What is breach of confidence?
A breach of confidence, or breach of confidential information, can arise at common law, either through contract law (e.g. interference with contractual relations) or through tort (e.g. tort of conversion). However, the High Court recognised breach of confidence as an equitable cause of action in 1984. Equitable causes of action exist to prevent extreme unfairness.
A breach of confidence can occur when one party imparts to another party a private or secret matter on the express or implied understanding that the communication is for a restricted purpose, and the recipient of that confidential information uses it without consent.
Equity can restrain a party from disclosing or making unauthorised use of information. It may also hold a person accountable for any profits gained or impose liability for any losses incurred by such improper use, as well as awarding equitable compensation to somebody whose confidence has been breached.
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Table of contents
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 through 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 subject matter. There are two tests:
- 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.
- 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 where the defendant uses confidential information for a purpose other than that for which the information was disclosed to them without authorisation.
It 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.
- Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR 414, 437-8. ↩︎
- Ramsay Health Care Ltd v Information Commissioner & Anor  QCATA 66 ; Coco v A N Clark (Engineers) Ltd  RPC 41, 49. ↩︎
- Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203, 215. ↩︎
- Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd  VR 37, 50. ↩︎
- Corrs Pavey Whiting & Byrne v Collector of Customs (1987) 14 FCR 434;  FCA 266 at 443. ↩︎
- Mense v Milenkovic  VR 784, 801. ↩︎
- Castrol Australia Pty Ltd v Emtech Associates Pty Ltd & Ors (1981) 33 ALR 31, 46-47. ↩︎
- Ibid. ↩︎
- Gartside v Outram (1856) 26 LJ (NS) 13. ↩︎