Breach of confidence

Elements of confidential information

There are three elements for a cause of action in breach of confidence:

Element 1: Information is confidential

The test for whether information is confidential is that:

• the information must have a degree of secrecy; and
• the information must not be in the public domain or common knowledge.

A common form of confidential information is trade secrets. Trade secrets are devices or techniques used in a trade or occupation that give an advantage that is not generally known to competitors.

A cause of action for breach of confidence in equity will require that the information that the plaintiff asserts to be confidential:

• is identified with specificity;
• has the quality of confidence (i.e. it is not common or public knowledge); and
• was received by the defendant in circumstances that create an obligation of confidence.

Element 2: Obligation of confidence

An obligation of confidence can arise in relation to different circumstances. Examples may include agreements, specific relationships between parties (e.g. fiduciary relationships, employee and employer relationships), subject matter, conscience, or information obtained through reprehensible means.

The most common way to determine whether there is an obligation of confidence is through the subject matter. There are two tests:

1. Reasonable person test: If the circumstances are such that any reasonable person standing in the shoes of the recipient of the information would have realised that upon reasonable grounds, the information was being given to them in confidence, this should suffice to impose upon them the equitable obligation of confidence.
2. Limited purpose test: Was the information disclosed for a particular purpose? If so, it cannot be used for another purpose. For example, if a party divulges an idea solely for the purposes of negotiating a commercial arrangement, an obligation of confidence may arise that the information is used for that particular purpose only.

Element 3: Unauthorised use of confidential information

A breach of confidence occurs when the defendant uses confidential information for a purpose other than that for which the information was disclosed to them without authorisation.

It is not necessary in Australia to show that detriment has been suffered by the disclosing party in order to establish a cause of action in breach of confidence.

Defences for breach of confidence

There are defences that might be available to a person who has been accused of breaching confidence, depending on the circumstances of each individual matter.

Some examples include:

• Not confidential – the information in question is deemed not to be confidential in nature;
• Public interest – the defendant is able to prove that the information disclosed was disclosed due to a legitimate public interest (i.e. where the information related to a posed threat to public health or safety);
• Public domain – the defendant is able to prove that the information disclosed is already available in the public domain; and
• Consent – the defendant is able to prove that they disclosed the confidential information with the plaintiff’s consent.

Remedies for breach of confidence

Remedies that might be available to a plaintiff suing for breach of confidence include:

• Injunction – the plaintiff may be able to obtain an Injunction to stop the defendant from disclosing the confidential information or otherwise use the information;
• Damages – the plaintiff may be awarded compensation for any loss or damage suffered as a result of the information being disclosed;
• Account of profits – the plaintiff may be awarded this equitable remedy in circumstances where the defendant has benefited from the breach of confidence, or where it is anticipated that the defendant will benefit from the breach of confidence; and
• Constructive trust – the plaintiff may be awarded this equitable remedy in circumstances where the plaintiff has been deprived of a right relating to the confidential information disclosed as a result of the defendant’s breach of confidence. In this circumstance, the defendant’s gains would be held on trust for the benefit of the plaintiff.