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Can a company stop a public authority from publishing materials?

Published on September 6, 2018 by John Cooper

Can a company stop a public authority from publishing materials?

The High Court judgment in Taveta Investments Ltd v Financial Reporting Council addresses a question that arises from time to time for all public law practitioners – can a company stop a public authority from publishing materials that might damage its commercial reputation?

The background

The case arises from the controversy over the sale of the retail group BHS in 2015, and its subsequent collapse with the loss of 11,000 jobs and a pensions deficit of £571m.

Taveta, while not a household name, was the owner of BHS at the time of its sale, and is still a significant player in the retail sector through its ownership of the Arcadia Group.

The BHS collapse continues to generate political fallout and to attract the interest of various regulators. One of these is the Financial Reporting Council (FRC) which, among other things, is the UK authority responsible for statutory audit and the professional disciplinary body for accountants.

The FRC’s regulatory interest was in the quality of the audit of the BHS accounts in the years before its sale. To that end it investigated the work of the company’s auditors (PwC) and their lead audit partner (Steve Denison). As a result, both PwC and Denison admitted certain acts of misconduct, and entered into a settlement agreement in return for which they received reduced (but still significant) penalties.

In the interests of transparency, the FRC publishes the details of such settlements, including a summary of the misconduct. Although the FRC was not directly interested in the conduct of Taveta or its management, the summary of the facts inevitably made reference to them. Part of the agreed misconduct was a failure by the auditors to challenge certain assumptions that Taveta had made about BHS. The judge found that, in describing these, the FRC had made implied criticisms of Taveta which were capable of bearing a defamatory meaning.

The legal challenge of preventing public authorities from publishing

Taveta sought to judicially review the FRC for failing to give it an adequate opportunity to respond to these implied criticisms via the process known as ‘Maxwellisation’ – an aspect of the public law duty of fairness. The principal questions in issue were whether the FRC owed that duty to a party it was not investigating, and whether in any event it had discharged it.

But the real interest in the case lies in Taveta’s interim application to prevent the FRC from publishing the details of the settlement until these questions had come to trial.

The judge summarised the established case law. The threshold for obtaining an injunction to prevent a public authority from publishing information in the exercise of its functions is ‘very high indeed’. According to the various authorities there must be ‘pressing grounds‘, ‘the most compelling reasons‘ or ‘exceptional circumstances’. (To be clear, these are probably all just different expressions of the same high threshold test, rather than attempts to create different tests.)

All of the case law leans strongly in favour of there being a significant public interest in public authorities being able to publish their decisions, and being restrained from doing so only in the most unusual cases.

Consequently, even though he was concerned about the potentially defamatory meaning of the implied criticisms of Taveta, and also decided that there was a case to be heard on the Maxwellisation issue (for which he granted permission), the judge felt it necessary to refuse the application to prevent publication.

The FRC did in fact publish its summary of the facts a few weeks later. By this stage, behind the scenes, it had most likely given Taveta a further chance to comment, and may well have changed elements of its initial description of the misconduct from the draft being reviewed by the court.

Postscript

Frank Field, Chair of the House of Commons Work and Pensions Select Committee (and a persistent thorn in the side of Taveta and its owner, Sir Philip Green) praised the judge for the ‘wisdom’ of his decision.

In fact, the judge himself – while feeling bound by the existing precedent – doubted that his conclusion was correct, and would plainly have preferred to reach a different one. But part of his reasoning for this was curious. He questioned the compatibility of the existing case law with European Convention rights. In his view, it privileges the FRC’s Article 10 rights over Taveta’s Article 8 rights – i.e. freedom of expression over protection of reputation – in a way that is now clearly regarded as impermissible.

However, this is a fundamental misstep. The FRC (at least in this context) is a public authority being judicially reviewed. As such it cannot be a ‘victim’ for the purposes of the Convention, and therefore cannot asset Convention rights in UK law (section 7 of the Human Rights Act 1998). Consequently the FRC’s supposed right to freedom of expression does not come into it, and there can be no question of the case law privileging one kind of right over another.

The fact is that Article 8 rights are qualified in the public interest, and the authorities are consistent with a (permissible) recognition of the strong public interest in public authorities being able to publish information about decisions made in the exercise of their functions, subject only to the right to judicial review post-publication.

Is this tough on affected companies? Sometimes, yes. But on balance I think it is still the correct position, and there is no reason to believe it needs to change. The judge in Taveta got it right, even if against his own instincts.

Want more information on public authority decisions, read our next blog post – Are the decisions of public authorities final?

John Cooper

Filed Under: Opinion Tagged With: Public Law & Regulation

Views expressed in this blog do not necessarily reflect those of Gowling WLG.

NOT LEGAL ADVICE. Information made available on this website in any form is for information purposes only. It is not, and should not be taken as, legal advice. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. Gowling WLG professionals will be pleased to discuss resolutions to specific legal concerns you may have.

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LoupedIn is the Official Gowling WLG Blog. Gowling WLG is an international law firm comprising the members of Gowling WLG International Limited, an English Company Limited by Guarantee, and their respective affiliates. Each member and affiliate is an autonomous and independent entity. Gowling WLG International Limited promotes, facilitates and co-ordinates the activities of its members but does not itself provide services to clients. Our structure is explained in more detail on our Legal Information page.

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