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Cite as: (2007) 81(12) LIJ, p. 66

The action for breach of confidence may be used as an equitable remedy for the unjustified publication of confidential information.

By Shirley Quo

The action for breach of confidence may be used as an equitable remedy for the unjustified publication of confidential information.
By Shirley Quo

On 22 August 2006, in the wake of a controversy involving allegations of ball tampering in a Test match in England, Australian umpire Darrell Hair sent an email to the International Cricket Council (ICC) offering to resign in exchange for a lump sum payment of US$500,000 to compensate him for future loss of earnings. In his email, Mr Hair made it clear that the details “must be kept confidential by both parties”.[1]

While the media spotlight has focused on Mr Hair’s conduct and the ball tampering incident, the decision by the ICC to disclose Mr Hair’s offer (despite his request for confidentiality) raises an interesting legal issue: the law relating to confidential information.

This issue is also raised in relation to legal practitioners and other professionals who attach confidentiality clauses to their emails as a matter of course. It is unclear whether such clauses per se are effective to protect from unauthorised use and disclosure personal information and other confidential matters acquired for business purposes.

An equitable doctrine

The courts of equity have long afforded protection to the disclosure of confidential information by means of the cause of action known as breach of confidence. The general jurisdiction in equity to restrain breaches of confidence exclusive of contract was accepted by the High Court in Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2).[2]

Equity will act to prevent the disclosure of information in circumstances where there is a duty of good faith binding the conscience of the confidant of the confidentially communicated information. This is the essence of the doctrine of breach of confidence. It is not necessary that the parties were in any relationship at the time the obligation of confidentiality arose. The confidential communication of the information creates an equitable obligation of good faith towards the confider – an obligation which equity will enforce – not to use or disclose the information except for the purpose for which it was provided in accordance with the wishes of the confider. The obligation is an in personam obligation, not a right in rem.[3]

The first modern English case which expressly relied on the equitable basis of the doctrine of breach of confidence was Saltman Engineering Co Ltd v Campbell Engineering Co Ltd.[4] The defendant was enjoined from manufacturing tools from drawings without the consent of the third plaintiff given to him for the purpose of manufacturing tools for the first plaintiff. The court held that even if there was no contract between the third plaintiff and the defendant, the defendant would still be accountable because an equitable duty of confidence could arise independently of contract.

As Lord Greene said (at 414): “If a defendant is proved to have used confidential information, directly or indirectly obtained from a plaintiff, without the consent, express or implied of the plaintiff, he will be guilty of an infringement of the plaintiff’s rights”.

In Australia, Callinan J in his High Court judgment in Australian Broadcasting Corp v Lenah Game Meats Pty Ltd[5] (ABC v Lenah) said:

“[A] duty of confidence arises when confidential information comes to the knowledge of a person ... in circumstances where he has notice ... that the information is confidential, with the effect that it would be just in all the circumstances that he should be precluded from disclosing the information to others”.

Elements

The classic exposition is by Megarry J in Coco v AN Clark (Engineers) Ltd[6] where his Honour indicated that three elements are required for an actionable breach of confidence:

  • the information must have the necessary quality of confidence about it;
  • it must have been imparted in circumstances importing an obligation of confidence; and
  • there must be unauthorised use of that information to the detriment of the party communicating it.

It is clear from Megarry J’s judgment that the objective test applies as to the confidentiality of the information itself as well as whether a reasonable person in the confidant’s shoes would have realised that the information was given in confidence.

Although some cases provide examples of damages being awarded for detriment in the form of embarrassment,[7]a loss of privacy[8] or fear,[9] a plaintiff is required to establish detriment in a specific sense. This is because equity considers that a confider whose trust has been abused has suffered sufficient detriment in having the information disclosed and should not be deprived of a remedy merely because the damage is not quantifiable in economic terms. However, detriment may be relevant if the remedy sought was compensation-based.

The most recent decision of the High Court on this subject is ABC v Lenah.[10] Gleeson CJ suggested that where the information is confidential equity will impose obligations of confidentiality, even though the information was not imparted in circumstances of trust and confidence.[11] This approach is more liberal than Megarry J’s formulation. The principle of good faith on which equity acts to protect information communicated in confidence may also be invoked to restrain the publication of confidential information improperly or surreptitiously obtained. In this case, the High Court refused to grant an interlocutory injunction to restrain the broadcasting of a film of Lenah’s operations. The film of the slaughter of possums was unlawfully taken and supplied by Animal Liberation to the ABC. The Court refused the injunction on the basis that the information (slaughtering methods) was not confidential in its nature.

Secrecy and confidentiality

The information must have some degree of secrecy to be capable of being regarded as confidential. The information will not attain the required degree of secrecy if it is common knowledge, being either information in the public domain or public knowledge. It may be public knowledge because it is so obvious that it “goes without saying” or because it has become known to enough people for it to be no longer a secret.

In the case of personal secrets – in contrast to trade secrets – publication may occur to a far greater degree before the courts will refuse protection.[12] This is because the confider still has an interest in preventing additional disclosure. In Foster v Mountford,[13] an interlocutory injunction was granted to restrain further publication of a book containing secret tribal folklore of the Pitjantjatjara Aboriginal people on the basis that the information had not been communicated to a specific group. In ABC v Lenah,[14] Gleeson CJ noted that information relating to health, personal relationships or finances may be identified as secret personal information. His Honour suggested that a useful practical test is to ask whether the disclosure of the personal information would be highly offensive to a reasonable person of ordinary sensibilities.

In G v Day,[15] the court held that personal information broadcast on television was still relatively secret to justify an injunction against further publication.[16.] In Abernethy v Hutchinson,[17] the plaintiff successfully enjoined unauthorised use of notes based on private lectures he had given on the basis that his lectures did not amount to publication.

To summarise, absolute secrecy is not required for the protection of confidential information as long as the information is not in the public domain or public knowledge. In respect of personal secrets, it appears that the information remains sufficiently confidential even where it has been published, unless it has become “notorious”.[18]

However, publication of the confidential information may extinguish the duty of confidence even though it is caused by an abuse of confidence by the confidant because the degree of publication has deprived the information of its secrecy. In Aquaculture Corporation v New Zealand Green Mussel Co Ltd,[19] Prichard J said (at 379): “Whether the information, originally confidential, has been released into the public domain depends upon whether the information has become freely available to the public. The question is whether such an element of secrecy remains, that except by improper means, a member of the public would have difficulty in acquiring the information”.

Third parties

Equity will also intervene to protect the obligation of confidence by restraining third parties who have received the information from someone else, even where the third party is innocent of wrongdoing. Beginning in the 19th century, various authorities indicate that the equitable jurisdiction to enjoin the use of confidential information will be exercised against third parties.[20] In Abernethy,[21] the defendant was a third party who had published lecture notes based on a lecture given by the plaintiff to a group of students. It was assumed the defendant obtained the notes from one of the students. The court granted an injunction on the basis that the defendant was participating in a breach of confidence.

The decision in Abernethy was followed by Prince Albert v Strange[22] which concerned unpublished royal etchings given to the royal printer. An employee of the printer sold copies of the prints to the defendant, a third party. The court enjoined the defendant from publishing the etchings. In doing so, the court was prepared to impute knowledge on the basis that the defendant was put on inquiry, that is, he ought reasonably to have known that the etchings were confidential information.

In Australia, the High Court has indicated its support for the accountability of third parties in breach of confidence cases. In ABC v Lenah[23] Gleeson CJ indicated that if the information was confidential, then the law of breach of confidence would apply. There would be an obligation of confidence on the persons who obtained it, and on those into whose possession it came, if they knew, or ought to have known, the manner in which it was obtained.[24]

Public interest defence

The High Court in A v Hayden[25] held that a court would not aid the enforcement of an express contractual obligation of confidentiality the effect of which would be to obstruct the administration of justice because to do so would be contrary to public policy. Following that decision, in Corrs Pavey Whiting & Byrne v Collector of Customs (Vic)[26] Gummow J in the Federal Court reviewed the authorities and concluded that absent any reliance on contractual confidence, the information will lack the necessary attribute of confidence if the subject matter is the existence of an iniquity – in the sense of a crime, civil wrong or serious misdeed of public importance. The confidence cannot be relied on to prevent disclosure to a third party with a real and direct interest in redressing such crime, wrong or misdeed.[27]

It is clear that a narrower approach has been taken in Australia compared with England. For example, in Castrol Australia Pty Ltd v Emtech Associates Pty Ltd,[28] Rath J held that a just cause for the breaking of confidence must be more weighty and precise than a “public interest” in the truth being told. His Honour rejected Lord Denning’s approach in Woodward v Hutchins[29] by balancing competing considerations, that is, weighing the public interest in maintaining confidence against a countervailing public interest favouring disclosure.

However, the English authorities must be read in light of the enactment of the Human Rights Act 1998 (UK), which incorporates the right to privacy and freedom of expression contained in Articles 8 and 10 of the European Convention for the Protection of Human Rights and Fundamental Freedoms.[30] In particular, s12(4) of the UK Act requires the English courts to take into account the public interest before granting any relief which affects freedom of expression. This has contributed to a divergence between English and Australian jurisprudence in this area.

Remedies

As a breach of confidence claim is based in equity, the general principle on which relief is provided will be based in equitable remedies. This means that the courts may exercise their discretion to grant injunctive relief,[31] equitable compensation,[32] an account of profits,[33] or an order for delivery up of documents containing the confidential information.[34]

Conclusion

Equity imposes a duty of confidence whenever a person receives information he or she knows or ought to know is fairly and reasonably to be regarded as confidential. The need for the existence of a relationship of trust and confidence does not give rise to problems because the basis for the exercise of equity lies in the obligation of conscience arising from the circumstances in which the information was imparted. Personal information is just as deserving of protection as commercial secrets and government information. The dictum of the High Court in ABC v Lenah[35] has indicated that the law of breach of confidence will protect such information from wrongful use and disclosure in an appropriate case.

In relation to legal practitioners and other professionals who attach confidentiality clauses to their emails prohibiting the use and disclosure of the information they contain, it is clear that such clauses are only effective where the information possesses the necessary quality of confidence in the first place. An obligation of confidence would also apply to third parties who mistakenly receive such confidential emails if they ought reasonably to have known that the information was confidential in nature.


SHIRLEY QUO is an assistant lecturer in the Department of Business Law and Taxation, Monash University. The assistance of Andrew Field with this article is gratefully acknowledged. Any errors are those of the author.


[1] The email can be found at http://www.abc.net.au/sport/features/2006/s1724805.htm (accessed 18 October 2007).

[2] (1984) 156 CLR 414 at 438.

[3] R Dean, The Law of Trade Secrets, 1990, Lawbook, p148.

[4] [1963] 3 All ER 413.

[5] (2001) 185 ALR 1 at [306].

[6] [1969] RPC 41 at 47-48. This case is discussed in Dean, note 3 above, pp150-153, 177-178.

[7] Coco v AN Clark (Engineers) Ltd, note 6 above, at 48.

[8] Foster v Mountford (1976) 29 FLR 233.

[9] G v Day [1982] 1 NSWLR 24.

[10] (2001) 185 ALR 1.

[11] Note 10 above, at [34].

[12] Dean, note 3 above, p125.

[13] (1977) 14 ALR 71.

[14] . Note 10 above, at [42].

[15] [1982] 1 NSWLR 24.

[16.] The information related to the identity of a police informant.

[17] (1824) 1 H & Tw 28; 47 ER 1313.

[18] Dean, note 3 above, p134.

[19] (1985) 5 IPR 353.

[20] For example Duchess of Argyll v Duke of Argyll [1967] Ch 302; Donnelly v Amalgamated Television Services Pty Ltd (1998) 45 NSWLR 570.

[21] Note 17 above.

[22] (1849) 1 Mac & G 25; 41 ER 1171; 1 H & Tw 1; 47 ER 1302.

[23] Note 10 above, at [39].

[24] Note 10 above.

[25] (1984) 156 CLR 532.

[26] (1987) 14 FCR 434.

[27] . Note 26 above.

[28] (1980) 33 ALR 31.

[29] [1977] 2 All ER 751.

[30] R Meagher, D Heydon and M Leeming, Meagher Gummow & Lehane’s Equity Doctrines & Remedies, 2002, LexisNexis Butterworths, p1110. See Campbell v MGN Ltd (2004) 62 IPR 231 which discusses the UK position in relation to breach of confidence and the effect of the Convention and the Human Rights Act 1998 (UK).

[31] Breen v Williams (1996) 186 CLR 71.

[32] Talbot v General Television Corp Pty Ltd [1980] VR 224.

[33] United States Surgical Corp v Hospital Products International Pty Ltd [1982] 2 NSWLR 766.

[34] Meagher, note 30 above, p1140. See also Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37.

[35] Note 10 above.

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