Restrict disclosure of overheard private and professional conversations – Beware of prying eyes!

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Companies, and by default their directors and employees, are often exposed to confidential information when engaged in day-to-day work and may overhear discussions that are private and should remain so.

The law protects this information and allows those whose privacy or confidentiality has been breached to file complaints for breach of trust and/or misuse of private information. The recent High Court request in the case of Clearcourse Partnership et al v Jethwa [2022] EWHC 1199 (QB) was brought for both torts, in addition to a GDPR data protection claim, but what makes this case more interesting than most is that the confidential discussions were heard by someone who was on the opposite side of a business acquisition in which the plaintiff participated.

The judgment concerned a request for an injunction preventing the disclosure of the contents of private business conversations between plaintiff’s representatives, which were heard by the defendant from another room during the business acquisition meeting.

In April 2022, the High Court issued an interim non-disclosure order (known as “INDO’) prohibiting disclosure of private conversations and any recordings thereof. The case was sent back to the High Court to determine whether the interim injunction should stand. Note that the test for prosecuting an INDO is not a full trial on the merits, merely that the judge at the return hearing must be satisfied that the plaintiff”more likely than not” uphold its underlying claims if sued (Cream Holdings Ltd v Banerjee and others [2004] UKHL 44).

Facts

Clearcourse, the plaintiff, entered into an agreement of sale and purchase (SPA) concerning a company of which Mr. Jethwa, the defendant, was co-owner and then CEO. During the negotiation of the SPA, the CEO of Clearcourse and one of its directors visited the offices of Mr. Jethwa to negotiate the SPA. The room in which the negotiations were taking place contained a CCTV camera and Mr Jethwa’s office was right next to it. Mr Jethwa left the room for a short while to go to his office, during which Clearcourse representatives had a “unsupervised and candidprivate conversation between them during which they discussed their negotiation strategy, their impression of Mr. Jethwa and the possibility that Mr. Jethwa would be terminated in the event of the acquisition of the target company.

Mr Jethwa argued that he clearly heard the conversation through the wall of his next room and that the matters discussed were not confidential. According to his own evidence, Mr Jethwa took a screenshot of the live CCTV footage of the meeting room (the “Screenshot”) but claimed he did not record what Clearcourse was saying. At the time, Mr Jethwa remained silent about what he heard because he wanted the SPA completed and, as he would be working with representatives of Clearcourse, he sought to maintain good relations .

Following the conclusion of the SPA, disputes arose between the parties regarding the performance of the SPA, involving financial and intellectual property disputes.

In March 2022, Clearcourse sent Mr. Jethwa an ultimatum to settle the disputes. At this point, Mr Jethwa replied, sharing the screenshot, with the message “You should know that it does you a disservice. While I was dating and what you two say should be interesting for social media (sic)”, threatening to disclose what Clearcourse discussed privately on social media.

Following this, Clearcourse quickly filed its application and the INDO was granted.

The underlying claims

Clearcourse made claims of breach of trust and misuse of private information in connection with his private conversation. Clearcourse also alleged a breach of data protection rules under the GDPR and (from 1 January 2021 UK GDPR) (“GDPR”) in relation to the screenshot.

Complaint for breach of trust

To succeed in an action for breach of trust, the plaintiff must establish that the content of the discussions (i) has the necessary quality of trust, (ii) that the defendant had knowledge of what was said in material circumstances. confidentiality and (iii) that there had been an unauthorized use or threat of use of such information to the detriment of the owner of the information.

Regarding the first part of the test, the judge was satisfied that “a reasonable person in [Mr Jethwa’s] shoes would appreciate that a conversation held behind closed doors, between people opposed to him in a commercial negotiation on these subjects, is both private and confidential”. Furthermore, the judge pointed out that “the obligation of confidentiality arises not only when a person actively seeks private and confidential information“but also applies”when a person is notified that the information they receive is of a confidential nature”.

Summarizing the second part of the test, the judge said: “A the obligation of confidentiality arises when confidential information comes to the knowledge of a person in circumstances where he knows, or is bound to have accepted, that the information is confidential, so that it would be fair, in all circumstances, it is prohibited from disclosing the information to others.

Applying this, the judge said that:As a matter of principle, there is no reason why a person who overhears a private discussion through a window or a wall, and who is aware of the context and the private nature of the discussion, should not be under an obligation confidentiality. The fact that he makes no specific effort to listen is not decisive in this respect.

Regarding the third part of the test, the judge said he agreed with Clearcourse that Mr. Jethwa was threatening to disclose something opposed to Clearcourse. While this may not necessarily have happened on social media, it could be the disclosure of embarrassing or commercially sensitive material to a third party. He further noted that the threat of disclosure of such information from Mr. Jethwa remains “real”. Therefore, the judge concluded that the plaintiff was likely to succeed at trial on all three prongs in a breach of trust complaint.

Complaint for misuse of private information

Successfully filing a misuse of private information complaint is a two-step test (as set out in ZXC vs. Bloomberg LP [2022] UKSC 5). The first step is to determine whether an applicant has a reasonable expectation of privacy regarding the information in question. Second, the court must balance the plaintiff’s right to privacy against the rights of others, such as the defendant’s right to freedom of expression. He stood in LJY vs. Unknowns [2017] EWHC 3230 that “blackmail is an abuse of free speech rights”.

The judge concluded that Clearcourse “would view their conversation behind closed doors as giving rise to a reasonable expectation of privacy(first test) and that there was no public interest or other justification for its disclosure, let alone Mr. Jethwa’s free speech rights versus Clearcourse’s privacy rights (second test). Therefore, the judge found that Clearcourse was likely to succeed at trial on both prongs of an allegation of misuse of private information.

GDPR

The judge found that the screenshot contained the personal data of Clearcourse representatives, which data had “compiled and stored without their consent or on the basis of any other legitimate interest of“Mr. Jethwa. The judge found that Mr. Jethwa”has not obtained and has not purported to obtain such consent to the processing” this personal data. Notably, the judge also ruled that a “CCTV general warning“did not help to show consent to the”private and personal copying and storage by [Mr Jethwa] of their pictures”. As such, Clearcourse’s data protection claim is likely to succeed at trial as well.

Beware of prying eyes

The injunction was therefore maintained, although with slightly modified wording.

There are a number of notable points that arise from this case:

  • INDOs remain powerful tools to restrict the disclosure of private and confidential information and courts can be persuaded to grant them if the criteria can be met.
  • Eavesdropping on a private/confidential conversation is not the only scenario where there can be a breach of trust – as long as the listener”is aware of the context and the private nature of the discussion“The auditor is bound by a duty of confidentiality.
  • Proof of blackmail remains likely to tip the granting of an injunction in favor of the plaintiff in the context of a claim for breach of trust or abuse of private information. The judge described the defendant’s conduct in this case as “unattractive“, which undoubtedly affected his credibility for the rest of the case.
  • A general warning from CCTV will not suffice to show consent to the compilation or retention of personal data under the GDPR.

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