Damages for emotional distress in action for breach of confidence

12.9 There are several arguments in favour of the ALRC’s proposal. First, if legislation clarified or confirmed that compensation could be awarded for emotional distress, the existing action for breach of confidence would more readily be seen as a useful response to serious invasions of privacy, and be more attractive to potential claimants.^[6] This is particularly important in the event that the statutory cause of action is not enacted. Secondly, the effectiveness and availability of the remedy may deter invasions of privacy involving disclosures of private information. Thirdly, this proposal would be an effective way of addressing a significant gap in existing legal protection of privacy while being more limited and directed than the introduction of a new statutory cause of action. Fourthly, this provision would also indicate that Australian legislatures intended that the action for breach of confidence could be relied on to remedy these kinds of invasions of privacy.

12.10 In traditional claims for breach of confidence in Australia, claimants have generally sought one of three remedies: an injunction to restrain an anticipated or continuing breach of confidence; compensation for economic loss due to a breach; or an account of the anticipated profits derived from a breach. This has been so, whether the relevant confidence concerned commercial, governmental or personal information.

12.11 However, where a breach of confidence in relation to personal confidential or private information has already occurred and an injunction is futile, the consequence that a claimant is most likely to suffer is emotional distress, rather than harm in the nature of economic loss.^[7] Professor Michael Tilbury has noted that ‘the very object of the action [for invasion of privacy] will be to protect plaintiffs against [mental or emotional distress], at least in part.’^[8]

12.12 The Law Institute of Victoria submitted that ‘harm caused by breaches of privacy is more likely to be harm such as embarrassment, humiliation, shame and guilt. Given the centrality of privacy to identity, these harms should not be seen as insignificant, even though they are not physical or financial’.^[9]

12.13 While the limited circumstances for the recovery of compensation for ‘mere’ emotional distress, even intentionally caused, has been a perennial issue for the law of torts,^[10] the issue of recovery in equity had not been raised in Australia until the case of Giller v Procopets,^[11]decided by the Supreme Court of Victoria Court of Appeal in 2008. In that case, Neave JA noted: ‘The Australian position appears to be at large on this issue. I am not aware of any appellate court decision which has considered it.’^[12] Ashley JA stated: ‘No Australian authority was cited at trial or on appeal to support the proposition that, in the context now under discussion, equitable compensation or equitable damages … can be awarded for mental distress alone.’^[13]

12.14 In Giller v Procopets the court held that the claimant could recover damages for emotional distress in her equitable claim for breach of confidence. The claim was clearly one for breach of confidence, as the material that had been disclosed by the defendant, a videotape of intimate activities, had been created by the claimant and defendant while in a de facto relationship. The court unanimously agreed that the claimant could recover compensation for her consequent emotional distress as equitable compensation. Neave JA, with whom Maxwell JA agreed, also upheld the award as damages under the Victorian equivalent of Lord Cairns’ Act,^[14]s 38 of the Supreme Court Act 1986 (Vic).^[15] An application by Procopets to the High Court of Australia for leave to appeal was rejected.^[16]

12.15 There are several reasons why it would be desirable for legislation to clarify the courts’ powers to award compensation for emotional distress, notwithstanding the judgment in Giller v Procopets.

12.16 First, at the time of this Discussion Paper, Giller v Procopets remains the sole appellate authority for the recovery of compensation of emotional distress in a breach of confidence action, over five years after it was decided. The position reached in that case has not been further tested or applied in Australia. Prior to that decision, a county court judge in Victoria, in the 2007 case of Doe v Australian Broadcasting Corporation, awarded equitable compensation of $25,000 for breach of confidence, for ‘hurt, distress, embarrassment, humiliation, shame and guilt’, as part of a larger award for other wrongs.^[17] The case was settled before appeal.

12.17 Secondly, s 38 of the Supreme Court Act 1986 (Vic), relied upon to justify the award of compensation in Giller v Procopets, differs from the form of Lord Cairns’ Acts in other jurisdictions^[18] where there is still controversy as to whether Lord Cairns’ Act applies in aid of purely equitable rights such as breach of confidence.^[19]

12.18 Thirdly, even if Lord Cairns’ Act or s 38 of the Supreme Court Act 1986 (Vic) does apply, this does not explain the basis on which equity can award compensation, in the form of common law compensatory damages and aggravated damages, for emotional distress arising from the breach of an equitable wrong. Regardless of the wording of the statute, it is problematic to have an equitable grant of compensation or ‘damages’ by analogy with tort law: as Ashley JA points out, ‘with few exceptions, the common law has turned its face against awards of damages for distress’^[20] and, as the majority held, tort law would not have provided a remedy in the circumstances. This point is not an argument that the judgment undesirably fuses law and equity.^[21] Rather it is an argument based on the need for legal coherence.

12.19 Fourthly, if the award for emotional distress in Giller v Procopets is better treated as an award of equitable compensation, there remains an unsettling lack of precedent for the decision. Further it is arguably inconsistent with another decision in which a state appellate court rejected a claim in an equitable action for punitive damages, previously only given at common law.^[22] While the courts of the United Kingdom, starting with Campbell v MGN Ltd in 2004, have routinely awarded damages for emotional distress in the so-called ‘extended’ action of breach of confidence which protects against disclosures of private information, they are clearly underpinned by the requirements of the Human Rights Act 1998 (UK), which provides a very different remedial framework from that in the Australian legal system.

12.20 However, equity is traditionally seen as having a great deal of remedial flexibility and, provided the award is seen as consistent with broad equitable principles and doctrines, a lack of precedent may not be a significant problem.^[23] Gummow J has contrasted the approach of equity to the common law:

The common law technique … looks to precedent and operates analogically as a means of accommodating certainty and flexibility in the law. Equity, by contrast, involves the application of doctrines themselves sufficiently comprehensive to meet novel cases. The question of a plaintiff ‘what is your equity?’[as posed by Gleeson CJ in ABC v Lenah Game Meats Pty Ltd^[24]] thus has no common law counterpart.^[25]

12.21 Further, there is much strength in the simple point made by Neave JA, that ‘[a]n inability to order equitable compensation to a claimant who has suffered distress would mean that a claimant whose confidence was breached before an injunction could be obtained would have no effective remedy.’^[26] On these grounds, it is strongly arguable that compensation for emotional distress should be part of the armoury of remedies available to a court of equity when determining a claim for breach of confidence through the disclosure of private information.

12.22 It may well be that courts will arm themselves with this power by following the lead of Giller v Procopets in the future. However, the position would be rendered more certain, and there would be less room for argument and expensive litigation along the way, if legislation were the source of that power. As Gurry has commented, ‘[a]ny discussion of the application of the remedy of damages in breach of confidence cases is fraught with difficulty at the outset’.^[27] It is therefore highly desirable that there be some legislative clarification.