Home > Confidential information—knowledge of unlawfulness not required for unlawful means conspiracy (The Racing Partnership Ltd v Sports Information Services Ltd)

Confidential information—knowledge of unlawfulness not required for unlawful means conspiracy (The Racing Partnership Ltd v Sports Information Services Ltd)

26th October 2020

Confidential information—knowledge of unlawfulness not required for unlawful means conspiracy (The Racing Partnership Ltd v Sports Information Services Ltd)

The Racing Partnership Ltd and others v Sports Information Services Ltd [2020] EWCA Civ 1300

Practitioners acting in the more challenging cases of conspiracies involving the misuse of confidential information or otherwise interested in the history and development of tort (outside the tort of negligence) will find this case compelling and essential reading. 

The Court of Appeal confirmed by majority that knowledge of unlawfulness is not required to establish the tort of unlawful means conspiracy and placed practical limits on what might be considered truly confidential information in the future, emphasising the need for careful pleadings. The judicial discussions of the role of economic torts where rights are otherwise governed by contract provide some significant food for thought, with competing views expressed.

What are the practical implications of this case?

Faced with an appeal from a judgment in a complex case about betting information garnered (allegedly unlawfully) from race courses for use by off-course (and often online) bookmakers, the Court of Appeal had to resolve whether the information was truly confidential, whether it had been passed to the defendant in circumstances where a duty of confidentiality subsisted and the existence and scope of a tortious duty where contract otherwise governed the relationship.

In a cross appeal, the Court of Appeal had to consider whether knowledge of unlawfulness in the obtaining of confidential information was a necessary ingredient in establishing the tort of unlawful means conspiracy.

Issues as to trespass to land and freedom of speech were also considered.

Lord Justice Arnold and Lord Justice Lewison were at odds over the key issues on the quality of confidence and duty of confidentiality, as well as the requirement of knowledge in an unlawful means conspiracy claim.

The necessary quality of confidence

This case reminds practitioners that in the commercial context, the necessary ingredient of confidentiality will often be found in the right to control the information (per Lord Hoffman in Douglas v Hello! (No 3) [2007] UKHL 21, [2008] 1 AC 1). Further, such commercially confidential information did not lose its quality of confidence simply by reason of the facts it represented, such as a wedding, being subsequently in the public domain where the nature of the information retained some essential feature that remained unknown to the public. Thus, on the facts of Douglas, each picture was confidential.

The claimant alleged that the information had the necessary quality of confidence at least during the short period between its production on the racecourse and it entering the public domain. As the judge had noted, ‘its value lasts for a matter of minutes only’.

In the alternative (as formulated by the Court of Appeal on a fair reading of TRP’s pleadings), the compilation of the information for onward dissemination was what gave it the necessary quality of confidentiality.

While Arnold LJ and Lord Justice Phillips held the majority view that the information had the necessary quality of confidence, Phillips LJ found with Lewison LJ that, on the facts, SIS had not been aware of any duty of confidence attaching to the information and did not turn a blind eye to such a duty.

Arnold LJ and Phillips LJ held a majority view that knowledge of unlawfulness is not a necessary ingredient of the tort of unlawful means conspiracy. Lewison LJ dissenting held that knowledge of unlawfulness should be a necessary ingredient for policy reasons, including limiting the expansion of the tort.

Further, the same majority held that where a person enters for both lawful and unlawful activities, the entry will not be trespass from the outset but will be trespass from the moment of the unlawful acts in respect of those acts.

What was the background?

The Racing Partnership Limited (TRP), being the first claimant, purchased the rights under a licence agreement with various racecourses to collect and sell on race day information with a short-term high value (the Confidential Information) to bookmakers (off course and often online) from 1 January 2017.

The defendant, Sports Information Services (SIS), had previously had that right under licence for which it had paid ‘an eight-figure sum in fees over the duration of the agreement’ (at para [3]).

Significantly, SIS was a successor in title to a statutory entity (the Tote) with access rights, initially under statute and later under contract, to the racetracks and this access continued despite SIS losing the licence from 1 January 2017. The question was whether and to what extent SIS was using Tote’s lawful access to collect information outside the proper scope of that access for commercial gain and by doing so infringing the rights of TRP to the Confidential Information.

SIS appealed the judge’s finding at first instance that it had misused the Confidential Information on the basis that the information did not have the requisite quality of confidence, as it was ‘public property and public knowledge’. SIS advanced four grounds in support of its appeal:

  • the law only protects secret information
  • the judge’s conclusion on the confidential quality of the information was inconsistent with the law of privacy, which only applies to information over which a claimant has a reasonable expectation of privacy
  • there was no need to expand the law of confidentiality to sporting events, and
  • a claimant must show that clear restrictions had been imposed on the information before it was confidential

SIS also challenged the judge’s finding that SIS obtained the Confidential Information in circumstances importing an obligation of confidence; this appeal was allowed by a majority (Arnold LJ dissenting).

TRP appealed against the judge’s dismissal of the unlawful means conspiracy, challenging whether knowledge of the unlawfulness is a necessary ingredient of the tort.

What did the court decide?

The quality of confidence (SIS appeal)

Arnold LJ (with whom Phillips LJ agreed on this point) disposed of SIS’s grounds on the quality of confidentiality:

  • the quality of confidence did not require that the information be secret. Although secrecy is often deployed in the authorities, the true focus (including in Douglas) was on inaccessibility. The information was not in the public domain at the material time and SIS only obtained the information by reason of its trespass
  • Lord Hoffman had made clear in Douglas that commercial confidentiality is distinct from privacy
  • no expansion of the law of confidence was required, as it applied to sporting events as part of the general law. Citing Lord Hoffman again, the Court of Appeal noted that ‘what matters is not the subject matter of the information, but the fact that it can be controlled and thus has commercial value’ (at para [71]). In this regard, a sporting event was indistinguishable from a celebrity wedding
  • the Court of Appeal accepted that ‘the claimant in a case of this kind must demonstrate that it has sufficient control over the information to render it relevantly inaccessible’ (at para [72]), but noted that the judge had found precisely that level of control in the case as a matter of fact. SIS attempted to rely on the lack of binding contractual obligations as evidencing a lack of control, but this was rejected by the court given the finding that the information was obtained outside of an implied licence to enter onto the racetracks and thus was unlawful by reason of trespass

In a strong minority judgment, Lewison LJ argued that TRP should be confined to its pleaded case. On that case, the information did not have the necessary quality of confidence but in fact had entered the public domain and could be used as part of a general ‘freedom of speech’ (at para [183]). The question was whether a reasonable person would have understood the commercial value of the information such that an equitable obligation of confidence was obvious. Further, the appropriate standard was of the ordinary person not a judge.

The commercial value, in Lewison LJ’s judgment, could only arise on compilation of the individual information into a form usable by bookmakers—a case he found was not available to TRP on its pleaded case—but, in any event, it could not be said that a reasonable person in SIS’ position would have understood a duty of confidence to attach to the information, particularly where contract otherwise governed the relationship and did not impose such a duty expressly.

However, Arnold LJ (with whom Phillips LJ agreed) noted that the fact of compilation could not assist SIS because it had no right to key constituent elements of its compilation; whereas it was arguable that TRP could rely on compilation as creating a confidential body of information even where the constituent elements lacked the necessary quality of confidentiality.

Whether SIS knowingly obtained the confidential information in breach of confidence (SIS appeal)

On whether SIS received the Confidential Information in circumstances imparting an obligation of confidence—essentially whether SIS ought to have reasonably known that the information was obtained unlawfully—the majority (Phillips LJ and Lewison LJ) found that the Confidential Information had not passed in circumstances where a duty of confidence was in place since SIS had made reasonable enquiry of the lawful provenance of the information. Arnold LJ, in the minority on this point, would have upheld the judge’s reasoning with minor changes in emphasis.

Knowledge of unlawfulness in conspiracy claims (TRP appeal)

Arnold LJ (with whom Phillips LJ agreed) considered three main points by SIS in support of its contention that knowledge of the unlawfulness should be a requirement in these terms:

  • knowledge of unlawfulness served to limit the scope of the tort—the Court of Appeal held that there were no grounds for allowing defences grounded in ignorance as it ran contrary to the principle of general application that ignorance of the law is no defence to it
  • inducing breach of contract would be redundant since it required knowledge where a conspiracy did not—the Court of Appeal held that the authorities (including Doulas) had emphasised the distinct development and effect of the two torts
  • knowledge should be required where the unlawfulness is in respect of a private right (as opposed to the criminal law)—the Court of Appeal could not see any rational basis for such a distinction in the application of the relevant test

It was re-emphasised that it is a requirement of unlawful means conspiracy that the defendant intended to injure the claimant but that it is not necessary that this is the sole or even predominate purpose; it is sufficient that the defendant intended to further its own economic interests at the expense of the claimant’s. The question remains one of causation, applying standard principles, and it was found that SIS had caused TRP’s loss rather than being the occasion for it.

Thus, there is now Court of Appeal authority that Belmont Finance Corpn Ltd v Williams Furniture Ltd (No 2) [1980] 1 All ER 393 is binding, ie that knowledge of unlawfulness is not required for a claim of unlawful means conspiracy. The fact that knowledge is not an ingredient for criminal conspiracy (see Churchill v Walton [1967] 2 AC 224, [1967] 1 All ER 497) was persuasive since the criminal act could not be materially distinguished from the tortious version of the same wrong.

Lewison LJ dissented, holding that knowledge was required and this included blind-eye knowledge (wilful ignorance). Fundamental to his dissenting judgment were policy grounds that suggest the development of the tort of unlawful means conspiracy should be carefully limited.

The starkly differing approaches between Arnold LJ and Lewison LJ will perhaps provide fertile ground for a further appeal to the Supreme Court.

 

Case details

  • Court: Court of Appeal, Civil Division
  • Judge: Lord Justice Arnold, Lord Justice Phillips, Lord Justice Lewison
  • Date of judgment: 9 October 2020

 

This article was written by Lauren Godfrey

This case was originally published on Lexis@PSL on 16th October 2020.

 

 

 

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