Recommendation 13–1 If a statutory cause of action for serious invasion of privacy is not enacted, appropriate federal, state, and territory legislation should be amended to provide that, in an action for breach of confidence that concerns a serious invasion of privacy by the misuse, publication or disclosure of private information, the court may award compensation for the plaintiff’s emotional distress.
13.11 There are several arguments in favour of the ALRC’s recommendation for compensation for emotional distress. First, if legislation clarified or confirmed that equitable 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 plaintiffs. This is particularly important in the event that the statutory cause of action is not enacted.
13.12 Secondly, the effectiveness and availability of the remedy may deter invasions of privacy involving disclosures of private information.
13.13 Thirdly, this recommendation 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.
13.14 Fourthly, this provision would indicate that Australian legislatures intended that the action for breach of confidence could be relied on to remedy these kinds of invasions of privacy.
Remedies for breach of confidence
13.15 In traditional claims for breach of confidence in Australia, plaintiffs have generally sought one of three remedies: an injunction to restrain an anticipated or continuing breach of confidence; an account of the anticipated profits derived from a breach; or compensation for economic loss due to a breach.
13.16 An injunction to restrain publication or misuse is the most valuable and effective remedy in respect of all kinds of information: commercial, governmental or personal information. The remedies of an account of profits or equitable compensation are usual in cases involving commercial information. Beginning with Prince Albert suing to restrain the publication of a catalogue of Queen Victoria’s family etchings in 1849, breach of confidence actions in equity have long been used to protect personal information, but the cases invariably concerned applications for injunctions.
Compensation for breach of confidence
13.17 While the general entitlement to compensation for breach of confidence is now well-established, issues about assessment remain unresolved. In 1982, IE Davidson noted that, even in commercial cases, assessment of loss was difficult:
The ‘protean quality of information’ makes it difficult to estimate what is required to finally restore a plaintiff to his position prior to the breach of his confidence. Nevertheless, relief based on the value for which the information would be sold between a willing buyer and a willing seller seems to be a satisfactory general criterion. There may be more serious difficulties in using Equity’s compensatory jurisdiction to remedy breaches of personal confidence where the damage suffered by the discloser through the confidant’s breach of duty will rarely be directly measurable in financial terms. Compensation, being based on specific restitution for the value of what has been lost, seems more appropriate for recovering identifiable financial loss or specific property than for granting solatium for personal suffering or loss of reputation caused by breach of a personal confidence. Whilst compensation may have a role, the major scope for a principled development of techniques with which to remedy losses due to breach of this equitable duty will be where the confidential information had a commercial value.
13.18 In 1999, the New South Wales Court of Appeal was still describing equitable compensation as ‘a developing area of the law’. In 2014, the authors of Meagher Gummow and Lehane’s Equity: Doctrines and Remedies state:
Monetary awards for loss, or something like loss, are awarded in a variety of contexts in equity. ‘Equitable compensation’ has come to denote many of these. It has become a category of concealed multiple reference: no single formulation can accurately describe all the applications of this relief.
13.19 In cases involving confidential personal or private information, the plaintiff’s economic losses or the defendant’s profits would seem to be readily recoverable where the private information had a commercial value. Where it does not have a commercial value, the plaintiff may nevertheless have suffered economic loss, such as the cost of hiring a public relations consultant to manage resultant publicity, or loss of employment. A plaintiff may also suffer some other type of harm such as personal injury or psychiatric injury but there is a dearth of authority on whether such damage is recoverable.
Emotional distress: a common result of misuse of private information
13.20 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 plaintiff is most likely to suffer is emotional distress. 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’.
13.21 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’.
13.22 It is well–established that tort law allows recovery of compensation for ‘mere’ emotional distress, even intentionally caused, in only limited circumstances. The issue of whether compensation for emotional distress can be awarded in equity was first raised in Australia in Giller v Procopets.Neave JA of the Supreme Court of Victoria Court of Appeal noted: ‘[t]he Australian position appears to be at large on this issue. I am not aware of any appellate court decision which has considered it.’
13.23 Allowing the plaintiff’s appeal, the court in Giller v Procopets held that the plaintiff 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 plaintiff and defendant while in a de facto relationship. The court unanimously agreed that the plaintiff could recover compensation for her consequent emotional distress as equitable compensation. An application by the defendant to the High Court for leave to appeal was rejected.
Why the law needs clarification
13.24 It is desirable for legislation to clarify the courts’ powers to award compensation for emotional distress, notwithstanding the judgment in Giller v Procopets, for several reasons.
13.25 First, at the time of this Report, Giller v Procopets remains the sole appellate authority for the recovery of compensation for emotional distress in a breach of confidence action. 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. The case was settled before appeal.
13.26 Secondly, the basis on which equity can award compensation, by way of common law compensatory damages and aggravated damages, for emotional distress arising from the breach of a purely equitable wrong remains unclear, even if Lord Cairns’ Act or s 38 of the Supreme Court Act 1986 (Vic) does apply. It is problematic to have a grant of equitable compensation or ‘damages’ by analogy with tort law, when, as Ashley JA pointed out, ‘with few exceptions, the common law has turned its face against awards of damages for distress’. This is even more so when, 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, although that argument could also be made. Rather it is an argument that the law would be more coherent if there was legislative clarification that equitable compensation could be awarded for emotional distress where private information was misused, published or disclosed.
13.27 Thirdly, there is an unsettling lack of precedent for the award of equitable compensation for emotional distress decision, other than the decision in Giller v Procopets. The ALRC has been unable to find any other precedent for the award of compensation for emotional distress in a purely equitable claim. Further, the decision 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. 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. However, these awards 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.
13.28 It may be argued that the remedial flexibility of equity allows the award of compensation for emotional distress without the need for a precedent, provided that the award consistent with broad equitable principles and doctrines. 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] thus has no common law counterpart.
13.29 In a similar vein, Meagher, Gummow and Leeming refer to equity’s ‘inherent flexibility and capacity to adjust to new situations by reference to mainsprings of the equitable jurisdiction.’
13.30 Notwithstanding these general statements, the ALRC considers that legislative clarification is desirable, as it would make the basis for an award clear and certain.
13.31 Most stakeholders who responded to the Discussion Paper commented on issues relating to the statutory cause of action or regulatory reforms rather than on the proposals that dealt with limited ways to supplement the common law. Comments on this proposal varied. Those stakeholders who saw no gaps in existing law or regulation, or who considered that their industry was already over regulated, opposed the proposal, or argued that such a development should be left to the courts.
13.32 Guardian News and Media Limited and Guardian Australia, for example, submitted that
[I]t would be preferable for the proposed statutory cause of action to be introduced rather than the modification of an existing cause of action. Attempts to ‘shoehorn’ an established action to cover an adjacent or similar situation result in the twisting of the original cause of action and fail to appropriately balance the relevant interests.
13.33 The Australian Privacy Foundation supported the proposal. It submitted that it would be desirable whether or not the statutory cause of action were enacted, and that it should not be confined to private information but extend to any breach of confidence action. The ALRC does not agree with these additional points. A recommendation that extended to non-private confidential information would exceed the ALRC’s Terms of Reference, and would have far–reaching implications for commercial actions generally. If the cause of action for serious invasions of privacy is enacted, the recommendation, which is aimed at filling a gap in the existing law, would be unnecessary.
13.34 Other stakeholders supported the proposal in the event that the statutory cause of action was not enacted. The Office of the Victorian Privacy Commissioner supported the proposal, submitting that
This would clarify the current common law position and strengthen an action for breach of confidence.
13.35 David Day also submitted that the proposal should not be seen as an alternative to a statutory cause of action, but as a ‘minor amendment to existing law that would offer limited improvement to privacy protection’.
The case for compensation for emotional distress
13.36 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. As Neave JA has noted, ‘[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’.
13.37 A remedy for emotional distress may have a powerful normative effect in the prevention of serious invasions of privacy by way of misuse or disclosure of private information. This is particularly relevant in light of the ease with which private information may be disclosed or distributed using new communication technologies.
13.38 Internet and other digital communication technology has enabled widespread and sometimes irreversible disclosures of private information causing continuing and serious harm and distress. As Gleeson CJ said in ABC v Lenah Game Meats Pty Ltd, citing the significant privacy concerns raised by advances in technology, ‘[t]he law should be more astute than in the past to identify and protect interests of a kind which fall within the concept of privacy’.
13.39 It may well be that courts will arm themselves with the power by following the lead of Giller v Procopets. However, the position would be rendered more certain, and there would be less room for ‘doctrinal angst’, argument and costly or risky litigation along the way, if legislation were the source of that power. Some stakeholders agreed that the issue of recovery of compensation for emotional distress ‘remains unnecessarily complex and uncertain’. It is therefore highly desirable that there be legislative clarification.
13.40 Legislation also has the advantage over common law development that it may be carefully crafted, if thought necessary, to deal with only the most egregious cases of breach of confidence concerning misuse, disclosure or publication of private information. While equitable liability for breach of confidence is conscience-based, a breach of confidence can be committed without any intent to harm, once the defendant has knowledge of the confidential nature of the information. The same approach may be taken with regard to private information, whether or not it is also confidential.
13.41 The ALRC notes also that it may be appropriate to limit the remedy of compensation for emotional distress caused by disclosures of private information to the most egregious cases, such as where the disclosure was done intentionally, recklessly or even maliciously.
The term ‘equitable compensation’ here is used to refer to an award of monetary compensation in an equitable action. ‘Equitable compensation’ has become the standard term for equitable monetary relief awarded for loss suffered by reason of breach of a purely equitable obligation—that is, in the exclusive jurisdiction’: Dyson Heydon, Mark Leeming and Peter Turner, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies (LexisNexis Butterworths, 5th ed, 2014) [23–015]. The authors distinguish ‘damages’ which are awarded in common law actions, including under Lord Cairns’ Act. See also the ‘Remedies’ section of Chapter 42 ‘Confidential Information’ of the same book; and The Salvation Army (South Australia Property Trust) v Rundle  NSWCA 347.
Normann Witzleb, ‘Giller v Procopets: Australia’s Privacy Protection Shows Signs of Improvement’ (2009) 17 Torts Law Journal 121, 123–124: ‘Considering that breach of confidence will, until more specific protection is in place, continue to act as Australia’s quasi-privacy tort, courts need to afford adequate protection against emotional distress.’
Prince Albert v Strange (1849) 1 Mac G 25.
Public Interest Advocacy Centre, Submission 105. See also Stephens v Avery  Ch 449, 454; Argyll v Argyll (1965) 1 ER 611; Lennon v News Group Newspapers Ltd  FSR 573.
Ian Davidson, ‘The Equitable Remedy of Compensation’  Melbourne University Law Review 349, 396.
Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1, . See also, Heydon, Leeming and Turner, above n 7, [23–020].
Heydon, Leeming and Turner, above n 7.
Authorities denying claims for personal injury based on fiduciary duties turn on the absence of a fiduciary obligation to protect that type of interest. See also, Ibid [23–605]. Recovery of common law damages in contractual cases depends on remoteness principles: see eg, Cornelius v de Taranto  EMLR 12; Archer v Williams  EWHC 1670 (QB).
Michael Tilbury, ‘Coherence, Non-Pecuniary Loss and the Construction of Privacy’ in Jeffrey Berryman and Rick Bigwood (eds), The Law of Remedies: New Directions in the Common Law (Irwin Law, 2010) 127, 140. Note also: Privacy Act 1988 (Cth) s 52(1) provides that the Information Commissioner investigating a complaint concerning a breach of that Act may make a determination that the complainant is entitled to compensation for loss, which is defined to include injury to the complainant’s feelings or humiliation suffered by the complainant.
Law Institute of Victoria, Submission 22.
Unlike the position in the United States, Australian courts, like those in the United Kingdom and elsewhere, do not recognise a cause of action for wilful infliction of emotional distress. The tort action for wilful infliction of nervous shock, known as the action under Wilkinson v Downton (1897) 2 QB 57 is an ‘action on the case’, and like an action in negligence, requires proof of actual damage such as recognised psychiatric illness: Giller v Procopets (2008) 24 VR 1, (Neave JA & Ashley JA, Maxwell P dissenting); Nationwide News Pty Ltd v Naidu (2007) 71 NSWLR 417; Wainwright v Home Office  2 AC 406. See further, Barbara McDonald, ‘Tort’s Role in Protecting Privacy: Current and Future Directions’ in J Edelman, J Goudkamp and S Degeling (eds), Torts in Commercial Law (Thomson Reuters, 2011).
Giller v Procopets (2008) 24 VR 1.
Ibid . See also Ashley JA at .
Neave JA, with whom Maxwell JA agreed, also supported the award as damages under the Victorian equivalent of Lord Cairns’ Act:s 38 of theSupreme Court Act 1986 (Vic).Ashley JA in Giller v Procopets (2008) 24 VR 1 at  did not agree that s 38 empowered the award: ‘I should next say that, upon the question of the availability of damages for mental distress, the common law would provide no assistance to the appellant even if s 38 was treated as making common law remedies available in a case within the exclusive jurisdiction. With few exceptions, the common law has turned its face against awards of damages for distress.’ Later at : ‘But that does not mean that equity must do so’. He supported the award of compensation under the exercise of equity’s inherent jurisdiction. Section 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’ Act in other jurisdictions, where there is still controversy as to whether Lord Cairns’ Act applies in aid of purely equitable rights such as breach of confidence: Supreme Court Act 1970 (NSW) s 68; Supreme Court Act 1935 (SA) s 30; Supreme Court Act 1935 (WA) s 25; Supreme Court Civil Procedure Act 1932 (Tas) s 11; Judicature Act 1876 (Qld) s 4; RP Meagher, JD Heydon and MJ Leeming, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies (LexisNexis Butterworths, 4th ed, 2002), [23–030]. The authors in Tanya Aplin et al, Gurry on Breach of Confidence (Oxford University Press, 2nd ed, 2012) [19.11] state that some courts ‘have taken the view that Lord Cairns’ Act could, and should, apply to confidence claims’, but that ‘leading commentators continue to argue that Lord Cairns’ Act had no effect on causes of action which were purely equitable (such as breach of confidence), rather in such cases equitable compensation should be awarded’. See also [19.15] and Cadbury Schweppes v FBI Foods  FSR 491.
Procopets v Giller (M32/2009)  HCASL 187.
Doe v Australian Broadcasting Corporation  VCC 281, .
Giller v Procopets (2008) 24 VR 1, .
‘[A]cceptance by the courts in most common law jurisdictions that (in relation to remedies at least) the rules of equity and law can be moulded to do practical justice means that the availability of remedies for breach of confidence are not, and should not be, confined by the nature of the jurisdiction upon which the claim is based. Rather the approach the court adopts should be flexible with the full panoply of remedies being available in appropriate cases. Nevertheless, this approach is not at present acknowledged by the Australian courts, and there is some indication that fusion has not been fully embraced elsewhere.’: Aplin et al, above n 20, [17.13].
Meagher, Heydon and Leeming, above n 20, [2–145] 59.
Cf cases based on a contractual obligation: Cornelius v de Taranto  EMLR 12. See further, B McDonald, ‘Defences to Privacy: Transformation, Fault, and Public Interest’ in J Goudkamp, F Wilmott-Smith and A Dyson (eds), Tort Defences (Hart Publishing, 2014).
Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298.
Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298, 304 (Spigelman CJ), quoted in Giller v Procopets (2008) 24 VR 1,  (Neave JA).
Australian Broadcasting Commission v Lenah Game Meats Pty Ltd (2001) 208 CLR 199, 216.
Roads and Traffic Authority of New South Wales v Dederer (2007) 324 CLR 330,  (emphasis added).
Meagher, Heydon and Leeming, above n 20, 415 [12–045].
ASTRA, Submission 99; Australian Bankers’ Association, Submission 27. ASTRA also noted in its submission that public interest should be considered when assessing compensation for emotional distress. As noted above, there is currently no broad ‘public interest’ defence to breach of confidence actions in Australia.
Free TV, Submission 109. In its submission to the Discussion Paper, Telstra stated: ‘Consistent with our previous submission, we do not believe damages should be awarded for emotional distress.’ In its submission to Issues Paper 43, Telstra commented: ‘if a significant increase in invasion or breach of privacy claims does occur in the future, as Gummow and Hayne JJ noted in Lenah, the adaptation and development of recognised causes of action to meet new situations and circumstances may be the most appropriate method of addressing this issue.’ From this the ALRC infers that Telstra thinks the issue should be left to the courts to decide: Telstra, Submission 107; Telstra, Submission 45.
Guardian News and Media Limited and Guardian Australia, Submission 80.
Australian Privacy Foundation, Submission 110.
Domestic Violence Legal Service and North Australian Aboriginal Justice Agency, Submission 120; T Butler, Submission 114; Public Interest Advocacy Centre, Submission 105; Australian Sex Party, Submission 92; J Chard, Submission 88; S Higgins, Submission 82; Women’s Legal Services NSW, Submission 76.
Office of the Victorian Privacy Commissioner, Submission 108.
D Day, Submission 72.
Giller v Procopets (2008) 24 VR 1, . Cf Ibid – (Gillard J).
Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199, 225, .
D Butler, Submission 74. ‘[A]ny discussion of the application of the remedy of damages in breach of confidence cases is fraught with difficulty at the outset’: Aplin et al, above n 20, [19.02].
Australian Privacy Foundation, Submission 110.
Vestergaard Frandsen A/S v Bestnet Europe Ltd  1 WLR 1556. See also, McDonald, ‘Defences to Privacy: Transformation, Fault, and Public Interest’, above n 26.