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Hacking hack sackings: can News of the World journalists sue for reputational damages?

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So, after the News of the World sackings, how are the poor old NoW journalists, who have lost their jobs because of the phone hacking scandal, to scrape a living now?

Offer themselves to other papers? But would you employ a second-hand hack from Britain’s biggest selling toxic brand (apart from Rentokil Mouse Killer perhaps)? Maybe hawk around some of the juicier secret documents snatched from the NoW conflagration? But two wrongs don’t make a right, and the laws on handling stolen goods can be pretty strict.

So why not try suing the company for wrongful dismissal? It’s not easy, but it could be lucrative and legal. The average News of the World journalist is now a pariah – shunned and avoided in the street but more importantly, through no fault of his or her own, likely to face difficulty getting a job on a more reputable organ. So sue the Rupert Murdoch empire!

What you are looking for is “stigma damages” – the trashing of your professional reputation through association with a company that has become notorious for – let’s call it dubious practices.

The precedent is the 1997 House of Lords case Malik v Bank of Credit and Commerce International (coupled with Mahmud v BCCI).

Before we proceed we should note that there is not as yet proof that News International, owners of News of the World, or senior mangers acted illegally or can be blamed for the hacking scandal. We do know, however, that the reputation of the News of the World has collapsed sufficient for it to be closed and extensively fumigated while its employees stumble out into the harsh light of publicity and public disapprobation.

In the case of BCCI, which was closed by regulators in 1991, we know that it “had reached the point where the bank itself could be identified with dishonesty. This was a dishonest business, a corrupt business” – the words of Lord Nicholls, hearing the case.

Malik and Mahmud were senior employees made redundant by the bank’s collapse who found that “their association with BCCI placed them at a serious disadvantage in finding new jobs”, such was the scandal attached to their old employer. In the words of Lord Steyn “they were tarnished and therefore undesirable employees to recruit” despite themselves having no role in the dishonesty and corruption. But does the employer (in this case in liquidation) continue to have a legal responsibility for this loss of reputation after the employees have been dismissed? The answer is yes.

‘In agreeing to work for an employer the employee, whatever his status, cannot be taken to have agreed to work in furtherance of a dishonest business. This is as much true of a doorkeeper or cleaner as a senior executive or branch manager’ – Lord Nicholls

Let us assume there is an implied contractual duty for the employer in any firm to maintain trust and confidence among employees (there is). It follows that there is a duty to each employee that the business will be run along moral and legal lines. It would be difficult, after all, to argue the opposite – that employees should be obliged to carry on working for a company acting immorally or illegally. “In agreeing to work for an employer, the employee, whatever his status, cannot be taken to have agreed to work in furtherance of a dishonest business,” as Nicholls points out.

If the employer’s breach of that duty creates a stigma leading to lower employability for the employees, (a “handicap on the labour market because they were stigmatised by reason of their previous employment” as Nicholls put it) then on the face of it damages are recoverable for the financial loss.

Thus: “If the employer commits a breach of the term [duty to maintain trust and confidence], and in consequence the contract comes to an end prematurely, the employee loses the benefits he should have received had the contract run its course until it expired or was duly terminated.”

So it might well be that if News of the World journalists, hitherto regarded as top grade operatives despite the grubby use to which their excellent skills were put producing the paper, now find themselves shunned by other potential employers as a result of the closure brought about by management failings – kerching! They can claim wrongful dismissal and damages for lost earnings – potentially to the end of their working lives.

So it could be the employer’s conduct “prejudicially affects an employee’s future employment prospects. The conduct may diminish the employee’s attractiveness to future employers.” There are other claims such as lost career opportunities and injured feelings (yes, even News of the World hacks have feelings).

If News International comes out of this smelling of roses on the basis that it knew nothing of what was going on under its collective corporate nose, it could nevertheless be argued that its duty extended to actively creating trust and confidence by ensuring such things were not going on.

The potential flood of BCCI cases was, it must be noted, stymied by Bank of Credit and Commerce International v Munawar Ali in 1999. Here it was deemed necessary for former employees to prove actual loss, in other words show that they really could not get work or had to take lesser jobs because of the reputational damage caused by BCCI.

The reputational issue might only apply to senior staff, wholly innocent people over whom the suspicion of complicity in the hacking might nevertheless lie. But senior staff would, of course, be the ones with the biggest claims.

There is already talk of staff suing for unfair dismissal, a relatively straightforward legal remedy that could cost the company £14m, according to one estimate. In fact the legal ramifications are far from straightforward – and potentially could cost far more.

News extra: Law firm Silverman Sherliker prepares for stigma damages class action against News of the World

Related post: Times’s ethical options after NotW phone hacking scandal

Note: Nothing in Alrich’s Weblog or any posting therein, however well argued, should be taken as professional legal advice or relied on in any way

Parliament should have a say in judicial appointments, constitution committee told

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A call for parliamentary input into the appointment of judges has been made at a House of Lords inquiry into judicial appointments procedure. A legal academic, Professor Alan Paterson, told the Lords constitution committee there were dangers in continuing to push for full separation of powers between parliament and judiciary in the light of the increasing powers and responsibilities that have been given to judges. There were problems in a democracy with one branch of the state having such a big role – particularly a self-replicating body in which judges have a large influence over judicial appointments.

Paterson, director of the Centre for Professional Legal Studies, University of Strathclyde, was speaking at the first hearing by the committee into the judicial appointments process in which it will look at judicial diversity, whether Britain should have US-style confirmation hearings or some other form of parliamentary oversight and whether the current system protects judicial independence. It is expected to report by the end of the year.

Paterson said: “There is an argument for a slightly increased role for the executive and parliament to get involved in the pre-appointments stage.” He backed the idea of a parliamentary committee asking questions of potential judges on the Supreme Court and possibly the Court of Appeal. Among questions they would be asked might be their view on the role of the Supreme Court in a democracy or their view on parliamentary sovereignty – the idea that parliamentary legislation is supreme over all other sources of law. It is known that there was a split view among judges on this issue, he added. Read the rest of this entry

David Cameron, Sharon Shoesmith and the rule of law

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There is a breakdown in the rule of law in Britain – and the government is at the heart of it.

The latest evidence is in the government’s response to the Sharon Shoesmith Baby P case. David Cameron, the prime minister, is ready to throw good money after bad to challenge the Court of Appeal finding that the former Haringey council director of children’s services was sacked unlawfully at the insistence of Labour children’s minister Ed Balls.

The case has already cost £1m, but the money is neither here nor there; for Cameron it is a matter of principle – the principle that the government should be above the law.

He announced there would be an appeal to the Supreme Court because ministers want to uphold the principle that they – rather than the courts, through judicial review – should be responsible for their decisions. “It does seem to me important that governments are able to manage their organisations and provide accountability when things go wrong,” he said.

It is, apparently, a constitutional issue about ministers’ decisions being overturned by judges – on the face of it, one would have thought, an essential requirement if Britain is to be governed by the rule of law.

Unfortunately Cameron’s understanding of the idea of the rule of law is rather simplistic. He thinks Parliament is supreme so judges shouldn’t keep interfering with it. And since he’s the boss of Parliament, he must surely be the most supreme of all.

This was the prime minister who claimed the London university fees rioting was an example of a breakdown in the rule of law. He wasn’t talking about police kettling peaceful demonstrators or arresting people without charging them. He was talking about the rioters. A temporary and geographically limited breakdown in law and order perhaps, but a collapse in the rule of law?

So let us clarify for him what the rule of law is. This is the view of 19th century jurist AV Dicey: No one should be punishable except for a distinct breach of law established in the ordinary legal manner before courts of the land; nobody is above the law and everybody is subject to the ordinary law whatever his rank or condition; anyone may go to the law courts to remedy breaches in rights and liberties.

Dicey’s principles on the rule of law in the Law and the Constitution, 1885

“a. No man is punishable or can be lawfully made to suffer in body or goods except for a distinct breach of law established in the ordinary legal manner before the courts of the land;
b. No man is above the law, whatever his rank or condition is, he is subject to the ordinary law of the realm and amenable to the jurisdiction of the ordinary tribunals;
c. It is because England has a constitution that the personal rights and liberties of individuals are always secure. This security comes from being able to go to the law courts to remedy any breach of these rights and liberties.”

This raises many questions but is a good starting point for those like Cameron who don’t have much of a grasp on the basic theory. Take this for example: before the royal wedding he felt there were too many pen pushers and local authority busybodies demanding vast amounts of paperwork, health and safety checks and expensive insurance for street parties. His response?

Let me put it like this. I am the prime minister, and I am telling you if you want to have a street party, you go ahead and have one.”

His clear view is that the will of the prime minister attached to a populist cause trumps the law and all the processes in place to ensure the law is followed. Street party organizers had permission from the highest authority in the land to ignore the law since the law was being unreasonably enforced by a bunch of bureaucrats.

Similarly with the Madeleine McCann case. The police, according to the classic view of the separation of powers, are independent from government. Yet Cameron has directed Scotland Yard to put millions of pounds of public money into further investigating the disappearance of the little girl, prompting Lord Harris to accuse him of driving a coach and horses through police operational independence.

Of course, Cameron only sent a letter. But the prime ministerial crest and the Downing Street postcode on the envelope would have ensured that it didn’t stay long in the Met’s pending tray.

In the Shoesmith case, Cameron’s objection is to a judicial review, the process whereby courts can examine the procedures of administrative bodies, including the government, to test their legality. The judges do not toss aside laws made by Parliament; they do not substitute their judgment for that of the minister on matters such as Shoesmith’s competence or culpability in the Baby P case. They simply examine whether the procedures used to arrive at the minister’s decision were correct and hence whether the decision was fair.

Judicial review became more accessible since reforms in the 1970s to allow ordinary people to, in Diceyan terms, remedy breaches of their rights and liberties. This is rather like that other Tory bugbear, the Human Rights Act. Cameron believes those rights and liberties are sufficiently protected by the fact that ministers are “accountable” – to Cameron himself.

When ministers have spread a bit more poison about unaccountable judges standing in the way of the democratically elected government, we may expect to see proposals for a “reform” of the way the judiciary is appointed. It won’t be difficult to undermine the Judicial Appointments Commission set up in 2006 as “an important step towards strengthening the drive to officially enshrine judicial independence in law, enhancing accountability and ensuring greater public confidence”. It has not done a good job in promoting diversity, it is extremely bureaucratic and unwieldy. But the real agenda will be to swing the balance of power back towards the Supreme Leader.

Note: The Supreme Court has now rejected leave to appeal in the Sharon Shoesmith case (2 August 2011)
Also as predicted above, the Ministry of Justice has now (November 2011) made its proposals to give the government more say in judicial appointments, discussed here

For a more considered look at the rule of law see the Thinking Legally blog: Bingham’s rule of law: Outdated? Utopian?

Lord Bingham: the rule of law or bending the rule of law?

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The death of Lord Bingham, the former senior Law Lord (senior appeal judge in what is now the UK Supreme Court), silences a significant voice on the issue of how far incursions into human rights by the government can be justified by the “war on terror”.

Lord Bingham’s was a committed but moderate view which led him, perhaps unfortunately, to a sense that the judiciary must in a democracy with a sovereign parliament, craft a compromise on human rights with the political sphere, the legislature and the executive. His two judgments in the linked cases commonly known as “A v Home Secretary”, one on torture and one on detention without trial, bear witness to such a disturbing compromise. The torture case allows the possibility of people being detained without trial on torture evidence. The detention case judgment balked at simply declaring detention without trial wrong and refused to deal with whether there truly was an emergency in post-9/11 Britain sufficient to justify such detention.

While the cases were based on classic, text book subject matter regarding the rule of law, the use of torture and detention without trial, and Bingham’s rulings did not favour the government, his judgments nevertheless left open wide areas within which the executive may act apparently contrary to those principles.

Take the torture case, (reported as A and others v Secretary of State for the Home Department (No 2) [2005] UKHL 71) which hinged on the use that could be put to torture evidence gathered abroad without the connivance of British authorities. Put briefly, Bingham said that such evidence could not be admitted in a court of law, including in the tribunal set up to hear appeals against arrest and detention of foreign terror suspects, the Special Immigration Appeals Commission (SIAC). However, the authorities could act on such evidence if they came across it – they could arrest individuals on the basis of information got by torture. He says (at paragraph 47):

“I am prepared to accept … that the Secretary of State does not act unlawfully if he certifies, arrests, searches and detains on the strength of what I shall for convenience call foreign torture evidence. But by the same token it is, in my view, questionable whether he would act unlawfully if he based similar action on intelligence obtained by officially-authorised British torture. If under such torture a man revealed the whereabouts of a bomb in the Houses of Parliament, the authorities could remove the bomb and, if possible, arrest the terrorist who planted it. There would be a flagrant breach of article 3 for which the United Kingdom would be answerable, but no breach of article 5(4) or 6.”

Article 3 relates to torture, Articles 5 and 6 to detention and trial. Lord Bingham is saying security services are wholly free to act upon third-party foreign torture evidence to arrest and detain. This might seem reasonable if the security services could make their arrests, question the detainees and find admissible evidence for a trial. Unfortunately several appellants in the case were being held without trial (subject to an indefinitely pending deportation). On the face of it, the government lost the case since it wished to reserve the right to offer such evidence to courts. But Bingham’s subtle distinction not only did not help the appellants but it opened a wide area of operation for the security services to flout human rights. Read the rest of this entry

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