Attorney General v. Blake and Another

The House of Lords held that, in exceptional cases, a claimant may obtain an account of profits as a discretionary remedy for breach of contract where compensatory damages and other equitable remedies are inadequate. The Crown, relying on a contractual undertaking given by Blake on entering the Secret Intelligence Service (not to divulge official information during or after service), was entitled to recover the sums due to Blake from his publisher under the publishing agreement. The court rejected the Court of Appeal's public law basis for an interlocutory freezing injunction which had the effect of confiscating Blake's royalties: the common law has no power to confiscate property in that way where Parliament has provided specified statutory schemes for restraint and confiscation.

Key legal principles: (1) an account of profits may be awarded for breach of contract in exceptional cases where the plaintiff has a legitimate interest in preventing the defendant's profit-making activity and other remedies are inadequate; (2) the Attorney General may act in civil proceedings in aid of the criminal law but civil courts do not possess a free-standing common law power to confiscate property in substitution for the statutory scheme; (3) where a contractual undertaking given to the Crown is closely analogous to a fiduciary duty and relates to the security and intelligence services, the Crown's interest in preventing profit from breaches of that undertaking can justify requiring disgorgement of profits.

The appellant, George Blake, a former member of the security and intelligence services, had given in 1944 a written undertaking not to divulge official information during or after his service. Blake pleaded guilty in 1961 under the Official Secrets Act to earlier unlawful communications and later escaped custody. In 1989 he contracted with Jonathan Cape Ltd to publish an autobiography; the book appeared in 1990 and substantial royalties were payable to Blake. The Attorney General sued to prevent Blake enjoying the financial fruits of disclosure.

The proceedings at first instance (Scott V.-C.) rejected a fiduciary/proprietary claim and dismissed the Crown's action. The Court of Appeal allowed the Attorney General to amend his claim to a public law action (acting as guardian of the public interest) and granted an interlocutory injunction restraining payment of royalties to Blake pending further order, and suggested the possibility of restitutionary relief for breach of contract. Blake appealed to the House of Lords.

Issues framed:

• whether the Crown had a private law remedy (including an account of profits) against Blake for breach of his undertaking not to publish official information;
• whether the Attorney General could, in the public law role, obtain an interlocutory freezing order preventing payment of royalties in the absence of criminal proceedings or statutory confiscation;
• whether section 1 of the Official Secrets Act 1989 (and predecessor provisions) or article 10 ECHR affected the result (raised but not decided on available material).

Reasoning and disposition:

• The majority concluded that the law permits, in exceptional circumstances, a discretionary remedy requiring disgorgement of profits for breach of contract. The factors to be considered include the subject matter of the contract, the purpose of the contractual provision breached, the consequences of the breach and whether the plaintiff had a legitimate interest in preventing the defendant's profit-making activity. The particular context of intelligence services and Blake's contractual undertaking justified the remedy: even though the disclosed information was no longer confidential, the Crown had an overriding interest in removing financial incentive to breach the undertaking.
• The House therefore granted a declaration that the Attorney General was entitled to be paid whatever sum was due and owing to Blake by Jonathan Cape under the publishing agreement, and kept the Court of Appeal's injunction in force insofar as it protected the Attorney General's interest until payment to the Attorney General.
• On the public law claim, the House rejected the Court of Appeal's reasoning that a civil court may freeze or confiscate property in aid of the criminal law in the absence of conviction and a statutory scheme: the order made had a confiscatory effect and Parliament had carefully prescribed the procedures for criminal confiscation, which cannot be supplanted by general common law powers.

The House did not finally decide arguments attacking section 1(1) of the Official Secrets Act 1989 under article 10 ECHR because it was not supplied with adequate material to do so.

Appeal by Blake dismissed in relation to the private law remedy; the House held that an account of profits (or equivalent disgorgement) can be awarded as a discretionary remedy for breach of contract in exceptional cases and declared that the Attorney General was entitled to be paid whatever amount was due to Blake from his publisher under the 1989 publishing agreement. The House also held that the Court of Appeal's public law injunction (with confiscatory effect) could not properly rest on a common law power to confiscate where Parliament had provided a statutory scheme for confiscation and restraint.

First instance: claim dismissed by Sir Richard Scott V.-C. (see [1997] Ch. 84). Court of Appeal allowed Attorney General's public law claim and granted an injunction ([1998] Ch 439). House of Lords allowed the Crown's private law restitutionary claim and dismissed Blake's appeal in part ([2000] UKHL 45).