Presidents Club scandal: the legal ramifications

The scandalous revelations about the recent Presidents Club’s charity fundraising event, where skimpily dressed hostesses were reportedly subject to sexual harassment by the exclusively male guests, could raise a number of different legal issues. Paul Magrath considers some of them.

man, cigar

Until it was shut down hurriedly in the wake of the scandal, the Presidents Club had been in existence for more than 30 years and had evidently acquired a certain reputation. Guests at the Dorchester Hotel were welcomed by one of the entertainers to “the most un-PC event of the year” and the accompanying brochure included a full-page warning that no attendees or staff should be sexually harassed. Among the auctioned prizes were a night at a strip club and a course of plastic surgery with the invitation to “Add spice to your wife”. All in all, alarm bells should have been ringing.

A reporter for the Financial Times went undercover as one of the hostesses hired by an agency to help entertain the guests, and parts of her secret filming of the event can be seen on the newspaper’s website. She noted the strict instructions about the “sexy shoes” and “black underwear” the agency told her to don for the occasion. But she also reported that, on arriving at the venue, she was made to sign a “non-disclosure agreement”, without being given a chance to read its contents, or keep a copy.

1. Is the NDA enforceable?

A non-disclosure agreement or NDA is basically a contractual gagging order: an agreement not to spill the beans about something. It is often used to prevent publicity about the terms of settlement of litigation (particularly in employment or disciplinary cases).

In this case, it might have been simply to prevent tittle-tattle about celebrity guests getting into the tabloids; but it may have been a device to intimidate the hostesses against making any complaint afterwards. If so, it would not have mattered whether, in purely technical terms, it was binding or enforceable, which seems doubtful.

Elaine Aarons, a partner at the City of London law firm Withers, was quoted in the Times as saying “no confidentiality agreement can prevent anyone from disclosing criminal offences, nor making sexual harassment claims nor from seeking protection as whistleblowers”. However, she also considered such claims unlikely to succeed owing to the fact that “the law is just too complicated and the damages too little for anyone to take the risk of making a stand”.

2. Employment law: harassment in the workplace

The problem for the hostesses is that they were in essence part of the gig economy – hired by the agency as casual labour. Moreover, the harassment they experienced was not at the hands of their employer or fellow employees, but from third parties. That reduces the protection they could expect under the Equality Act 2010 in its current form.

As originally enacted, subsections (2) to (4) of section 40 of the 2010 Act treated an employer as responsible for continued harassment of an employee by a third party where the employer is aware of it and fails to take steps to prevent it. But those provisions were repealed by section 65 of the Enterprise and Regulatory Reform Act 2013.

Another remedy might be available under the Protection from Harassment Act 1997. Beverley Sunderland, managing director at Crossland Employment Solicitors told Employment Solicitor magazine that “the fact that the women recruited were allegedly asked not only to wear short, black clothing but also matching underwear and were encouraged to drink with guests” and that an “enforcer” allegedly roamed the event, not to prevent harassment but to prevent the ladies from spending too much time in the toilets, could render the employer open to vicarious liability under the 1997 Act.

Although, under that Act, “there needs to be more than one incident which the employer is aware of and fails to take reasonable steps to prevent,” the fact that “the very person who recruited the ladies concerned has organised the event for many years and was allegedly actually there” meant she could not claim to have no knowledge of it. As for taking steps, “Putting a note into the programme is unlikely to be considered sufficient, when balanced with everything else.” Indeed, one might think the presence of the anti-harassment warning would reinforce the awareness of the problem.

3. Charity law: reputational risk

The scandal has tarnished the charitable objects of the event, which reportedly raised some £2m for good causes such as children’s hospitals. Some charities have refused to accept donations from the club or have repaid the money and the Charity Commission has issued advice to charities about how to respond.

The days when you could get away with pretty much anything by saying it was “all in a good cause” are well and truly over. The Presidents Club was subject to charity law and strict regulation. The Charity Commission now issues guidance to trustees on protecting their charity’s reputation.

As Barbara Rich, a barrister specialising in trusts law, has commented, ‘‘It’s difficult to understand how any assessment of reputational risk could have led the trustees to conclude that a men-only event for ‘presidents’ who were reportedly welcomed to ‘the most un-PC event of the year’, with a full-page warning against sexual harassment of its hostesses in its brochure and auctions of cosmetic surgery treatments for the guests’ wives, was not bristling with reputational risk in the year of #TimesUp and wide debate about sexual conduct in public life — both for the Presidents Club and for the charities supported by the funds it raised.”

4. Professional (mis)conduct

A number of solicitors from leading firms are reported to have been on the guest list, including a partner from Mishcon de Reya (as reported here). It’s not yet clear whether there were any barristers there. Other professions were represented, in many cases firms booking tables to entertain their own staff or clients. So the question arises whether their conduct, if inappropriate or offensive, let alone offending, would render them liable to disciplinary proceedings, e.g. before the Solicitors Disciplinary Tribunal (SDT), Bar Standards Board (BSB), or some equivalent professional body.

In the case of a barrister, the courts have found that lewd and offensive behaviour towards female staff at a marketing event held by his chambers was capable of being “likely to diminish the trust and confidence which the public places in you or in the profession”, contrary to CD5 (core duty 5) in the BSB Handbook : see Bar Standards Board v Howd [2017] EWHC 210 (Admin); [2017] 4 WLR 54.

The Solicitors Regulation Authority (SRA) Handbook sets out a number of Principles that apply to all solicitors, including ‘6. behave in a way that maintains the trust the public places in you and in the provision of legal services’, which is similar to CD5 for barristers. In the case of SRA v Wotherspoon (2014) Case No: 11171 / 2013, a male solicitor who was guilty of a sexual assault on a female was suspended for an indefinite period for an admitted breach of Principle 6.

5. Media law: can the newspaper be sued?

Analysing the scoop in the Guardian on 28 January 2018, media commentator Roy Greenslade reported that the FT initially faced a “blizzard of threats from company lawyers”, presumably in a fit of nostalgia for the golden age of “super-injunctions”. But if any of the judges in the Queen’s Bench Media and Communications List were ever troubled by such urgent applications, they did not stop the FT publishing its scoop. Once the dam had burst, the reaction on social media and the story’s repetition by other publishers made any attempt at damage limitation by media law quite hopeless.

In fact, given the cogent evidence gathered by the FT’s reporter, Madison Marriage, any libel claim could be met by a strong defence of truth under section 2 of the Defamation Act 2013. But there might be scope for a claim under the common law tort of misuse of private information (MPI), as recognised in Campbell v MGN Ltd [2004] UKHL 22; [2004] 2 AC 457 and subsequent cases. It will be interesting to see if any such claim materialises, though anyone pursuing it is likely to do their own reputation more harm than good by doing so.

6. Criminal law

The above are all civil remedies. But if sexual molestation or indecent assault did take place, that could give rise to criminal prosecutions. The problem would be identifying the culprit – not easy in a room full of blurry old men in identical black ties and dinner suits – and providing the police and CPS with cogent evidence. Sexual offences have recently given rise to further issues, including problems with disclosure of evidence to the defence, and around the cross-examination of complainants, which might affect the chances of success.

Conclusion

It’s not often that a story in the news gives rise to such a range of legal issues as this one has. But the story is also a demonstration of a cultural shift, part of a pattern of reaction against the objectification of women in the film and entertainment industries, as demonstrated by the #metoo campaign, and the undervaluing of women’s contributions in corporate institutions such as the BBC. In that sense it is truly a tale for our times.

Paul Magrath is head of product development at the Incorporated Council of Law Reporting for England and Wales (ICLR) and a member of the Transparency Project.