Breach of Confidence

Breach of Confidence n.
  1. Improper use or disclosure of confidential information in circumstances importing a duty of confidence.
  2. A civil action that protects commercial, professional, or personal information shared in trust from unauthorised exploitation or communication.

Grigoras Law acts for clients across Ontario in breach of confidence matters, including misuse and disclosure of trade secrets, confidential business information, and personal confidences. We advise on NDAs, information governance, and internal investigations. We act for plaintiffs and defendants, move quickly to preserve evidence, and seek targeted relief such as interlocutory injunctions, Anton Piller orders, delivery up and destruction, and accounts of profits. Where appropriate, we pursue damages and negotiated undertakings to protect your competitive advantage.

Breach of Confidence Services

Your breach of confidence counsel

Denis Grigoras
Counsel, Civil & Appellate Litigation
  • Misuse and disclosure of confidential information in employment, partnership, and M&A contexts.
  • NDAs and confidentiality clauses drafted and enforced; urgent injunctions and delivery-up orders.
  • Trade secrets and commercial know-how protected; account of profits and damages pursued.
  • Departing employee and vendor leak investigations; preservation steps and forensic coordination.
  • Norwich and Anton Piller relief where appropriate; proportional, evidence-focused motion practice.
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Selected breach of confidence matters

  • Commercial misuse of confidential information
    Ontario Superior Court of Justice · Breach of confidence and equitable relief
    Acted for a privately held company against a competitor alleged to have used confidential business materials to establish a competing enterprise. Relief sought included injunctions, delivery up, and account of profits for misuse of proprietary information.
  • Defence of individuals accused of breach of confidence and trademark
    Ontario Superior Court of Justice · Alleged breach of confidence and passing off
    Acted for individuals alleged to have engaged in breach of confidence and misuse of marks in publishing a website addressing alleged corporate misconduct. Defences included absence of confidential character, public interest disclosure, and fair use principles.
  • Misappropriation of confidential client and operational data by former executive
    Ontario Superior Court of Justice · Breach of confidence and fiduciary duty
    Representing a member-based enterprise in proceedings against a terminated executive alleged to have retained and used confidential customer and operational information following dismissal. Relief sought includes injunctive protection, preservation, and recovery of proprietary data.

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Commercial Litigation & Urgent Relief

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UNDERSTANDING BREACH OF CONFIDENCE

A breach of confidence occurs when a person uses or discloses information that was provided to them in circumstances giving rise to an obligation of confidentiality. It is an equitable claim designed to protect valuable business and personal information that is not publicly available and that has been wrongfully used.

This cause of action is particularly important in commercial and employment settings, where the unauthorized disclosure of trade secrets, client lists, or proprietary data can cause immediate and lasting harm.

What is a Breach of Confidence?

A breach of confidence is established when confidential information is shared, received, or used without permission. The Supreme Court of Canada has confirmed that this claim arises not from property ownership but from the duty of trust between parties. See Cadbury Schweppes Inc. v. FBI Foods Ltd., [1999] 1 S.C.R. 142.

Information commonly protected under this doctrine includes business plans, customer databases, pricing models, manufacturing processes, and technical know-how. Even without a written confidentiality agreement, courts can find an implied obligation of confidence when the circumstances show that secrecy was expected.

Origins and Legal Foundations

The modern Canadian test for breach of confidence originates from Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574. The Supreme Court held that three elements must be proven:

  1. The information had the necessary quality of confidence.

  2. It was communicated in circumstances importing an obligation of confidence.

  3. There was an unauthorized use of that information resulting in detriment to the party who communicated it.

This test has been consistently applied by courts across Canada and remains the foundation of the action today.

Key Elements of the Claim

Each element must be established with evidence and clarity.

Information with the Necessary Quality of Confidence
The information must be secret, valuable, and not generally available to the public. Courts examine the steps taken to maintain its confidentiality, the effort invested in its creation, and whether it provides a competitive advantage.

Circumstances Importing an Obligation of Confidence
The duty may arise from an express agreement, such as a non-disclosure clause, or it may be implied from the nature of the relationship. Employers, joint venture partners, and professional advisers often owe such duties even without formal documentation.

Unauthorized Use to the Detriment of the Plaintiff
The defendant must have used or disclosed the information in a way that was not authorized and that caused harm. Detriment can include economic loss, reputational damage, or an unfair competitive benefit.

RELATIONSHIP TO OTHER LEGAL CLAIMS

A breach of confidence often overlaps with other causes of action, such as breach of contract, breach of fiduciary duty, and unjust enrichment. Understanding how these claims interact helps determine the most appropriate strategy for litigation or settlement.

Breach of Confidence vs. Breach of Contract

A breach of contract claim enforces the specific terms of an agreement, while breach of confidence relies on equitable principles that apply even where no contract exists. This distinction is important because an obligation of confidence may arise simply from the relationship between the parties or the nature of the information itself.

In Ontario, written confidentiality clauses are enforceable under contract law principles recognized by the common law and can be supplemented by equitable duties of confidence. Where an agreement exists, its terms will generally define the limits of confidentiality, but courts can still apply equitable relief where fairness requires it.

Breach of Confidence vs. Breach of Fiduciary Duty

A fiduciary duty arises where one party has undertaken to act in the best interests of another. Breach of confidence, by contrast, focuses on misuse of information obtained in confidence.

In Lac Minerals, the Supreme Court found that no fiduciary duty existed between the parties but that the defendant had nevertheless breached its duty of confidence. The court imposed a constructive trust over the mining property that was wrongfully acquired, demonstrating the flexibility and strength of this remedy.

Breach of Confidence and Intellectual Property

Breach of confidence protects information that has commercial value because it is secret. It often complements intellectual property law by filling the gaps where copyright, patent, or trademark protection does not apply.

For instance, a company’s proprietary method or formula that is deliberately kept secret, rather than patented, can still be protected through a breach of confidence claim. The action therefore plays a key role in safeguarding business innovation that depends on secrecy.

Distinction From Privacy and Unjust Enrichment

Although breach of confidence may intersect with privacy concerns, its focus is commercial rather than personal. Privacy law protects individual autonomy, while breach of confidence protects control over valuable information.

The doctrine also overlaps with unjust enrichment, particularly where a defendant profits from the misuse of another’s information. In those cases, the court may order disgorgement of profits or impose equitable remedies to prevent unjust benefit.

COMMON SCENARIOS IN BREACH OF CONFIDENCE

Breach of confidence cases arise in many commercial contexts. Businesses often face these claims when confidential information is misused by employees, contractors, competitors, or potential business partners.

Prompt action is essential to preserve confidentiality and prevent further damage.

Confidential business information forms the backbone of commercial competitiveness. This includes financial models, pricing structures, marketing strategies, and supplier data. Unauthorized use or disclosure can undermine a company’s position in the market.

Courts frequently grant injunctions to stop further misuse and may award damages or equitable remedies to restore fairness. For an overview of injunctive remedies in Ontario, see Courts of Justice Act, R.S.O. 1990, c. C.43, s. 101 and Rule 40 of the Rules of Civil Procedure.

Employee and Executive Misconduct

Employees and executives have a duty not to misuse confidential information obtained through their employment. When departing staff take client lists or strategic data to a competitor, the employer may have grounds for immediate injunctive relief.

In some cases, senior executives are fiduciaries who owe an even higher duty of loyalty. This principle was recognized in Canadian Aero Service Ltd. v. O’Malley, [1974] S.C.R. 592, where the court held that fiduciaries cannot exploit confidential opportunities gained through their position.

Misuse of Client Lists 0r Trade Secrets

Client lists and trade secrets are among the most litigated forms of confidential information. Courts consider whether the information required skill, effort, or expense to compile and whether it was protected by internal policies or limited access.

Even where some data is public, a compiled database or list that provides a competitive advantage can be protected if it is unique and not easily reconstructed. The key question is whether the information gives an unfair head start to someone who should not possess it.

Breach During Commercial Negotiations or Joint Ventures

Parties entering into commercial negotiations often share proprietary information with the expectation of confidentiality. When one party later uses that information for its own benefit, courts can find that a duty of confidence was breached.

The Lac Minerals case illustrates this scenario, where information disclosed during joint venture discussions was used by one party to purchase valuable mineral property for itself. The court ordered the property to be held in constructive trust for the disclosing party.

DEFENDING A BREACH OF CONFIDENCE CLAIM

Defending against a breach of confidence claim requires showing that one or more elements of the cause of action are not met. This may include challenging the existence of confidentiality, the alleged obligation of confidence, or the claim of misuse and harm.

When Information is Not Truly Confidential

Information that is already in the public domain, widely known within an industry, or easily discoverable through independent means will not attract protection. Courts refuse to extend confidentiality to material that any competitor could reasonably obtain through research or observation.

Demonstrating that the information was public, outdated, or of trivial value can defeat a claim at an early stage.

Lack of Confidential Circumstances

Even where information is valuable, a duty of confidence will not arise if it was shared without an expectation of secrecy. For instance, where parties communicated in the course of open negotiations and no agreement or understanding of confidentiality existed, no equitable obligation may be found.

Evidence that the information was shared voluntarily or without limitation is often central to this defence.

Absence of Misuse or Detriment

It is not enough that information was disclosed; the claimant must prove that the defendant used it improperly and caused harm. If the information was never used or if the alleged harm cannot be connected to its use, the claim will fail.

In some cases, defendants can show that they independently developed the same information or that any loss claimed by the plaintiff is speculative.

Other Available Defences

Other defences include consent, independent creation, reverse engineering, and disclosure in the public interest. A claim may also be barred if brought outside the limitation period set out in Ontario’s Limitations Act, 2002, S.O. 2002, c. 24, Sch. B.

Where these defences apply, the defendant may also seek a declaration of non-liability or damages for any improper injunction obtained by the plaintiff.

REMEDIES AND COURT RELIEF

Courts in Ontario have broad discretion to fashion remedies that restore fairness and prevent ongoing misuse of confidential information. The appropriate remedy depends on the nature of the breach, the conduct of the defendant, and the type of loss suffered.

Damages and Equitable Compensation

Damages are awarded to place the plaintiff in the position they would have been in had the breach not occurred. This may include lost profits, loss of goodwill, or reputational damage.

Where the loss cannot be precisely calculated, the court may award equitable compensation. This ensures fairness even where the harm is difficult to quantify.

Accounting For Profits and Constructive Trust

If the defendant has gained a financial benefit from the misuse of confidential information, the court may order an accounting for profits. In exceptional cases, it may impose a constructive trust over property or assets acquired through the breach.

This type of remedy was imposed in Lac Minerals, where the court transferred ownership of a mining property obtained through misuse of confidential data. Constructive trusts prevent unjust enrichment and reinforce the equitable foundation of the law.

Injunctive Relief

Injunctions are one of the most effective remedies in breach of confidence cases. They can prevent further disclosure, require the return or destruction of materials, and preserve the status quo until the dispute is resolved.

To obtain an injunction, a party must meet the three-part test from RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311:

  1. There is a serious issue to be tried.

  2. The applicant will suffer irreparable harm if the injunction is not granted.

  3. The balance of convenience favours granting the order.

For procedural guidance, see Rule 40 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

Anton Piller Orders and Preservation Remedies

In rare circumstances, the court may issue an Anton Piller order allowing the plaintiff to enter the defendant’s premises to secure evidence that might otherwise be destroyed. This extraordinary order is used sparingly and only where there is a real risk of evidence destruction.

Courts may also issue preservation orders under Rule 45 of the Rules of Civil Procedure to protect documents, electronic files, or other materials containing confidential information until the case is resolved.

F.A.Q.

Disclaimer: The answers provided in this FAQ section are general in nature and should not be relied upon as formal legal advice. Each individual case is unique, and a separate analysis is required to address specific context and fact situations. For comprehensive guidance tailored to your situation, we welcome you to contact our expert team.

Confidential information refers to data or details that are not publicly available and have been shared with an expectation of privacy. This can include trade secrets, business plans, client lists, technical specifications, financial records, and personal data. For information to be considered confidential, it must be treated as such by the parties involved and should not be easily accessible to others. Confidentiality is often established through agreements, but it can also be implied based on the nature of the relationship, such as between a doctor and patient or lawyer and client. The key factor is whether the information holds value due to its secrecy and whether its disclosure could harm the party that provided it.

The law requires that confidential information must have the necessary quality of confidence about it. This means that it is not trivial or public knowledge and is kept secret. Additionally, the information must have been shared in circumstances that imply an obligation of confidentiality. This can occur in professional settings, business transactions, or personal relationships. It is essential to clearly define and communicate what constitutes confidential information to all parties involved to ensure that it is adequately protected.

The legal consequences of breaching confidentiality can be significant and multifaceted. A party found to have breached confidentiality may face various legal remedies, including injunctions, damages, and account of profits. An injunction may be issued to prevent further disclosure or use of the confidential information, thereby protecting the injured party’s interests. Damages can be awarded to compensate the injured party for any financial losses or harm caused by the breach, including loss of business opportunities or damage to reputation. Additionally, the court may order an account of profits, requiring the breaching party to surrender any gains made from the misuse of the confidential information.

In some cases, reputational damage and loss of trust can have long-lasting effects, impacting professional relationships and business opportunities. Legal proceedings can be complex and costly, making it crucial to seek experienced legal counsel to navigate these issues effectively. Furthermore, breaching confidentiality can lead to a breakdown in business relationships and could result in additional legal claims such as breach of contract or fiduciary duty. It is essential to understand the full scope of potential consequences to mitigate risks and respond appropriately.

Protecting your confidential information involves several proactive steps. Firstly, implement robust confidentiality agreements with employees, business partners, and contractors to clearly outline expectations and obligations. These agreements should specify what information is considered confidential, the duration of confidentiality, and the consequences of breaches. Secondly, limit access to sensitive information to only those who need it and use secure methods for storing and sharing data, such as encryption and password protection.

Regularly train employees on the importance of confidentiality and the potential consequences of breaches. Establishing a culture of confidentiality within your organization can help prevent accidental disclosures and reinforce the seriousness of maintaining secrecy. Additionally, monitor and audit the use of confidential information to detect any unauthorized access or misuse early. If you suspect a breach, act swiftly to investigate and mitigate the impact. Legal measures, such as seeking an injunction, can also be taken to prevent further disclosure and protect your interests.

If you are accused of breaching confidentiality, it is essential to take the accusation seriously and seek legal advice immediately. An experienced lawyer can help you understand the allegations and evaluate your options. Begin by gathering all relevant documents and evidence related to the confidential information and the circumstances of its disclosure. This may include emails, agreements, and any communications with the party alleging the breach.

Your lawyer can help you build a defence, which may involve proving that the information was not confidential, that it was disclosed with permission, or that the disclosure was necessary and lawful. It is also crucial to refrain from further disclosing the information and to follow your lawyer’s advice closely to protect your legal position. Additionally, you may need to engage in settlement discussions or mediation to resolve the issue without escalating it to court. Addressing the accusation promptly and professionally can help mitigate potential damage to your reputation and business relationships.

Yes, third parties can be held liable for using confidential information if they knew or ought to have known that the information was confidential and obtained through improper means. The law imposes obligations on third parties to respect the confidentiality of information they receive. If a third party benefits from the misuse or disclosure of confidential information, they can be subject to legal action, including injunctions, damages, and account of profits.

Third-party liability often depends on the circumstances under which the information was acquired. For instance, if a third party knowingly received confidential information from someone who was breaching their duty of confidence, they could be held accountable. The courts may also consider whether the third party acted in good faith or whether they took steps to verify the confidentiality status of the information. Seeking legal advice is crucial to understand the specific circumstances and potential liabilities involved in such cases. It is important to take appropriate measures to ensure that you are not inadvertently using or disclosing confidential information improperly obtained.

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