Fawcett denies the allegations
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The Guardian newspaper has won a High Court battle to name the former royal aide trying to stop allegations from being printed by another paper.
The Mail on Sunday was blocked from publishing a story about Michael Fawcett, a former aide to Prince Charles.
The Guardian told the court it had no intention of repeating the allegations, but had a right to name Mr Fawcett.
The allegations at the centre of the Mail on Sunday story have been strenuously denied.
The Mail on Sunday is to return to the High Court on Friday to challenge the original injunction won against it last Saturday.
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The claimant's concern ever since he learnt of the utterly false allegations
the Mail on Sunday intended to publish has been to preserve his reputation and
protect his family
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The Mail on Sunday's editor, Peter Wright, said: "Our lawyers have given notice of our intention to apply to the court on Friday to challenge the terms of the injunction against us."
Lawyers representing the Guardian went before a judge on Wednesday over a temporary injunction served against it on Monday night.
The ban was lifted by agreement after the Guardian agreed to publish the name of the former servant only
in relation to him obtaining an injunction against the Mail on Sunday.
Desmond Browne QC, for the former royal aide, told Mr Justice Tugendhat,
sitting in the High Court in London: "The claimant is delighted that it has
been possible to reach an agreement with the Guardian which puts an end to these
proceedings and saves further costs.
"The action will be discontinued by the claimant and your Lordship is asked
formally to discharge the injunction granted by Mr Justice Henriques on 3
November 2003 and continued since then.
The Guardian welcomed the outcome
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"The claimant's concern ever since he learnt of the utterly false allegations
the Mail on Sunday intended to publish has been to preserve his reputation and
protect his family.
"No other consideration motivated his action against the Guardian.
"As your lordship knows the injunction against Associated Newspapers granted
by Mr Justice McKinnon remains in force and this settlement in no way affects
it."
'Liberty'
A statement from the editor of the Guardian, Alan Rusbridger, said: "The Guardian is extremely pleased with the outcome, which has significant implications for freedom of expression.
"The identity of those seeking the injunction should be a matter of public record - even when there is a connection to the royal family.
"Today's outcome is reassuring in underlining the fact that those with links
to the royal household are subject to the laws of this country in the same way
as anyone else."
Mr Fawcett had argued that his name should not be revealed, as the publication of the story would seriously libel him.
In March, he was cleared of serious malpractice after a report alleged wrongdoing at St James's Palace, but he resigned as the prince's aide.