Hedley, '“Very much the wrong people”:  The House of Lords and publication of spy memoirs  (A-G v Blake)', [2000] 4 Web JCLI
<http://webjcli.ncl.ac.uk/2000/issue4/hedley4.html>

“Very much the wrong people”:  The House of Lords and publication of spy memoirs  (A-G v Blake)
Steve Hedley
University Lecturer, University of Cambridge, 
<swh10@cus.cam.ac.uk>

Copyright © 2000 Steve Hedley
First Published in Web Journal of Current Legal Issues in association with Blackstone Press Ltd. 

Summary
A-G v Blake (HL, 27 July 2000) is yet another case of a spy who publishes his memoirs, the Government then seeking to claim his royalties.  It is notable factually because this was no ordinary spy:  this was George Blake, who famously betrayed his UK employers, escaped imprisonment and escaped to Russia in 1966.  It is notable legally as well, for unlike previous cases, the Attorney General could not base his claim on confidentiality.  Any secrecy in Blake’s doings is long gone. Yet the House of Lords have now held that action nonetheless lies against Blake to recover his royalties.  
This case-note argues that the Lords have identified no principled basis for their decision, which cannot fairly be based on the precedents cited, or any rule that can reasonably be inferred from them.  This was new law, made to fit Blake’s case, and in all probability never to be applied again.  While it is unsurprising that there was pressure to confiscate Blake’s earnings, in this author’s view such a job falls outside the judicial function. Discretionary confiscation must be statutory, if it is to exist at all.  Whether or not a confiscatory jurisdiction should be developed, the judges are very much the wrong people to do it.

Contents
The facts and the proceedings
What duty was broken?
Breach of contract: General rule denying action for profit
The exceptional Mr Blake
A public law solution ?
Conclusion
Bibliography

The facts and the proceedings
In 1944 George Blake, a 21-year-old naval trainee who had already worked in the Dutch Resistance, was recruited into the British Secret Services. He worked first in Naval Intelligence, was then posted to Korea (and was for 3 years held prisoner in North Korea), and subsequently to Berlin.  Then in 1961, the CIA acquired Polish documents listing officials the British were expected to attempt to recruit.  The list was traced back to Blake, who was arrested, and confessed his treachery.  It was merely one of a large quantity of papers he had passed on.  In fact, he had been a double agent since the early 1950s.  By his own account, he was persuaded of the merits of Communism while held in Korea, and decided that acting as a double agent would constitute a far greater contribution to its eventual triumph than any other course open to him, even though other ways of serving the cause were clearly “more honourable and at the same time ... less dangerous” (Blake 1990, p 141).  
Pleading guilty to five charges under the Official Secrets Act 1911, Blake was sentenced to 42 years’ imprisonment.  However, he served only five, then escaping to Moscow.  At first reticent about his past, he was persuaded by the KGB in the early 1970s to write an autobiography.  This however found no Western publisher, allegedly because of the excessive price demanded.  After glasnost, he made a second attempt, and (at least according to Phillip Knightley, who wrote his preface) managed to get the manuscript to his London publishers without clearing the revised text with the KGB  (Blake 1990, xi).
Unsurprisingly, Blake also failed to submit his manuscript to his former employers in London, who first heard of the book through publishers’ notices.  It would have been possible to seek an injunction against publication, but the opportunity to do so was deliberately passed up, there clearly being nothing in the book which threatened the nation’s security.  However, on hearing that Blake’s advance royalties were to be unexpectedly large  £150,000  the Attorney General sued, though too late to prevent a payment of about £60,000.  Before Sir Richard Scott VC, he argued that Blake was a fiduciary, and that the copyright and royalties belonged to the Crown.  This was rejected.  At one time, no doubt, Blake had held a fiduciary position, but it was absurd to suggest that the duty of loyalty survived Blake’s arrest as a traitor.  It was possible for a fiduciary duty to have consequences lasting beyond the termination of the fiduciary relationship, particularly in cases where the ex-fiduciary still retained confidential information.  But in a case like this, where the information was no longer confidential and could do no additional harm to the Government’s interests, it was impossible to say that any duty was broken (Attorney General v Blake (Jonathan Cape, third party) [1996] 3 All ER 903).
The Attorney appealed, raising quite different arguments.  Whether the money was Blake’s or not, he said, nonetheless for his publishers to send it to Blake would be to send a criminal the proceeds of his crime.  They should be restrained from doing anything of the kind.  With this, the court agreed.  The Attorney also challenged Scott VC’s ruling on fiduciary duties. To no avail.  Blake was undoubtedly in breach of an express term of his employment contract, the court of appeal agreed, but he had committed no breach of fiduciary duty.  And then the court of appeal dangled a third argument before the Attorney: it might be argued that, while this was only an ordinary breach of contract, nonetheless an action for Blake’s profit might lie. However, the Attorney refused this intriguing offer, presumably content that he had been able to prevent the money going to Blake.  Undeterred by this, and declaring that there was “no possibility that this case will reach a higher court” (Attorney General v Blake (Jonathan Cape, third party) [1998] 1 All ER 833, 844ab), Lord Woolf MR explained at some length why such an argument, had it been made, might well have succeeded.  He suggested a view of the law on restitutionary damages (to be considered below) which, if correct, might well have caught Blake.  But the Attorney relied not on this, but on the public law point.
Blake then appealed.  He had long since lost touch with his solicitors, and indeed had not been represented at any level, though amici curiae were instructed before all three courts.  Before the Lords, the validity of the injunction was challenged.  The new Attorney General defended the injunction, and further argued the private law point.  The Lords have now held that while the injunction was wrong, nonetheless (by a majority, Lord Hobhouse dissenting) a private law liability is established.
What duty was broken?
The duty in the case needs to be identified with some care.  It was accepted that Blake was in breach of an express term of his employment contract, “not to divulge any official information gained by me as a result of my employment, either in the press or in book form”.  There was no express duty to submit his manuscript to anyone in advance, but nonetheless the term was broken by divulgence without permission. It was also accepted that this term survived the termination of the main part of the contract, as it was expressly stated to apply even “after employment has ceased”.  
In passing, we can note the ineptness of this contractual term to cover information that is already public knowledge, as all Blake’s “revelations” were.  If I talk of “divulging” facts which are apparent to all observers, such as that the sky is blue or that I should lose weight, then this can only be a jocular use of language.  You cannot “divulge” what everyone can see for themselves.  And the dictionaries agree:  “divulge” implies that what is revealed was formerly a secret. This makes the whole case problematical, given that the Attorney did not contend that anything in Blake’s book was confidential any more.  Are we to suppose that some of the detail, while too well known to be “confidential”, was nonetheless not so well-known that it could not be “divulged?  Or that the profit from the book was derived solely or mainly from those details?  Neither argument was made, and neither seems particularly convincing.  There seems to be a lingering doubt, therefore, whether the entire case is not based on a false premise.
This may seem like pedantry, as it at first sight seems odd that the consequences of Blake’s treachery should depend on the precise wording of the declaration he signed on 16 August 1944.  But this is, in fact, what the case is all about.  The duty on Blake is founded the express contractual term, and not otherwise.  This was clearly established at first instance, confirmed by the court of appeal, and not challenged in the Lords. In some circumstances we can talk of a wider duty on Blake as fiduciary, but that did not help the Attorney here.  As Scott VC explained, of course Blake was a fiduciary.  He was senior enough, and trusted enough by his superiors, to be ranked as a fiduciary without hesitation.  But when his arrest and confession led to the termination of his employment, that bond of trust no longer subsisted.  While there was a continuing duty to maintain the confidentiality of matters not yet public, it could not be said that in any other sense he owed a duty of loyalty.  Indeed, the idea that his employers reposed any confidence in him after that date is manifestly contrary to the facts.  
Their lordships stated that while Blake may no longer have been a fiduciary, he was under a continuing obligation which was “closely akin to a fiduciary obligation” (Lord Nicholls).  This is a surprising argument, for that ground was very well covered in the lower courts. Indeed, the Attorney’s contention on that topic having been so roundly rejected by both Scott VC and the court of appeal, he did not bother to argue it a third time.  So it is surprising to see the argument revived, especially since their lordships gave no answer to the difficulties that led to its rejection below.  The problem is not in the nature of the relationship.  Blake was a trusted officer of some seniority.  No-one doubted that he was a fiduciary, and there is no need to resort to analogies. Rather, the argument was over when that fiduciary relationship terminated, and the consequences of that termination. To talk of relationships “closely akin to” fiduciary relationships does not get over that difficulty.  Whatever the character of the relationship, it was incontestably over.  How, then, to explain a continuing duty, in the absence of any continuing confidence?  Their lordships do not say.
We see here, of course, a tension between the law the court has to apply and the values it would like to apply.  Employment law does allow for defection and for changing sides, and while employers often scream “Treachery!”, it is not in the public interest to grant them too many remedies to back it up. The fact that employees can go elsewhere is not merely important, it is fundamental.  Now that everyone knows that employment is not necessarily for life, employment law becomes an inept way of enforcing a life-long loyalty. The duty their lordships were seeking to impose on Blake cannot be derived from ordinary employment law.
Breach of contract: General rule denying action for profit
On hearing that an appeal was to be heard in Blake, what many restitution lawyers hoped for was a restatement of the law on when a simple breach of contract could lead to an action for profit made in consequence. 
Indeed, Lord Woolf in the court of appeal made a stab at it, and while his version is manifestly too broad (and criminally vague), it seems the right place to start. He insists that the breach in question must be “deliberate and cynical” before this remedy can be considered.  However, both those words are entirely uncertain in their meaning; the ambiguities of “deliberate” are notorious, and “cynical” seems no more precise than “extremely bad”.  But assuming that this vague criterion is met, Lord Woolf proposes that a remedy for profit will lie in two cases: where the defendant did the very thing he contracted not to do, and where the defendant made a profit by skimping on the contractual performance to save money.
Both of these grounds have been extensively criticised by academics, and these criticisms have now been accepted by the lords.  Briefly, the first is unacceptably broad. Lord Woolf’s criterion (“doing the very thing which he contracted not do”) seems to cover all breaches of negative stipulations, and indeed with only slight ingenuity could be made to fit all breaches of positive ones as well. Clearly, therefore, something narrower must be meant, though it is not very clear what.  
The second (“skimping”) is more comprehensible, but may be aimed at a problem which is either non-existent, or better addressed by other means. What is the problem? The case usually cited as showing the need for the remedy is City of New Orleans v Fireman’s Charitable Association (9 So 486 (1891)). Here the defendant had contracted to provide a fire service for the plaintiff, but had broken the contract by failing to make the necessary fire-fighters and equipment available.  However, damages as conventionally measured were zero, as in fact no fires requiring the extra fire-fighters and equipment had occurred.  Now, in this rather unusual situation, perhaps some response is called for   though the court which decided the case did not think so, considering that the contractual over-estimates of the necessary staff and equipment were not desperately important. Yet from those who do see a problem, it is surprising to hear that contract doctrine is not itself sufficient to deal with a simple failure to produce what the contract stipulated.  After all, commercial lawyers have no difficulty in saying that a seller of goods who only delivers ¾ of the goods is only entitled to ¾ of the price (Sale of Goods Act 1979 s 30).  So similarly they should be able to say that a defendant who has only supplied part of a fire service should only get a part of the promised remuneration.  As to the removal of enrichment, that solution happens to work well on the facts of the New Orleans case.  But this seems to be mere coincidence.  “Whether or not the defendant has saved anything from the breach, he has been overpaid” (O’Sullivan 1997, p 23). The possible enrichment of the defendant is a distraction; and while the pursuit of profit may be a common motive for wrongdoing, it is the wrongdoing, not the profit, that is important.
So the inadequacies of Lord Woolf’s criteria are well-recognised, and the Lords have now unanimously rejected them.  But what have they put in their place?   There is startlingly little by way of analysis.  Lord Nicholls, who gave the leading opinion, trod the familiar path of the property cases where action for profit has been allowed, repeatedly suggesting that contractual rights deserve similar protection.  But ultimately he recognised that there is only one contract case which supported his view, the Wrotham Park case (Wrotham Park Estates v Parkside Homes [1974] 1 WLR 798), which he admitted was much-criticised by judges and academics, and was inconsistent with both prior and subsequent case-law. However, in his eyes it “still shines, rather as a solitary beacon, showing that in contract as well as in tort damages are not always narrowly confined to recoupment of financial loss …”    
Indeed contract damages are not always confined to recoupment of financial loss.  But no-one has suggested otherwise.  It is a huge conceptual leap, from the undoubted fact that the courts often depart from the stricter measures of loss, to the dubious notion that they should grant an account of profits.  Rules, as they say, are made to be broken, and it is easy to show that the courts have frequently departed from the rules they have set themselves for the assessment of damages. The diversity of the situations the judges are faced with virtually guarantees this.  It is quite another matter, however, to say that these departures are evidence of another, unacknowledged rule that benefits are recoverable in contract.  
And Wrotham Park, even if right, is weak evidence of such a principle.  If we are distinguishing “property” cases from “contract” cases, it is not obvious that it is not a “property” case (it does, after all, involve a restrictive covenant on land, enforced against a successor-in-title of the original covenantor).  And the award was not an account of the profit the contract-maker made, but rather the amount they ought to have paid for the chance to make that profit.  In other words, the court imposed the very contract that the defendant ought have made with the claimant. The result may, to some minds, be better rationalised as one about benefit, but Brightman J did not say so. As Lord Hobhouse says, right or wrong, the case reflects a different principle entirely.
It is regrettable that, having acknowledged that no other case law supported the position he was taking, Lord Nicholls set out to claim that other cases (which suggest no such thing) are nonetheless in support of his view.  He cited Lake v Bayliss ([1974] 1 WLR 1073) and Reid-Newfoundland Co v Anglo-American Telegraph Co ([1912] AC 555) as cases where the courts used the “label” of trust to justify what was really an action for profit for breach of contract; and he similarly prayed in aid British Motor Trade Association v Gilbert ([1951] 2 All ER 641), where contract damages “effectively stripped the wrongdoer of the profit he had made”.  
Now this has always struck me as a most unsatisfactory mode of argument. If the courts in those cases were really so thoroughly wrong about the legal concepts they were applying, what business do we have placing any weight on the results they came to?   Perhaps the results are wrong, too   indeed, very probably they are, if the courts were so thoroughly wrong in the doctrine they were applying. As the programmers say, “Garbage In, Garbage Out”.  And why is it the analysis in those cases that is to be presumed wrong, and not that in the solitary and controversial Wrotham Park case?   Lord Nicholls does not tell us.  We do not get analysis, but only name-calling.  Apparently, in those other cases “the courts .. reached the desired result by straining existing concepts”, employing “a phantom ‘trust’” and “abusive instrumentalism”.  Of course, it is all very droll to say that his colleagues suffer from “that well known ailment of lawyers, a hardening of the categories” (Lord Nicholls, quoting Dawson 1959, p 175). But this is not reasoned argument either.  
Lord Nicholls is using the same affectation as some academics, that most legal concepts are only masks for what the courts want to do, whereas restitution somehow reaches bedrock.  This, with respect, is impossible.  Put at its highest, the case for restitution can only be that restitution is an accepted legal concept, one concept amongst others.  And an argument that certain cases really involve restitution, even though they never mention it, has to go beyond mere assertion or amusing turns of phrase.
Lord Nicholls’s conclusion, however, is uncomplicated: that while the court has never done so before, nonetheless “there seems to be no reason, in principle, why the court must in all circumstances rule out an account of profits as a remedy for breach of contract”.  When will the court grant this remedy?  Apparently, whenever “a just response to a breach of contract so requires”, which will only be “exceptionally”.  One of the tantalising things about the opinion is the refusal to give any hint of when this might be, other than that the court will review the other remedies available and then ask whether the remedy of account of profits should be ordered.  Those who wonder how commercial law will be affected will be disappointed.  All we have is Lord Nicholls’s assurance that only exceptional circumstances will justify a remedy, and that “a useful general guide, although not exhaustive, is whether the plaintiff had a legitimate interest in preventing the defendant’s profit-making activity …”  For the rest, “it would be difficult, and unwise, to attempt to be more specific”. The new rule is “best hammered out on the anvil of concrete cases” (Lord Steyn).
The exceptional Mr Blake
Having established, therefore, that Blake can only lose the money if his case can be regarded as an exceptional one, the Lords went on to ask whether it is. They conclude that it is indeed exceptional, in such a way as to justify a remedy.  
Most of this part of the main opinion consists of a review of Blake’s life and treacherously broken promises.  The relevance of this is not entirely clear, as the court has already rejected the proposition that the remedy is available merely for breach of serious promise.  In any event, was Blake’s breach of contract really so serious?  His treachery was, certainly.  It doomed large numbers of agents to imprisonment or death, and it wasted many years’ worth of work by British and other secret services. But that is a judgment on Blake’s life, not on his manuscript or its contractual status.  It is most unclear how it can be said that Blake’s breach is a serious one, and it is hard to dispel the suspicion that he is being judged by quite different criteria from those openly stated. And the insistence that the Crown “had and has a legitimate interest” in preventing Blake from making a profit seems to beg the question. Why does the Crown have an interest in preventing the publication of the book, which it agrees is neither confidential nor prejudicial to security?  And on what does Lord Nicholls base his assertion that trust between the secret services and their informers will be assisted by his ruling?  Do such people really consult the latest case-law before deciding who to trust, and how far to do so?   Did Blake?  Did his UK employers? 
Lord Nicholls places some stress on the terms of the Official Secrets Act 1989, noting that that Act imposes greater obligations on secret service employees than on others.  But this point seems weak.  The Crown having conceded that book contained nothing confidential, where is the “damaging disclosure” to which the Act applies?  And in any event, can the Act apply to Blake at all?  It can hardly have been incorporated into his employment contract. It appears that the publishing agreement was signed on 4 May 1989, presumably on the basis of an existing, if as yet unedited, manuscript, and publication occurred on 17 September 1990.  The 1989 Act was in force on 1 March 1990.  So while the matter is not entirely clear, it seems likely that Blake’s “disclosure” to Jonathan Cape, such as it was, occurred before the Act was in force. 
Finally, there is an attempt to invoke Snepp, where the US Supreme Court imposed a constructive trust on another spy who wrote too much.  But how far down that road of discretionary remedies do we want to go?  The Supreme Court were accustomed to imposing constructive trusts on the basis of broad considerations of justice and convenience, and (by a majority) imposed one on Frank W Snepp III. But that has never been a road that English judges have been happy to go down.  As an eminent jurist has commented, 
It is surprising to find judges among the advocates of discretionary remedialism.  They mostly owe their appointment to their being masters of that complex rationality which is the law.  Their authority is legitimated by their expertise.  A rational rule of law has to have its experts.  Community justice does not …  Why should it be believed that the very same people who earned their appointment as experts in a difficult science should also be the right people to do discretionary justice?  One might think that they were very much the wrong people (Birks 2000, 17).
The law lords seem to be claiming a broad discretion to find contract-breakers liable to disgorge profits, and if Blake is typical, they seem to give themselves a very free rein to take into account whatever factors seem appropriate.  Is this the sort of law we want?  Is it likely to prove acceptable in any other context?  Or were the law lords, in reality, declining to apply the common law because it seemed to favour the wrong litigant?
A public law solution ?
The court of appeal, unconvinced that the money could be claimed on a fiduciary basis, and thwarted in their attempt to suggest another, found the solution in public law considerations. It is a serious thing, they argued, for a criminal to receive the proceeds of his crime, and it would be surprising if the courts could not restrain it.  While there was room for argument over which public officer should wield this power, and what safeguards should be available against its misuse, nonetheless the Attorney seemed an appropriate officer; and the safeguards here seemed adequate.  Accordingly, an injunction was issued.
All of this the Lords have rejected. Lord Nicholls rightly resisted the suggestion that this was some sort of interlocutory “freezing” order, pointing out that if the order were granted then Blake would never get the money back, in any circumstances.  So the order asked for was “confiscation in substance, if not in form”.  This, he said, could not be allowed; and the various statutory confiscatory powers only emphasise that this was not an area where the courts should go.  To hold otherwise “would offend the established general principle, of high constitutional importance, that there is no common law power to take or confiscate property without compensation”.
Absolutely right.  But where is this high constitutional principle in the remainder of the opinion?  The opinion of their lordships takes away from Blake some £90,000, on the basis of a doctrine never previously enunciated, never previously applied, and extremely unclearly stated.  The remedy protects no economic interest of the Crown, it protects no confidence. The Crown asserts that it protects national security, yet adduces no evidence of a threat, and admits that neither the publication itself, nor the payment itself, in fact harms national security in the least.  The reference to “national security” is mere arbitrary conjecture as to the effect of a ruling in Blake’s favour.  When the remedy is sought in public law, the court sees immediately that this is an argument for confiscation, which it rightly rejects.  But how is private law different?  How does it get round “the essentially punitive nature of the claim” (Lord Hobhouse)?  How is the lords’ ruling not itself an arbitrary act of confiscation?  We are not told.  
Conclusion 
A cynic would say that an elaborate doctrinal analysis of the Blake case is wasted effort. George Blake was a traitor, whose work doomed many of his fellow intelligence workers, and ruined projects meant to further the country’s interests against those of its enemies.  If the war in which Blake was fighting had ever been a declared or publicly-acknowledged one, he would in all probability have been shot.  As it was, he received a lower punishment, most of which he managed to evade.  It would be surprising in the least, the cynic would say, if Blake were to win any legal action anywhere in the UK, left alone one over his right to relate the very events which constituted his treachery.  To expect the judges to find against the secret services, even in a case where their opponent might well be innocent of any wrong-doing, is to ask them to act out of character (Simpson 1989); to expect it in a case like Blake is simply naivety.
The strengths of the cynical view are obvious, and as a point of view it seems undeniable. The interesting question is whether a non-cynical view of the case can be defended. If it can, the importance of the cynical view is much diminished.  We cannot expect the judges to forget their personal views entirely, we can only demand that they stay within the limits of the legal tradition.  Is there, then, a plausible doctrinal view of the case, which makes sense of what the law lords were doing as part of the ordinary workings of the common law?  As I hope I have shown, it is very hard to do so. At the very least, the approach it takes has never been taken in any previous case, and is so very hard to defend by ordinary lights that it seems doubtful whether it will ever be taken in any other.  This is not the ordinary operation of the common law.
The reasoning of their lordships therefore cannot, I think, be severed from its Cold War roots, and is of little value as a precedent, except of course in relation to the publication of spy memoirs. The hope that their lordships might make a serious contribution to the difficult problems of restitution was not an unreasonable one   after all, Scott VC and the court of appeal did so.  But in the event, that hope  has been dashed.  Despite a veneer of restitutionary reasoning, the case quickly departs from the doctrinal and commercial concerns that would have to be at the forefront of any real solution to those problems.  It is to be hoped that the Lords will someday soon return to them, undistracted by past battles, and alert to the real dangers we confront, as was the dissenting lord, Lord Hobhouse:
I must also sound a further note of warning that if some more extensive principle of awarding non-compensatory damages for breach of contract is to be introduced into our commercial law the consequences will be very far reaching and disruptive. I do not believe that such is the intention of your Lordships but if others are tempted to try to extend the decision of the present exceptional case to commercial situations so as to introduce restitutionary rights beyond those presently recognised by the law of restitution, such a step will require very careful consideration before it is acceded to.
Bibliography
Birks, P (2000) ‘Three kinds of objection to discretionary remedialism’ 29 Western Australia Law Review 1.
Blake, G (1990)  No other choice, An autobiography  (London: Jonathan Cape). 
Dawson, J (1959)  ‘Restitution or damages’ 20 Ohio Law Journal 175.  
O’Sullivan, J  (1997) ‘Loss and gain at greater depth :  The implications of the Ruxley decision’ in Rose, F (ed) Failure of contracts —  Contractual, restitutionary and proprietary consequences (Hart Publishing: Oxford), p 1.
Pottle P and Randle M (1989) The Blake Escape :  How we freed George Blake and Why  (London: Harrap)
Simpson, AWB (1989) ‘The judges and the vigilant state’ Denning Law Jour 145.