Interim injunction to restrain disclosure of private conversation overheard during business negotiations - Clearcourse Partnership and others -v- Jethwa

In Clearcourse Partnership and others v Jethwa¹ , the High Court decided to continue an interim non-disclosure order “INDO” to restrain the disclosure of a private conversation between the Claimants which had been overheard by the Defendant during business negotiations. It held that:

• the Defendant should have reasonably known that the conversation between the Claimants was private;
• the Defendant had no permission to process and copy the private and personal images of the Claimants through CCTV footage and screenshots; and
• the Claimants would likely succeed at trial on claims for misuse of private information, breach of confidence, as well as breaches of the GDPR and UK GDPR.

Background

The three Claimants were a technology business “First Claimant”, GG (Chief Executive Officer of the First Claimant) “Second Claimant”, and JR (Director of the First Claimant and its head of Mergers and Acquisitions) “Third Claimant”. The Defendant was part-owner and the Chief Executive of E-Novations (London) Limited the “Target”. The Target was acquired by the First Claimant pursuant to a Share Purchase Agreement “SPA”.

In essence, the case related to a private conversation between the GG and JR which the Defendant became aware of having overheard it through the wall of his adjoining room. The Defendant subsequently took a screenshot of the live CCTV footage from the meeting room. During the conversation, the Claimants discussed various matters in connection with the negotiation of the SPA and their wider negotiating strategy, including:

1. the progress of the purchase negotiations generally;
2. the Second and Third Claimants’ strategy;
3. the First Claimant’s plans for the future of the Target and associated commercially sensitive information; and
4. the Second and Third Claimants’ impressions of the Defendant, his negotiating strategy, his lack of fitness to remain as CEO of the Target and the possibility that the Defendant be fired if the Target was acquired by the First Claimant.

Having overheard the conversation, the Defendant returned to the meeting room and continued with the negotiation. He made no indication that he had overheard the private conversation and the SPA later completed.

Subsequently, a dispute arose between the parties. The Defendant threatened to share on social media the screenshot and details of the private and commercially sensitive conversation he had overheard between the Claimants.

Without notice hearing and claim

In response to the Defendant’s threat, the Claimants applied for and, following a without notice hearing on 1 April 2022, were granted the INDO to restrain the disclosure of the private conversation. Proceedings were also commenced against the Defendant for: (i) breach of confidence, (ii) misuse of private information, and (iii) breach of the GDPR.

The High Court’s judgment on the return date

On the return date², the High Court had to consider whether to continue with the INDO, as argued by the Claimants, or discharge it, as the Defendant sought to argue.

Justice Saini held:

1. The INDO would continue until trial, but on modified terms than those sought by the Claimants. Particular concern was cast over the lack of clarity in the language of the initial INDO, as well as the Claimants’ inability to identify with precision the confidential information in issue. Initially, the content of the injunction stated that the Defendant was to be restrained from disclosing:

   “Any information or purported information concerning the contents of any private conversations between the Second and Third Claimant on 13 August 2020 at the offices of E-Novations, Unit 14, York House, Langston Road, Loughton, Essex. [And,] any personal data relating to the Second and/or Third Claimant compiled or created or made by the Defendant on 13 August 2020, including visual images of the Second and/or Third Claimant attending the offices of E-Novations, Unit 14, York House, Langston Road, Loughton, Essex”.

   The Judge found the first limb to be too vague, because it should have been clear to the Defendant what he was and was not permitted to do. Further, the term “private conversation” was considered too broad. Consequently, the terms of the INDO were modified and confined to the four areas of the private conversation noted above.
   
   

2. The subject matter of the private conversation between the Claimants attracted confidentiality. Further, “there is no reason why a person overhearing a private discussion through a window or wall, and who is aware of the context and private nature of the discussion, should not come under a duty of confidence.” A reasonable person in the Defendant’s position who understood the context of the commercial negotiations would recognise that conversations in connection with the proposed transaction and future plans for the Target as private and confidential. As such, the threat of their disclosure was a “real” threat, and the Claimants would likely succeed on a claim for breach of confidence.
   
   
3. A reasonable person in the Claimants’ position would regard their conversation, which was held behind closed doors, as giving rise to a “reasonable expectation of privacy”. Further, there was no “general interest nor any other justification” for disclosure of the private information by the Defendant. The Claimants would therefore likely succeed on a claim for misuse of private information.
   
   
4. The screenshot taken by the Defendant contained the Claimants’ personal data had been compiled and retained without consent³. The Defendant had no legitimate interest or reason to compile and retain such data. The Defendant did not obtain consent from the Claimants to process their personal data and store the screenshot on his phone. In addition, the general CCTV warning in the Defendant’s offices did not establish the Claimants’ consent to “this distinct private and personal copying and storage by the Defendant of their images”. Therefore, the Claimants were likely to succeed on a claim for breach of the GDPR.

Important takeaways from the Judgment

• INDOs are a vital tool to protect private and confidential information against unlawful disclosure. If applying for such, it is important to ensure the restriction sought are clearly defined.
• A duty of confidence falls on an individual who overhears a private conversation and is aware of the private nature of the conversation.
• A general CCTV warning may not be sufficient in showing consent for the compilation, copying, or storage of personal data under the GDPR.
• The High Court is likely to look unfavourably on evidence of “blackmail”, or “an unauthorised use or threat to use … information” when considering the balance between upholding freedom of expression against the privacy and confidentiality of commercially sensitive information.

Comment

The High Court’s decision to restrain disclosure of private conversation overheard during business negotiations serves as a reminder that there is an important public interest in protecting the confidentiality of private and commercially sensitive conversations. This case provides an interesting insight into the potential for confidentiality and privacy claims preventing disclosure of overheard business conversations, and what steps individuals and organisations may wish to take in the event relationships unravel.

¹Clearcourse Partnership and others v Jethwa [2022] EWHC 1199 (QB)
²The first hearing after an interim injunction has been granted where the court can decide whether the injunction should be continued, ceased, or varied.
³Article 4(11) UK GDPR states that any consent must be by way of a “freely given, specific, informed and unambiguous indication of the data subject’s wishes by which he or she, by a statement or by a clear affirmative action, signifies agreement to the processing of personal data relating to him or her”.