Douglas & Ors v Hello! Ltd. & Ors

Damages for breach of confidence are assessed by reference to losses sufficiently consequential upon and foreseeable from the breach. The but for test alone does not establish liability. Where unauthorised publication spoils an exclusive media arrangement, the court may assess hypothetical sales, advertising revenue, production costs and reasonable mitigation on a conventional compensatory basis. The effect of a spoiler is fact-sensitive and depends on matters including its attractiveness, timing, accessibility, publicity and the importance of authenticity. Distress caused by publication may be compensable, but distress attributable merely to the intrusion is separable. Alternative compensatory and notional licence-fee claims need not necessarily be elected at the outset where the court can determine which basis produces the higher award.

The claimants had established at an earlier hearing that Hello! Ltd and two associated defendants were liable for breach of confidence arising from the publication of unauthorised photographs of Michael Douglas and Catherine Zeta-Jones’s wedding. This judgment concerned quantum.

The claimants sought damages for distress, wasted costs, lost revenue from planned OK! wedding issues, and a notional licence fee. The court also considered nominal awards under the Data Protection Act 1998. The principal issues were the counterfactual publication and sales of OK! issues 242 and 243, causation and remoteness, mitigation, and the alternative basis of a notional licence fee.

1. The court awarded the claimants £1,047,756 in total: £14,600 to Mr and Mrs Douglas and £1,033,156 to Northern & Shell plc, trading as OK!. The first three defendants were liable.

2. For OK!, the court found that, absent the breach, two wedding issues would have been published. It assessed hypothetical sales, printing and transport costs, advertising revenue, actual sales and credits, and reduced the resulting loss by £28,000 for sales effects attributable to press publication considered too remote. It awarded £1,026,706 for lost revenue and £6,450 for reasonable wasted mitigation costs.

3. The but for test did not itself determine liability. The losses were also sufficiently consequential upon and foreseeable from the breach. Publication of the photographs by newspapers was not too remote because it would not have occurred as it did without Hello!’s publication. The court excluded the effect of downbeat press comment where foreseeability and impact were uncertain.

4. The effect of a spoiler could not be determined by a general rule. Relevant considerations included the subject matter, the comparative attractiveness of the spoiler and target, timing, accessibility, publicity, and whether authenticity or authority affected sales.

5. The Douglases were awarded £3,750 each for distress caused by publication, £7,000 for additional costs of bringing forward authorised photographs, and £50 each under the Data Protection Act 1998. Distress caused merely by the intrusion was distinguished from distress caused by publication.

6. The alternative notional licence-fee claim was assessed at £125,000 on assumptions favourable to the claimants. The court did not decide the underlying legal issues because the conventional compensatory award was higher.

The judgment was an adjunct to the earlier liability judgment in the same proceedings. The court proceeded to quantify the damages following its finding that the first three defendants were liable for breach of confidence.