouring release of the information. She acknowledged the general public interest in promoting accountability and transparency of government agencies, as well as a particular public interest in home owners being in a position to challenge decisions which affect them. However, the Chief Ombudsman was not persuaded that these public interest considerations outweighed the interest in EQC being able to negotiate repair costs in a fiscally sound manner, especially when considering that public money was
involved.53
[72] I consider therefore the information contained in the spreadsheet includes genuinely commercial information which needed to be kept confidential at the time I issued the interim injunction in order to enable EQC to discharge its responsibilities
as an insurer, in a fiscally prudent manner. However, the commercial information in
52 9 Other reasons for withholding official information
...
(2) Subject to sections 6, 7, 10, and 18 of this Act, this section applies if, and only if, the withholding of the information is necessary to—
...
(j) Enable a Minister of the Crown or any Department or organisation holding the information to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations);
...
53 Dame Beverley Wakem, above n 8.
the spreadsheet related to the status of claims as at September 2012. Since then claims will have progressed and changed to the point where today it is difficult to assess if the information in question is still commercially sensitive.
[73] More significantly however, the information in the spreadsheet included private information about individual claimants. Mr Krieger recognised this from the outset when he said that he did not want to indiscriminately disclose private information “because of the Privacy Act, and more importantly, common decency”. Unfortunately, his actions in disclosing that information has enabled the private details about individual insurance claims to be disclosed to the world.
[74] Because the information which EQC wishes to keep confidential includes genuine commercial and private information, I am drawn to the conclusion that the information in the spreadsheet is not information “relating to government” as described by Mason J in Commonwealth of Australia v John Fairfax & Sons Ltd.54
Accordingly, EQC does not have the onus of establishing that restraint of publication
is in the public interest.
Does Mr Krieger have a public interest defence?
[75] Mr Krieger suggests that disclosing the spreadsheet is in the public interest. In order to succeed with this defence Mr Krieger must show that the public interest in disclosing the information in the spreadsheet outweighs the interests of EQC (or the public generally) in keeping it confidential. This involves a balancing exercise in
which I must weigh up those two competing considerations.55
[76] I propose to weigh up these considerations by briefly reiterating the nature of the information and restating that it does not have the essential characteristics of “government information” in which the public would have a legitimate interest. The information in the spreadsheet would not allow the public to discuss, review and criticise government policy. Here the information lists the addresses of claimants
and the costs associated with repairing individual residential properties, land and
54 Commonwealth of Australia v John Fairfax & Sons Ltd, above n 29, at 51-52.
55 Attorney-General v Observer Ltd, above n 29; Attorney-General for the United Kingdom v
Wellington Newspapers Ltd [1988] 1 NZLR 129 (HC) at 176.
personal property. The information is collated in the spreadsheet to assist EQC’s procurement of repair services. In this respect the spreadsheet was an integral part of EQC’s performance of its commercial functions.
[77] Furthermore, the spreadsheet does not contain information that keeps the community informed or promotes the discussion of public affairs or the government’s management of the Christchurch earthquake recovery process. It simply lists EQC’s estimate of the cost of the claim before it is sent to Fletcher EQR, the quote for repair of the damage, and the progress that has been made in relation to the repair of the damage. This information is of limited assistance to the public in scrutinising the conduct of its government. Mr Krieger relies on the claimants’ entitlement to know the value that EQC has attributed to their claims, which he says is an inaccurate figure in many instances. However, comparing the initial assessment value as estimated by EQC, with the Fletcher EQR quote is not going to assist the public in understanding or participating in policies concerning EQC’s management of the claims process. I am not satisfied that comparing these figures, on a spreadsheet, enables any meaningful conclusions to be drawn.
[78] In this sense the nature of the information at issue in this case can be distinguished from the information at issue in London Regional Transport Ltd v The Mayor of London.56 That case concerned a report by Deloittes into certain private- public partnerships for the maintenance of the London underground. Although the commercial sensitivity of the information was recognised, the injunction was lifted because the report would have enabled the citizens of London to assess whether the government’s private-public partnership model met the “value for money test”, which was described in the judgment as being a “hotly fought” contemporary political debate.57
[79] In contrast, the information contained in the spreadsheet falls far short of information in which there is a legitimate public interest. In Attorney-General for
the United Kingdom v Wellington Newspapers Ltd, McMullin J said:58
56 London Regional Transport Ltd v The Mayor of London, above n 32.
57 At [40].
58 Attorney-General for the United Kingdom v Wellington Newspapers Ltd, above n 55, at 178.
By public interest is meant something more than that which catches one’s curiosity or merely raises the interest of the gossip. It is something which may be of real concern to the public.
Here, Mr Krieger’s disclosure of the spreadsheet aroused the prurient interest of neighbours of those adversely affected by the Christchurch earthquakes but it was not information that promoted public understanding or discussion of government activities.
[80] In my assessment, the real public interest is in preserving the private information of those who have dealings with EQC for the settlement of their insurance claims. Those who negotiate with or provide information to EQC should be able to do so freely and frankly, unhindered by the prospect that their private information will become publicly available.
[81] Therefore, the interest that EQC and the wider public have in keeping the information contained in the spreadsheet confidential outweighs any public interest in disclosure.
The defence of freedom of expression
[82] Restraining publication of the spreadsheet limits Mr Krieger’s right to freedom of expression guaranteed by s 14 of the NZBORA. That right includes the right to hold opinions and to receive and impart information and ideas without interference from public authorities.
[83] The value of freedom of expression when scrutinising government decisions is a bastion of democracy. As the Supreme Court of Canada has observed:59
It is difficult to imagine a guaranteed right more important to a democratic society than freedom of expression. Indeed a democracy cannot exist without that freedom to express new ideas and to put forward opinions about the functioning of public institutions. The concept of free and uninhibited speech permeates all truly democratic societies and institutions. The vital importance of the concept cannot be over-emphasised.
59 Edmonton Journal v Attorney-General (Alberta) [1989] 2 SCR 1326 at 1336-1337.
[84] Any injunction is by its nature a restriction on Mr Krieger’s right to freedom of expression. Therefore, any limitation on Mr Krieger’s right to freedom of expression must be demonstrably justified in a free and democratic society.60 The justification lies in the rationale for being able to bring an action in breach of confidence and the interests it is designed to protect. A similar question arose in HRH Prince of Wales v Associated Newspapers Ltd, where the Court of Appeal of England and Wales said:61
Today [post the enactment of the Human Rights Act 1998 (UK)] the test is different. It is whether a fetter of the right of freedom of expression is, in the particular circumstances, “necessary in a democratic society”. It is a test of proportionality. But a significant element to be weighed in the balance is the importance in a democratic society of upholding duties of confidence that are created between individuals. It is not enough to justify publication that the information in question is a matter of public interest.
[85] A similar evaluation of competing ideals was undertaken by the Supreme Court of Canada in Hill v Church of Scientology of Toronto, where freedom of expression was raised as a defence in a defamation proceeding. In that case the Supreme Court of Canada weighed the defendant’s right to freedom of expression against the plaintiff’s right not to be defamed and concluded that the plaintiff’s right to protection from defamation prevailed. The Supreme Court said:62
The publication of defamatory comments constitutes an invasion of the individual’s personal privacy and is an affront to that person’s dignity. The protection of a person’s reputation is indeed worthy of protection in our democratic society and must be carefully balanced against the equally important right of freedom of expression.
[86] These passages recognise that in some circumstances a restriction on an individual’s freedom of expression will be justified in order to protect other values which are seen as important in a democratic society. One of those values is protecting confidential information which the action of breach of confidence is
designed to achieve.
60 New Zealand Bill of Rights Act 1990, s 5.
61 HRH Prince of Wales v Associated Newspapers Ltd [2006] EWCA Civ 1776, [2008] Ch 57 at
[67].
62 Hill v Church of Scientology of Toronto [1995] 2 SCR 1130 (SCC) at [124].
[87] The limitation on Mr Krieger’s freedom of expression that would result from an injunction must be proportionate to the interests served by an injunction.63 The proportionality of any limiting measure can be tested by using what is commonly referred to as the Oakes test, adopted by the Supreme Court in R v Hansen.64 This was also referred to by Sedley LJ in the context of a breach of confidence when he posed the following questions:65
Does the [order sought] meet a recognised and pressing social need? Does it negate the primary right or restrict it more than is necessary? Are the reasons given for it logical?
[88] A restriction of Mr Krieger’s freedom of expression is rationally connected to EQC’s objective of protecting commercially sensitive and private information, because restraining publication of the spreadsheet will limit the public’s access to the confidential information it contains. Furthermore, an injunction does not go further than is necessary to achieve this aim. The limit on Mr Krieger’s freedom of expression only relates to the contents of the spreadsheet, it will not prevent him expressing opinions about EQC or the government generally, as long as the confidential information in the spreadsheet is not revealed. In this sense the extent to which Mr Krieger’s freedom of expression is limited is in due proportion to the importance of the objective that EQC is seeking to achieve with an injunction, namely, protecting confidential information and preserving the integrity of the claims settlement process.
[89] In assessing the importance of the objective in restraining publication, it is also important to consider the nature of the relationship that gave rise to the duty of confidence.66 When Mr Krieger obtained the spreadsheet he knew it contained confidential information and that he had obtained it in circumstances where he appreciated others had breached their duty not to disclose the spreadsheet to him. In these circumstances I am satisfied that the limits imposed by an injunction are
demonstrably justified.
63 See R v X, above n 26, at [85], citing R(L) v Commissioner of Police of the Metropolis [2009] UKSC 3.
64 R v Hansen [2007] NZSC 7, [2007] 3 NZLR 1 at [103]-[104] citing R v Oakes [1986] 1 SCR
103. Although used in that case to test a legislative provision, decisions that impose limits on freedom of expression must also be justified using the same analysis.
65 London Regional Transport Ltd v The Mayor of London, above n 32, at [57].
66 HRH Prince of Wales v Associated Newspapers Ltd, above n 61, at [69].
[90] Furthermore, there are other ways of obtaining this kind of information without breaching duties of confidence. Such issues can be resolved through the mechanisms which Parliament has established in the Official Information Act 1982, including the role of the Ombudsman in reviewing decisions to withhold information. This method of resolving issues concerning the disclosure of private information is more preferable than allowing individuals such as Mr Krieger to take it upon themselves to disclose private information without consent.
Relief
[91] I am willing to grant a declaration that Mr Krieger’s disclosure of the spreadsheet constituted a breach of his obligation to keep the information in that spreadsheet confidential because:
(1) doing so settles any remaining question about Mr Krieger’s liability;
(2)will assist in the prosecution of any claims against any second defendants should they be identified;
(3) will assist EQC’s enforcement of its rights;
(4)it is appropriate to issue a declaration in a case such as this where damages are not pursued;
(5)signals to the world that disclosures of information of the kind disclosed in this case carries consequences.
[92] I am also willing to grant a declaration because it would be inimical to decline EQC relief simply because through his conduct, Mr Krieger has made public information that should have been kept confidential. It would create a perverse incentive for potential defendants to disseminate confidential information as widely and as publicly as possible, if that would be effective in denying a plaintiff any relief in a breach of confidence action subsequently brought.
[93] The spreadsheet contained information that was relevant as at the date of its creation, namely September 2012. EQC recognises that the commercial imperatives to preventing further disclosure of the information in the spreadsheet has diminished with the passage of time. However, whilst the commercial characteristics of the information carry less weight than previously, the fact that the spreadsheet contains private information about claimants has not diminished since the spreadsheet was created and subsequently disclosed by Mr Krieger.
[94] In McKennit v Ash the High Court of England and Wales recognised that where material has already been revealed to the public, but an injunction is still sought, the courts may take different approaches to the treatment of personal information and commercially sensitive information. Courts are more willing to take a less restrictive approach to commercial information, whilst recognising there may be continuing utility in restraining private information.67 As Eady J said in that case,
citing Lord Keith in Attorney-General v Observer Ltd:68
... there are grounds for supposing that the protection of the law will not be withdrawn unless and until it is clear that a stage has been reached where there is no longer anything left to be protected. For example, it does not necessarily follow that because personal information has been revealed impermissibly to one set of newspapers, or to readers within one jurisdiction, that there can be no further intrusion upon a claimant’s privacy by further revelations. Fresh revelations to different groups of people can still cause distress and damage to an individual’s emotional or mental well-being.
[95] I am not satisfied that this is a case where a permanent injunction would be futile because of the extent of disclosure to date. As the process involved in assessing claims for damage caused by the earthquake is still ongoing, further revelations of confidential details of claimants identified by the spreadsheet is likely to continue to cause damage to the individuals involved.
[96] Absent the continuation of the desire to protect the private information of individuals claimants, I would have been reluctant to issue a permanent injunction. However, the existence of the rights of individuals not to have their information disclosed through the actions of people such as Mr Krieger, leads me to the
conclusion that a permanent injunction is justified.
67 McKennit v Ash [2005] EWHC 3003 (QB) at [81].
68 At [81], citing Attorney-General v Observer Ltd, above n 29, at 260.
Conclusion
[97] The two questions posed in paragraph [1] of this judgment are answered
“Yes”. Therefore:
(1)I issue a declaration Mr Krieger has breached his obligation to keep the information contained in the spreadsheet confidential.
(2)I also issue a permanent injunction restraining Mr Krieger from disclosing the information contained in the spreadsheet.
Costs
[98] EQC is entitled to costs on a scale 2B basis.
Solicitors:
Chapman Tripp, Wellington for Plaintiff
D B Collins J
4
4
0