Breach of Confidence in Canadian Law: Trust, Misuse, and Remedies
In commercial and professional relationships, trust is currency. Parties routinely exchange non-public information—technical data, strategic plans, financial models, or client lists—expecting it will remain confidential. Yet when that trust is broken, Canadian law steps in through the doctrine of breach of confidence. This equitable cause of action protects confidential information even when no formal non-disclosure agreement (NDA) exists, offering a suite of flexible remedies designed to prevent unfair advantage and restore integrity to commercial dealings.
The Foundations of a Breach of Confidence Claim
A breach of confidence claim arises where one party wrongfully discloses or misuses information imparted in circumstances importing an obligation of confidentiality. The Supreme Court of Canada established the modern test in International Corona Resources Ltd. v. LAC Minerals Ltd. ([1989] 2 SCR 574, 1989 CanLII 34 (SCC)). To establish a breach of confidence, three elements must be proven:
The information was confidential in nature;
It was communicated in circumstances giving rise to an obligation of confidence; and
It was misused by the recipient to the detriment of the confider.
In LAC Minerals, Corona had disclosed geological data to LAC during joint-venture negotiations. LAC then used that information to purchase the property in question for itself. The Court found that damages alone were inadequate: LAC had gained a windfall that equity could not ignore. A constructive trust was imposed over the property, forcing LAC to transfer it to Corona—a striking example of equity’s power to restore fairness rather than merely award compensation.
Even in the absence of a written NDA, the common law imposes duties where the circumstances imply confidentiality—whether between business partners, consultants, or employees.
Why the Law Protects Confidential Information
Canadian courts protect confidential information because its misuse causes harm that is often incalculable. Monetary damages may not capture the loss of competitive advantage, the erosion of goodwill, or the unauthorized “head start” a wrongdoer obtains. Courts assess remedies by considering factors such as the sensitivity, uniqueness, and commercial importance of the information, and how difficult it would have been for the defendant to develop it independently.
This sensitivity is precisely what distinguishes breach of confidence from ordinary contract law: it protects relationships of trust rather than the written word. In business contexts, the doctrine ensures fair dealing even where an NDA is absent, aligning with the equitable maxim that “equity acts in personam” to restrain unconscionable conduct.
The Range of Remedies: Equity’s Flexibility
Remedies for breach of confidence are among the most diverse in Canadian jurisprudence. Courts may grant damages, disgorgement of profits, constructive trusts, injunctions (interim or permanent), delivery-up or destruction of materials, and, in exceptional cases, Anton Piller orders allowing seizure of evidence. The choice depends on context and fairness.
Constructive Trusts
The LAC Minerals decision remains the archetype of the constructive trust remedy. Where the defendant’s gain is directly traceable to misuse of confidential information, a court may treat the property or profits as held in trust for the claimant. More recently, the British Columbia Supreme Court in XY, LLC v. Canadian Topsires Selection Inc. (2016 BCSC 1127) imposed a constructive trust recognizing that the defendants had deliberately exploited proprietary reproductive technology for their own benefit. The order compelled transfer of gains until compliance with prior injunctions was achieved—reinforcing that equitable ownership can persist until the wrong is fully remedied.
Injunctions: Preventing Ongoing Harm
Because harm from disclosure is often irreversible, injunctions are the most commonly sought remedy. Interim or interlocutory injunctions preserve the status quo pending trial. Courts apply the tripartite test from RJR-MacDonald Inc. v. Canada (Attorney General) ([1994] 1 SCR 311, 1994 CanLII 117 (SCC)): the plaintiff must show (1) a serious issue to be tried, (2) risk of irreparable harm, and (3) that the balance of convenience favours the injunction.
In Google Inc. v. Equustek Solutions Inc. (2017 SCC 34), the Supreme Court affirmed that interlocutory injunctions may bind third parties, such as search engines, when necessary to prevent ongoing misuse of confidential or intellectual property information. This underscores the flexible, pragmatic character of equitable relief.
Permanent injunctions, though rarer, remain crucial where misuse would otherwise persist. Courts weigh the enforceability of rights, the potential harm, and proportionality. In XY Inc. v. International Newtech Development Inc. (2012 BCSC 663), the defendants were ordered both to deliver up all confidential materials and to refrain permanently from further use, demonstrating that equitable orders may compel positive acts where necessary to undo a wrong.
Accounting for Profits
Where the defendant’s enrichment exceeds the plaintiff’s measurable loss, an accounting for profits may be ordered. In GasTOPS Ltd. v. Forsyth (2012 ONCA 134), the Ontario Court of Appeal upheld a ten-year disgorgement exceeding $12 million after former employees misused confidential engineering software to found a competing firm. The decision illustrates how equitable remedies deter misappropriation by ensuring that no one profits from their breach.
Compensatory and Punitive Damages
Damages for breach of confidence are highly fact-specific. Courts may measure them by reference to a consultant’s fee, the market value of the information, or a “reasonable royalty” for its unauthorized use. In Cadbury Schweppes Inc. v. FBI Foods Ltd. ([1999] 1 SCR 142, 1999 CanLII 705 (SCC)), the Court declined a permanent injunction but awarded damages equivalent to a twelve-month “head start” period, the time the defendant would have needed to develop its rival product without misusing the plaintiff’s confidential recipe. This pragmatic approach balances deterrence with economic reality.
Punitive damages are available where conduct is high-handed or malicious. In Sweet Factory Inc. v. Hudson’s Bay Co. (1999 CanLII 15085 (ON SC)), the defendant induced disclosure during franchise negotiations, then used the information to open competing stores. The court described the behaviour as “harsh, malicious and reprehensible,” awarding $200,000 in punitive damages. Equity’s conscience is not blind to deceit.
Procedural Aspects and Relief in Practice
A typical claim for breach of confidence pleads that confidential information was disclosed or obtained under an obligation of confidence, that it was misused or disclosed without authorization, and that the plaintiff suffered loss or the defendant obtained an unjust benefit. Relief usually includes declarations of ownership, injunctions, delivery-up or destruction of materials, and equitable monetary remedies. Courts may also award pre- and post-judgment interest and costs, ensuring that remedies align with both law and fairness.
Courts exercise considerable discretion. For instance, an Anton Piller order—permitting search and seizure without notice—may be granted only where there is an exceptionally strong prima facie case, risk of destruction of evidence, and serious potential harm. Such orders are approached with great caution but remain vital where digital evidence can vanish instantly.
Lessons from Modern Cases
Modern breach of confidence litigation reflects the intersection of technology, privacy, and equity. Courts have extended the doctrine beyond business information to include intimate personal data. In Jane Doe 464533 v. N.D. (2016 ONSC 541), the posting of a private video online constituted a breach of confidence as well as a privacy tort, yielding significant damages. Similarly, in Jones v. Tsige (2012 ONCA 32), the Ontario Court of Appeal recognized the tort of intrusion upon seclusion, underscoring that confidentiality obligations extend to personal information accessed without authorization.
These developments show that breach of confidence is not a relic of commercial law but a living doctrine adapting to digital realities. It bridges business ethics and privacy, ensuring that information entrusted in confidence, whether corporate or personal—remains protected by conscience and law alike.
Conclusion: Equity’s Enduring Role
The essence of breach of confidence lies in conscience. Canadian courts wield equitable remedies to prevent unjust enrichment, deter opportunism, and maintain the integrity of confidential relationships. From LAC Minerals to GasTOPS and Cadbury Schweppes, the jurisprudence shows that misuse of confidential information will meet with restitution, injunction, or both.
For businesses, the lesson is clear: document confidentiality expectations through NDAs, limit access internally, and act swiftly when a breach occurs. For those entrusted with sensitive information, the duty is moral as well as legal. Confidentiality, once breached, cannot be un-disclosed—and in equity, conscience leaves no refuge for the faithless.
