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Breach of Confidence

  1. Origins of Breach of Confidence in Australia
  2. What is Breach of Confidence?
    1. Elements
    2. Element 1: Quality of Confidence
    3. Element 2: Circumstances give rise to an obligation of confidence
    4. Element 3 - Actual or Threatened Use
  3. Justification Defence
  4. Remedies

The equitable doctrine of breach of confidence is a remedy that protects confidential information – including private and personal information as well as trade secrets. It sometimes operates as a quasi-privacy right. Whilst it is not as straight forward as enforcing a contractual non disclosure agreement for example, in some instances the breach of confidence doctrine can be used to prevent the disclosure of private or secret information.

Video overview by Nicolas Suzor on Breach of Confidence.

Origins of Breach of Confidence in Australia

There is no one body which governs confidential information. In Australia, we have a number of statues and relationship specific situations which seek to protect various types of confidential information. These are specific to types of relationships or duties owned in situations. For instance, a lawyer has a legal professional privilege and the Corporations Act 2001 (Cth) s 183(1) imposes obligations of confidence. These are just two examples, there are many others which set out specific obligations of confidence or protect secret information. Confidence may also be contractual, such as in a non-disclosure agreement.

In situations where there is no statue, contract or relationships which expressly protect confidential information, the doctrine of breach of confidence may assist.

What is Breach of Confidence?

As an equitable doctrine it is not as easy to enforce as contractual agreements. The doctrine of breach of confidence does not confer a property right but it does bind the conscience of a person receiving a secret. There are many uses for the doctrine such as:

  • Trade secrets, know-how, customer information, commercialisation information;
  • Non-contractual remedy to protect development of ideas / patentable information; and
  • As a quasi-privacy right.

Video overview by Benjamin Odman on Breach of Confidence and Personal Privacy

Elements

There are three elements to an action of breach of confidence:

  1. Confidential information;

  2. Disclosed in circumstances of confidence;

  3. Actual or threatened disclosure.

There is a fourth element which applies in instances of Government information. This applies where disclosure of information would be against the public interest.

Each of these elements will be considered in turn.

Element 1: Quality of Confidence

This element is based on a requirement of secrecy. Should the information enter the public domain, the quality of confidence is lost. It is sufficient for relative secrecy1, total secrecy is not required.

Information can be disclosed if recipient is under an obligation of confidence (usually a Non-Disclosure Agreement or NDA).

Ansell Rubber Co v Allied Rubber Industries [1967] VR 37

Trade secret case. The machine was patented but improvements were not. Have regard to:

  • the extent to which the information is known outside the owner’s business;
  • the extent to which it is known by employees and others involved in his business;
  • the extent of measures taken to guard the secrecy of the information;
  • the value of the information to him and to his competitors;
  • the amount of effort or money expended by him in developing the information; and
  • the ease or difficulty with which the information could be properly acquired or duplicated by others.
Argyll v Argyll [1967] Ch 30

Duchess of Argyll obtained an injunction to prevent disclosure of marital secrets by her ex-husband.

“Secrets […] relating to her private life, personal affairs or private conduct, communicated to the first defendant in confidence during the subsistence of his marriage to the plaintiff and not hitherto made public property.”

Commonwealth v Fairfax (1980) 147 CLR 39

Leaked information was embarrassing to Cth Government. Once the information was published, it lost its character of confidentiality.

“The sales of the book already made, including those made to Indonesia and the United States, the countries most likely to be affected by its contents, and the publication of the first instalment in the two newspapers, indicate that the detriment which the plaintiff apprehends will not be avoided by the grant of an injunction. In other circumstances the circulation of about 100 copies of a book may not be enough to disentitle the possessor of confidential information from protection by injunction, but in this case it is likely that what is in the book will become known to an ever-widening group of people here and overseas, including foreign governments”. (54, Mason J)

AG v Guardian (No 2) (Spycatcher)
  • Former MI5 agent moved to Tasmania to escape UK law and write a book revealing some MI5 secrets.
  • British could not enforce UK legislation here.
  • Information was leaking rapidly.
  • Injunction to prevent further publication not available.

Video overview by Sam Turner on Spycatcher, Breach of Confidence

Video overview by Cam McCall on Spycatcher, Breach of Confidence

Element 2: Circumstances give rise to an obligation of confidence

There are certain circumstances which give rise to a situation where confidence is expected. This situation would be present where a reasonable recipient (of information) would believe that the information was given in confidence.

An obligation of confidence may also be present in situations where:

  • Information received pursuant to a contract (Bate’s Case);
  • Information received in a course of relationship – employment, contractual, or fiduciary;
  • Could extend to a third party if third party knows or ought to know that the information is confidential; and
  • Surreptitiously obtained information.
Coco v A N Clark (Engineers) [1969] RPC 41

This cases asked whether a reasonable person in the position of the recipient would have recognised that the information was given in confidence (Megarry J). The information was provided in the course of contractual negotiations around a new moped engine. It was held that the circumstances imposed an obligation of confidence, however the information was not sufficiently novel.

AG v Guardian (No 2) (Spycatcher)

Duty not limited to relationships:

“also to include certain situations, beloved of law teachers, where an obviously confidential document is wafted by an electric fan out of a window into a crowded street, or when an obviously confidential document, such as a private diary, is dropped in a public place, and is then picked up by a passer-by” (Lord Goff, in obiter)

Douglas v Hello! [2005] EWCA Civ 595

In this case, Douglas’ negotiated to commercialise the photography rights at their wedding. The wedding had the quality of confidence. The photographs were taken by a surreptitious gatecrasher. It was held that the circumstances satisfied the equitable obligation.

Element 3 - Actual or Threatened Use

The third element involves actual or threatened use of the confidential information. This includes:

  • Use without consent;
  • Use beyond scope of limited purpose; and
  • Unauthorised use of the information.

Intention to breach is not an element of the doctrine.

There must be detriment sufficient to show either:

  • Loss of commercial advantage;
  • Ability to exploit;
  • Embarrassment; and
  • Exposure to discussion and / or criticism.

Justification Defence

The defence of justification may be used to defend the disclosure. Information can be disclosed where there is just cause or excuse.

There are three main reasons that may be evoked under a just cause or excuse defence. These are an argument in support of iniquity, a disclosure of wrongdoing or for public safety of community (strongest approach) or, to balance the public interest. The justification on the base of balancing the public interest is not an accepted argument in Australia but has been used in the UK.

Video overview by Paris Hamrey on Breach of Confidence and the Public Interest

Corrs Pavey Whiting and Byrne v Collector of Customs (Vic) (1987) 10 IPR 53

The applicant represented patentee; sought documents under FOI relating to importation of patented drug. Customs declined, citing breach of confidence. Gummow J, dissenting, discussed the existence public interest test, suggesting that it was better thought of as equity barring the plaintiff on the basis of unclean hands; and no quality of confidence in equity for information that shows crimes, wrong or misdeeds of public importance.

Naomi Campbell v Mirror News (2004)

Campbell’s attendance at Narcotics Anonymous may have had the necessary degree of confidentiality (doubted on appeal). Confidence was lost by Campbell’s deliberate courting of the media and an anti-drug reputation. (Public interest test).

Remedies

There are a number of remedies available for breach of confidence.

These include:

  1. Injunctions - Interlocutory or Permanent.

  2. Damages, account of profits - Usually plaintiff seeks an injunction.

Beware of the Streisand effect: a phenomenon where attempts to hide, remove, or censor a piece of information has the unintended consequence of drawing attention to and publicising the information more widely, usually facilitated by the Internet.2

  1. Gee v Day ↩

  2. https://en.wikipedia.org/wiki/Streisand_effect ↩