Mulcaire v News Group Newspapers Ltd

A contractual indemnity may be accepted by conduct where signature is requested only as evidence of consent. Collateral negotiations do not reject the offer unless they constitute a counter-offer concerning the same subject matter. Contract formation is assessed objectively from words and conduct, including subsequent performance. A termination power is not implied where inconsistent with the wording, commercial context and negotiations. An indemnity agreed after an earlier criminal act, concerning civil proceedings between joint tortfeasors, is not necessarily contrary to public policy. A contractual conflict of interest concerns divergent positions on issues in the proceedings, not general reputational or commercial pressure.

The claimant had been employed by the defendant as a private investigator and was later convicted of conspiracy to intercept communications and unlawful interception. Numerous civil claims arising from voicemail interception were brought against both parties. During that litigation, the defendant sent an indemnity letter offering to meet the claimant’s legal costs and any damages for which they were jointly liable, subject to specified conditions.

The claimant did not sign the letter but acted in accordance with it, while the defendant paid numerous invoices. The defendant later stopped paying, contending that no contract existed or that it was terminable at will, terminated because of a conflict of interest, or void on public-policy grounds. The court determined whether a binding indemnity had been formed and whether it remained enforceable.

1. Formation. The signature requested by the Indemnity Letter was evidence of consent, not the exclusive means of acceptance. The offer remained open to acceptance by conduct. The claimant’s request for £750,000 in return for further information was collateral to the indemnity negotiations and did not reject the indemnity.
2. The parties’ subsequent conduct objectively demonstrated agreement. The claimant co-operated through his solicitor and performed the stated obligations. The defendant repeatedly treated the letter as the governing indemnity and paid at least 72 invoices. In the alternative, a contract arose through performance under the principles stated in RTS Flexible Systems Ltd v Muller [2010] 1 WLR 753.
3. Termination. The indemnity contained no express power of termination, and no such power was to be implied. Its history, specified carve-outs and commercial purpose were inconsistent with termination at will or on reasonable notice.
4. The phrase “conflict of interest” referred to conflicting positions on issues in the proceedings. It did not extend to reputational damage, parliamentary pressure or a general divergence of interests. No relevant conflict had arisen.
5. Public policy. The rule against indemnifying a person for his own wilful and culpable crime did not apply to an agreement concluded after the criminal conduct concerning civil proceedings arising from it. The indemnity was valid and enforceable.
6. Declarations were to be made that a valid contract had been concluded on the terms of the Indemnity Letter and remained subsisting. No immediate order for specific performance or inquiry as to damages was made, but the claimant had liberty to apply if necessary.