Court of Appeal Grants Injunction to Protect the Privacy of Parties to a Non-Disclosure Agreement

Background

The parties applying for the interim injunction were two companies from the same group and a senior executive, also of the same group (the Claimants). Five employees of the group (the Complainants) had complained of discreditable conduct by the senior executive. All of the Complainants settled their complaints under settlement agreements (SA's) under which they all received substantial payments. The SA's all contained confidentiality clauses, often referred to as "NDA's" and were completed before any public hearing took place, meaning that the details of the allegations were not in the public domain. A journalist, from the Daily Telegraph, approached the Complainants seeking information, despite knowing of the SA's and the NDAs they contained.

The High Court refused to impose an injunction preventing the Daily Telegraph from publishing details of the allegations. In its view the public interest in the publication of the information outweighed the duties of confidence contained in the SA's. The Claimants appealed.

Confidentiality of Private Contracts and NDAs vs Public Interest

The CoA had to consider how to balance the right to privacy of the parties to the SA's and the right to freedom of expression and the freedom of the press. From a legal perspective, the court had to decide if in all the circumstances it was in the public interest to allow the confidentiality clauses in the SA's to be breached or whether an injunction should be granted preventing publication until a full hearing of the case could take place.

The CoA endorsed the High Court's statements as to the importance of freedom of political debate and freedom of expression, the important public concern about misbehaviour in the workplace and the important role of the press. However, in the specific facts of this case the CoA decided to grant the injunction until a full hearing could take place, highlighting the public benefit in the enforcement of contracts that have been freely entered into and in settling disputes outside of court.

Why the NDA Trumped the Public Interest Argument

Here the express contractual obligations signed up to by the parties have trumped the public interest argument but each case turns on its own particular facts.

Key factors in the CoA's decision:

• There was no evidence of bullying or duress inducing the Complainants to enter into the SA's and all parties had received independent legal advice.
• The SA's did not attempt to prevent the Complainants from making legitimate disclosures such as reporting any criminal offences or whistleblowing.
• Some of the Complainants were opposed to the information being made public and it was held that there was a real prospect that publication by would cause substantial harm to the Complainants and the Claimants.
• In all the circumstances the Claimants had a reasonable chance of successfully preventing publication at the full hearing and that the information was not already, or about to be, in the public domain.
• The Telegraph Media Group was aware that the information was obtained in breach of a duty of confidentiality set out in the NDA's.

Best Practice

The Judgment of the Court of Appeal has, to some extent, been overtaken by events in the House of Lords. However, it highlights the importance of considering confidentiality obligations in settlement agreements carefully to ensure that they are clear in scope and lawful.

It also highlights the importance of being able to demonstrate that settlement agreements are entered into freely.

Finally, the judgment recognises the public interest served by settlement agreements and the importance to all of being able to enter into full and final settlements which put an end to disputes without having to go to a public hearing. This public interest will, of course, always need to be balanced against the freedom of expression and the press and each case will turn on its facts.

For further information on employment issues, please contact Michael Halsey in our Employment Law team, on 020 7665 0842.