Between 1951 and 1960, however, Blake served as an agent for the Soviet Union. He pleaded guilty in 1961 to five counts of unlawfully communicating information in violation of Section 1(1)(c) of the Official Secrets Act of 1911, the court sentencing him to serve 42 years in prison. Five years later, he broke out of prison and got himself to Moscow where is still residing.
Blake’s 1989 autobiography set out substantial amounts of information about his activities in SIS and about data obtained by him during his SIS service. Jonathan Cape, Ltd., published his book in the U.K. in 1990. Blake had never asked for the Crown’s permission to publish the book nor had he sent in the manuscript for prior Crown approval. His publishing contract involved a payment of 150,000 pounds sterling of which Blake has already gotten 60,000.
On the Crown’s behalf, the Attorney-General (AG) filed an action in May 1991 to deprive Blake of financial benefit from the book’s publication and, in particular, to bar payment of the 90,000 pounds owed by Cape. Blake’s pro bono attorney in turn filed a third party proceeding against Cape. The Crown admitted that the information in the book was no longer confidential and that its revelation was not injurious to the public interest. Moreover, it had never asked the court to bar the book’s publication. The theory of the Crown’s case at first instance was that Blake had violated fiduciary duties owed to the Crown. The Court, however, dismissed the suit.
The AG took his case to the Court of Appeal. Here he amended the Crown’s claim, first, to allege that Blake had breached a contract and, second, that public law warranted relief in that the suit was enforcing the criminal law. There was no claim for an account of profits or for restitutionary damages for breach of contract. The Court of Appeal dismissed the private law appeal but allowed the public law appeal.
Blake appealed to the House of Lords and the AG cross-appealed. The AG contended for the first time that the Crown should be able to recoup Blake’s profits from his contract breach on restitutionary grounds. Five members of the House unanimously allow Blake’s appeal in public law and, with one dissent, allow the AG’s appeal in private law.
While most contract litigation seeks compensation, the law sometimes measures contract damages according to the benefit gained by the wrongdoer. The loss-of-profits approach applies only when the courts consider damages, specific performance and injunction inadequate remedies. One general element is that a claimant have a rightful interest in barring the defendant’s profit-making activity.
“The present case is exceptional. The context is employment as a member of the security and intelligence services. Secret information is the lifeblood of these services. In the 1950's Blake deliberately committed repeated breaches of his undertaking not to divulge official information gained as a result of his employment. He caused untold and immeasurable damage to the public interest he had committed himself to serve.”
“In 1990 he published his autobiography, a further breach of his express undertaking. By this time the information disclosed was no longer confidential. In the ordinary course of commercial dealings the disclosure of non-confidential information might be regarded as venial. In the present case disclosure [by an SIS officer] was also a criminal offence under the Official Secrets Acts, even though the information was no longer confidential.” [968]
The quite similar case of Snepp v. United States, 444 U.S. 507 (1980), the House notes, showed a majority of the U.S. Supreme Court approving the imposition of a “constructive trust” on the profits made by a former CIA employee who had violated his nondisclosure agreement in a book that disclosed official, but unclassified, information. Providing the plaintiff with an account of profits under U.K. law “is a different means to the same end.” [970]
In this case, the Crown had a right against Blake to an account of his profits and to a money judgment enforceable by attachment of the debt as usual. As to Cape, the AG was entitled to have it pay the Crown a sum that matched whatever amount Cape still owed Blake. An injunction against the payment of royalties awarded by the Court of Appeal is to continue in force until Cape pays the Crown instead.
The House points out (incidentally) that the AG’s public law claim rested on the theory that Blake “owned” the royalties payable by Cape. The Court of Appeal, however, did not intend to issue a confiscatory order to blot out Blake’s title to the payments but one to “freeze” them until the occurrence of some future event. Theoretically this might be a future criminal prosecution of Blake under the Secrets Act. Such a prosecution would trigger the application of the Criminal Justice Act of 1988 which does allow for confiscations of criminal proceeds under defined conditions. The Crown has admitted, however, that it sees no prospect of Blake’s return to England for trial.
“This being the case, one must look elsewhere for the event which will decide what is to happen to the money thus frozen in Jonathan Cape's hands. ... The Crown suggested that at some stage in the future an application might be made to the court for the money to be released to a charity, or used in some other way which would not benefit Blake. The Court of Appeal envisaged the possibility of some use for the unpaid royalties which would not be ‘contrary to the public interest.’”
“But these suggestions serve only to underline that, although not so expressed, the effect of this order is confiscatory. The order will have the effect of preventing the money being paid to Blake. It is not envisaged that the money will ever be paid to him.” [971] As a result, the court lacked the power to enter such an order.
Citation: Attorney-General v. Blake, [2000] E.M.L.R. 949, [2000] 4 All E.R. 385 (House of Lords).
