Blog

“That’s Confidential!” – A Crash Course on Confidentiality

  • 20 May 2022
  • Studio Legal

Written by Alyce Evans and Principal, Jennifer Tutty

Can you keep a secret?

Divulging other people’s secrets in the schoolyard is a fast way to lose friends. Beyond the playground, disclosing confidential information could cause you to lose your friends, reputation and money. Under Australian law, sharing confidential information, photographs, videos or other material may amount to a ‘breach of confidence’.

This can extend to a wide range of scenarios, from business and trade secrets (e.g. the recipe for Coca Cola and KFC’s 11 secret herbs and spices), to government, health and medical information. It can cover personal secrets, identities, concept pitches and even private images. 

However, not all secrets are protected by the law.

In this blog, we spill the beans on what exactly is ‘confidential information’, how a breach of confidence can occur, how to avoid a breach of confidence claim and, finally, how to protect your own confidential information.

What is Confidential Information?

It’s not uncommon to discuss matters of a private nature with others.

For example, you may discuss someone’s personal or business affairs with them. During this discussion, they might specifically ask you to keep the information secret. They may even state that it is confidential. Alternatively, it might be implied from the information itself and the nature of the discussion that you shouldn’t share that information.

‘Confidential information’ is information that is not public knowledge and that has a ‘quality of confidence’. It does not have to be labelled ‘confidential’ to actually be confidential. We note, however, that labelling something (such as a document) as ‘confidential’ may assist in establishing an obligation of confidence.

Where there is a contract, agreement or understanding between yourself and someone else that the information is secret or confidential and that you are not to disclose it, then this may be confidential information. At this point, you are bound by an obligation of confidence.

How can disclosing confidential information lead to legal issues?

If you disclose confidential information, a breach of confidence claim may be brought against you.

What conduct will amount to a breach of confidence at law?

There are four elements required for an action of ‘breach of confidence’. These are:

1. The alleged confidential information is identified with specificity;

2. The information was of a confidential nature;

3. The information was communicated or obtained in circumstances importing an obligation of confidence; and

4. There was unauthorised use of the information.

1. The alleged confidential information is identified with specificity

The person claiming a breach of confidence must be able to identify the information that they allege is confidential. It is necessary for the courts to know specifically what the information is, to determine if it is in fact confidential and whether it should be protected.

Therefore, if you are alleging a breach of confidence, you must specify what private information has been shared. It is not enough to refer to it in global or general terms.

2. The information was of a confidential nature

To be protected, information must not be public knowledge and it must have a ‘quality of confidence’.

When information has been disclosed to the public (or a section of the public), it enters the public domain. Generally, it then loses its quality of confidence. This means that anyone can use that information, as it is no longer confidential.

Information obtained through lawful means, such as public registers or through freedom of information requests, is generally also not confidential.

Quality of confidence

A ‘quality of confidence’ does not have one defined meaning. The cases on confidential information demonstrate the broad and evolving scope of this term.

Generally, confidentiality protects business and trade secrets, as well as other commercially valuable information. It can also cover personal secrets, government information and health or medical information (not available through a public register). It also generally covers information shared in a fiduciary relationship, such as with a doctor and patient or lawyer and client.

In certain circumstances, ‘confidential information’ can cover personal secrets, pitches to television networks or other businesses, a person’s identity, information about sexual affairs, tribal knowledge, explicit photographs and much more.

Revenge porn and the law

In the 2015 case of Wilson v Ferguson, the Supreme Court of WA confirmed that private images of a person (and particularly, ‘revenge porn’) could constitute ‘confidential information’.

In this case, a man who shared explicit photos and videos of his ex-girlfriend to Facebook (as revenge after their break-up) was found guilty of a breach of confidence.

An injunction was ordered, preventing the man from further publication of the images. Additionally, he was required to pay his ex $30,000 to compensate her for embarrassment, anxiety and distress. As the images had been published to a number of the woman’s work colleagues, she had taken leave without pay for a number of months. As a result, her ex also had to pay her $13,404 for her economic loss.

Is it confidential?

Ultimately, whether information has a ‘quality of confidence’ depends on the circumstances of the case. There is no certainty that certain types of information will or will not have a quality of confidence.

3. The information was communicated or obtained in circumstances importing an obligation of confidence

To be confidential, information must be imparted or obtained in circumstances that create an express or implied ‘obligation of confidence’.

When does an obligation of confidence arise?

An obligation of confidence may arise where there is a contractual relationship, which requires someone not to use or disclose particular information. A non-disclosure agreement (NDA) is a clear example of a contract creating an obligation of confidence. Additionally, employment or sub-contractor contracts often include confidentiality clauses.

Fiduciary relationships can also create an obligation of confidence. Professionals who have a fiduciary duty to keep their client’s confidence include doctors, lawyers and psychologists.  

Finally, an obligation of confidence can arise due to the nature of the relationship between the two people and/or the circumstances in which the information was given.

Is it confidential?

If someone is telling you something secret, consider whether this creates an obligation of confidence. Additionally, if someone tells you something that they were under an obligation of confidence not to tell you, and you knew (or should have known!) that they were breaching that confidence, proceed with caution. This duty of confidence now extends to you. Breaching it will make you liable to the original person.

Let’s take a Gossip Girl scenario as an example. Blair tells Serena a secret, which is confidential. Serena then tells Dan the secret, (breach of confidence!) telling Dan not to tell anyone. But, spoiler alert…Dan tells everyone. In this scenario, Dan was also under an obligation of confidence, which he has now breached. He and Serena are both now liable to Blair for breaches of confidence. And if you have no idea about the goings on of Gossip Girl, we take this moment to apologise!

4. There was an unauthorised use of the information

A breach of confidence claim may be brought against you if you use or disclose confidential information (or threaten to do so), without permission.

Additionally, if you were permitted to use confidential information for a particular, limited purpose, and you use it for a different purpose, this may be a breach of confidence.

Are there any defences to a breach of confidence claim?

There are some defences that can be argued in an action for breach of confidence. These include:

– The information is not confidential;

– Justified disclosure;

– Disclosure under legal compulsion; and

– Acquiescence.

1. The information is not confidential

One way to defend a claim for breach of confidence is to argue that the information was not confidential. For example, you may argue that the information did not have the necessary ‘quality of confidence’ or it was already ‘in the public domain’.

2. Justified disclosure

This defence operates where there is a ‘just cause or excuse’ for breaking the confidence. However, it’s not about whether you thought it was just or not, but whether the courts do.

A just cause or excuse for disclosing confidential information includes circumstances where the information relates to:

– A crime, fraud or civil wrong; or

– A serious misdeed of public importance, where disclosure is in the public interest.

However, the public being interested in something is not the same as ‘the public interest’. Stay away from gossip. This isn’t the Upper East Side (yep, another Gossip Girl reference for those following along).

Additionally, the courts will consider:

– Who you have disclosed the information to;

– Why; and

– Whether this is justified in the circumstances.

3. Disclosure under legal compulsion

If you’re required to disclose confidential information due to a court or government order, this is a valid defence.

4. Acquiescence

It’s all about consent. Has the person to whom the confidential information relates consented to you disclosing that information? If so, then this is a defence to a breach of confidence claim.

What key remedies are available for breach of confidence?

Injunction

Injunctions and interim injunctions are used to stop threatened or further disclosure of confidential information. When deciding whether or not to grant an injunction, the court will consider whether the information is already in the public domain.

Damages

A remedy of damages is a court ordered payment, which must be made by the person who breached the confidence to the person whose confidence was breached. As the case of Wilson v Ferguson shows, it can include equitable damages for humiliation, damage and distress caused.

Account of profits

If someone has benefited from the breach of confidence, or it is anticipated that they will benefit, the court can order that these profits be paid to the person whose confidence is breached.

Studio Legal Top Tips on Confidentiality Laws

Top Tips – Protecting your confidential information

– Get non-disclosure agreements (NDAs) signed.

– Ensure that your contracts have clearly drafted confidentiality provisions.

– Label your commercial documents ‘Confidential’.

– Review your security protocols and protections at your business. Speak to your IT department. What can you do to better protect people taking and using your confidential information? If you believe someone has taken your confidential information and used it in an unauthorised manner, you will have to provide evidence that this is indeed the case.

– Be realistic about whether your confidential information is indeed ‘confidential’ or whether it forms part of the public domain. Before you bring a claim of breach of confidence, you want to be sure.

Top Tips – Avoiding breach of confidence claims

– The best way to avoid legal action for breach of confidence is to gain consent or permission to use the information. If you validly obtain this consent from the person to whom the information relates, this is a defence to an alleged breach of confidentiality. 

– To cover yourself, make sure that the person giving consent for you to disclose the information is authorised to do so. If the information is of a business or commercial nature, you will need consent from the relevant authorised person.

– If things get complicated, you’re going to want evidence of your agreement. Where possible, put it in writing and have it signed. 

– Be careful of any contract clauses relating to confidentiality. Have you signed a contract or agreement, which requires you to keep information confidential? If so, gaining permission or consent to use information may be a defence to breach of confidence, but you might inadvertently breach your contract. It may be necessary to have the contract amended before you disclose any information.  

– Finally, continuing on the topic of contracts and confidentiality – if you agree to keep things confidential in a contract and you don’t, not only are you looking at a breach of confidence claim, but also a breach of contract claim. A breach of contract claim could have much wider financial and legal implications for you, especially if the contract contains a broad indemnity clause in favour of the other contracting party, whereby you agree to pay for any consequential loss (for example, loss of earnings, lost opportunity or loss of reputation) suffered by the contracting party as a result of your breach

Written by Alyce Evans and Principal, Jennifer Tutty

Published 4 May 2022

Further information

If you have any legal questions relating to confidential information, please contact us through our online form or at hello@studiolegal.com.au.

DISCLAIMER

The information in this article is of a general nature. It does not constitute formal legal advice, and should not be relied on as such. Please see the full disclaimer in our website terms. Please contact Studio Legal if you are seeking advice about a specific legal matter.