Improper threats to disclose private and commercially sensitive information obtained from conversation overheard during acquisition negotiation

Clearcourse Partnership and others v Jethwa [2022] EWHC 1199 (QB)

The question

Can the court prevent disclosure of information of a confidential nature obtained from a private conversation overheard by the opposing party during a negotiation?

The key takeaway

Confidentiality and privacy rights may prevent the disclosure of overheard private, commercially sensitive information. 

The background

The claimant, Clearcourse Partnership LLP (Clearcourse) issued proceedings in the High Court against Mr Jethwa, the defendant, for breach of confidence, misuse of private information and breach of UK GDPR legislation. 

Clearcourse bought company: ENovations, of which Mr Jethwa was CEO, pursuant to a share purchase agreement (SPA). During the negotiations that concluded with the SPA, the parties held an in-person meeting at ENovations’ offices. ENovations had a standard CCTV system in their offices that made an audio-visual recording of the meeting. During the meeting, Mr Jethwa left the meeting room and members of Clearcourse’s senior leadership team (SLT) held a private conversation in relation to the negotiation, including their plans for ENovations, their ongoing negotiating strategy and some disparaging remarks about Mr Jethwa. Mr Jethwa heard the conversation through the wall of the adjoining room. Apparently on impulse, Mr Jethwa then took a screenshot of the visual recording system showing members of Clearcourse’s SLT in the meeting room. 

Many months after the meeting and the execution of the SPA, a commercial dispute arose between the parties concerning performance of the SPA. As an apparent negotiating tactic, Mr Jethwa threatened to release the recording onto social media to embarrass Clearcourse’s SLT. 

In a without notice hearing, Clearcourse was successful in obtaining an interim non-disclosure order restraining disclosure of the private conversation (and any recordings of the conversation). 

At the return hearing, Clearcouse sought continuation of the injunction, while Mr Jethwa opposed its continuation and argued that the injunction should never have been granted.

The decision

Satisfied that in respect of each of the causes of action in issue, Clearcourse was more likely than not to succeed at trial in relation to injunctive relief claimed, the court decided to continue the injunction until trial or further order.

Addressing each of the three elements of the claim the court held:

• Breach of confidence – although Clearcourse’s SLT could not recall the precise details of what they discussed between themselves (only the subject-matter) a reasonable person in Mr Jethwa’s shoes would appreciate that a conversation held behind closed doors, between individuals on the opposite side to him in a business negotiation on these subjects, was both private and confidential. Mr Jethwa was therefore under a duty of confidence. It made no difference that the information was (allegedly) accidentally overheard. Even where a person does not actively seek out private and confidential information, a duty of confidence may arise when a person has notice that the information they receive is of a confidential nature. Further, there was no public interest in disclosure of the details of the private conversation but there was however an “important public interest in protecting the confidentiality of private and commercially sensitive conversations.”
• Misuse of private information – Clearcourse’s SLT reasonably expected their conversation, which took place behind closed doors, to remain private. This outweighed Mr Jethwa’s right to freedom of expression.
• UK GDPR – the screenshot contained the personal data of those captured in the meeting room which had been compiled and retained without their consent or on the basis of any other legitimate interest of Mr Jethwa. The general CCTV warning given did not assist in showing consent by

Clearcourse’s SLT to this distinct private and personal copying and storage by Mr Jethwa of their images. The data protection claim was likely to succeed at trial.

Why is this important?

This case confirms that private and commercially sensitive information, accidentally or covertly obtained, may be prevented from being disclosed even where the claimants cannot with precision identify the precise detail (only the subject matter) of the confidential information in issue. 

Any practical tips?

Take steps to guard the privacy of private conversations when you are in public places and especially if you are attending the offices of another business or even the law firm of a party on the other side in commercial negotiations or legal proceedings.

Avoid disclosing any information obtained from an overheard conversation to third parties if it is clearly confidential and/or part of a private conversation.

Avoid using what might be considered confidential or private information or data obtained covertly or inadvertently during commercial negotiations.

Autumn 2022