Attorney General v Blake (2000) – The Spy Who Owed Me

Attorney General v Blake & Another [2000] UKHL 45

This is a landmark contract law case that established the possibility of restitutionary damages as an award where ordinary damages are not practical or fail to adequately address the facts. A claimant can have a restitution interest in certain benefits which the defendant has acquired at their expense. If certain conditions are met, it may be possible for the claimant to receive the profits which the defendant has made from their breach of contract.

The House of Lords judgment can be found here.

Background

George Blake was a Soviet spy in the British intelligence services. He was exposed in 1961 and given a 42 year prison sentence under Section 1(1)(c) of the Official Secrets Act 1911.  In 1966 he escaped Wormwood Scrubs prison and fled to Moscow, where he remained until his death in 2020. While in Russia he wrote his memoirs of his time as a spy, which included material in contravention of OSA 1911. While this content was no longer confidential by the time of its release in 1989, OSA 1911 disallows disclosing any information at all about previous employment which it covers. Naturally, it was unlikely that he would be prosecuted again under OSA for his memoirs as he was in Russia and already had a prison sentence to resume if he ever returned to the UK. The book did, however, represent a breach of his employment contract with the British Government, which was actionable in the civil courts. His OSA declaration, which he was required to sign to gain employment, specifically references divulging information about his employment, in book form, after he was no longer an employee, and this undertaking was contractually binding.

Facts

Blake’s memoirs were published by a British firm, Jonathan Cape Ltd, who at the time of trial had already paid him somewhere in the region of £60,000 in advance payments, which the UK Government wrote off as unrecoverable. However, over the course of the book’s publication it was expected that Blake would receive another £90,000 worth of payments. The Attorney General claimed that Blake’s breach of contract entitled the Government to those profits – which they then would be able to receive as damages, although there was no loss suffered by the Government as a result of publication.

Judgment

Lord Nicholls gave the leading judgment in a 4-1 decision, with Lord Hobhouse dissenting.

The presumption at court is that “damages are measured by the plaintiff’s loss, not the defendant’s gain”. Lord Nicholls drew on the precedent established by Lord Blackburn in Livingstone v Rawyards Coal Co. (1880) 5 App. Cas. 25, 39, whereby damages should as far as possible represent the “amount of money which will put the injured party in the same position he would have been in had he not sustained the wrong”. However, in this case the claimant suffered an unquantifiable loss – it is not possible to put a monetary value on secrets. This has been established in other areas of law – such as trespass, where the depredation is not through causing monetary loss, but by using the land of another for one’s own benefit (as noted by Lord Nicholls in the judgment).

In the Court of Appeal, Lord Woolf had made explicit the point that the Attorney General’s case was based upon making a point of public policy “by instituting civil proceedings, in aid of the criminal law, to uphold the public policy of ensuring that a criminal does not retain profit directly derived from the commission of his crime.”

The ‘exceptional’ nature of the case was repeatedly emphasised in the judgment. Restitutionary damages are rare for a reason, as they do not conform to the standard common law formula of ‘loss = damages’. The confidential nature of Blake’s employment (and the corresponding espionage trial) meant that his subsequent breach of contract was out of the ordinary. A more radical remedy would therefore serve as public policy, by providing the Government with alternative recourse against individuals who might breach OSA.

Lord Hobhouse’s dissent argued that using contract law to make a point of public law was inappropriate, as the Government’s commercial interests did not suffer any form of loss. He essentially disagreed with the court using a contract law remedy as a weapon to make a point of public policy.

Injunction

While the case is notable for its establishment of grounds for restitutionary damages, this only formed half of the case. The Government had also taken out an injunction against Blake publishing the book in the UK, confirmed in the Court of Appeal, and challenged by Blake. The House of Lords held that this injunction amounted to a confiscation of Blake’s property without compensation, which is unlawful (Attorney General v De Keyser’s Hotel Ltd [1920] AC 508, UKHL 1). Powers of confiscation are regulated by statute, and the court declined to constrain them with a divergent common law judgment, so the Court of Appeal’s judgment upholding the injunction was overturned, and it was lifted.

Significance

While based in contract law, the case’s primary significance lies in the House of Lords being willing to apply commercial legal principles to make a public policy point in the realm of public law. The ultimate significance comes in confirming the Government’s interest in confidential information and any profits that come to the defendant based upon their misuse of it. The award of restitutionary damages, while theoretically available to a ‘standard’ commercial claimant, is in reality reserved for ‘exceptional’ cases. Ironically, this is therefore an exception that proves the common law rule that damages are only an available remedy when a loss can be established and quantified (unless, as here, there are utterly exceptional circumstances).

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