In this case, the NSW Supreme Court considered whether an equitable duty of confidence could sit alongside written confidentiality agreement, so as to make available equitable remedies (such as an account of profits) that would not be available for a contractual breach of confidence.
The Court in this case found that the written confidentiality agreement between the parties, which included an "entire agreement" clause, left no room for a separate equitable duty of confidence to operate. Accordingly, even though information had been disclosed in breach of confidence, the only remedies available for the plaintiff were common law contractual remedies. If the parties to a confidentiality agreement want to retain the flexibility to bring breach of confidence claims in equity as well as in contract, then it is important that they make an allowance for this in the agreement (for example, by including a provision that makes clear that the agreement is not intended to exclude rights that may otherwise arise at law or in equity).
Gold and Copper Resources ("GCR") alleged that Newcrest Operations ("Newcrest") had breached both the terms of a written confidentiality agreement between the parties and also an equitable duty of confidence by disclosing to the NSW Department of Primary Industry ("Department") that GCR and Newcrest had been discussing the possibility of carrying out joint surveys over certain land.
The relevant confidentiality agreement obliged Newcrest to keep confidential any information that had been disclosed in writing by GCR. However, the Court said that this did not deal with information disclosed by Newcrest to GCR, such as information concerning Newcrest's interest in carrying out a joint survey in conjunction with GCR. Accordingly, if the agreement had finished there, it is possible that Newcrest would not have breached the agreement merely by disclosing the fact that Newcrest had been discussing the possibility of joint surveys with GCR. However, the agreement went on to say that the existence and content of any discussions or negotiations between the parties was also confidential and, on this basis, Newcrest had breached the agreement by indicating to the Department that discussions had been taking place. It is clear from this that, if parties wish to keep secret the mere fact that they have been in discussions on a particular topic, it is important that they say so in their confidentiality agreements (either in an express provision, as in this case, or by making sure that the definition of "confidential information" includes information about the existence of those discussions).
Apart from the claim in contract, GCR also pursued a claim against Newcrest in equity, alleging that Newcrest's disclosure breached an equitable duty of confidence. The key advantage of this dual claim was that, if successful in equity, GCR would have access to a range of additional equitable remedies, which would not be available for the common law breach of contract claim. In particular, if successful in equity, GCR would be able to bring a claim for an account of any profits that had been generated from the breach. And in this case, an account of profits would have been an attractive remedy, as GCR alleged that the breach had enabled Newcrest to renew a number of exploration licences, which in turn had generated a profit for Newcrest.
However, the Court rejected this aspect of GCR's claim saying that the written confidentiality agreement left no room for equity to intervene and overlay an additional obligation of confidence on the parties. The agreement included an "entire agreement" clause, which indicated that it was intended to be the exclusive agreement between the parties in relation to its subject matter. In these circumstances, given the residual nature of the equitable duty, the equitable duty could not continue to apply alongside the contractual obligations of confidence and, accordingly, GCR could not avail itself of any equitable remedies.
The Court left open the possibility that an equitable duty may have still arisen if the agreement had included a "cumulative remedies" provision to the effect that the parties did not intend for the agreement to exclude other rights and remedies that may be available at law or in equity. However, in any case, the Court went on to say that even if the account of profits remedy had been available to GCR, Newcrest's disclosure made no difference to the Department's decision in relation to Newcrest's renewal application and, therefore, any profit generated from the renewal of the licences could not be attributed to the breach. Nonetheless, this case clearly illustrates that a party that wants the flexibility to bring breach of confidence claims in equity as well as contract should take active steps to preserve their equitable rights (for example, by including a cumulative remedies provision in their contracts).
To see the full judgment in this case, please click here.