What are the consequences of breaching an NDA?

Isabel Oakeshott’s disclosure of a cache of 100,000 texts and WhatsApp messages between Matt Hancock, the former health secretary, and other politicians and government officials to The Telegraph may be one of the highest profile breaches of a non-disclosure agreement or NDA in recent times.

Whilst Oakeshott has disputed that the confidentiality obligations she agreed to constitute an NDA, she seems to have admitted that she signed up to an agreement obliging her not to disclose confidential information received.

Hancock shared the information with Oakeshott to enable her to work with him on his recent book, ‘Pandemic Diaries’. When I first heard this story reported, my initial reaction was to wonder if Hancock had properly covered himself with a confidentiality agreement before releasing such sensitive material to a journalist. His reaction suggests that he did, as he responded:  "Isabel and I had worked closely together for more than a year on my book, based on legal confidentiality and a process approved by the Cabinet Office. Isabel repeatedly reiterated the importance of trust throughout, and then broke that trust." Although in some instances, if you share sensitive confidential information there is an automatic or implied duty of confidentiality, I doubt Hancock was relying on that.

Oakeshott has sought to justify her decision to release the messages by saying she was "acting in the overwhelming national interest" adding "anyone who thinks I did this for money must be utterly insane".

NDAs are a very common mechanism to allow confidential information to be disclosed by one party to another for a specific purpose, whilst preventing disclosure for any other purpose. Businesses and other organisations typically use them if they are going to explore opportunities to collaborate on a project and there is a need to share confidential information to enable them to do so.

They also often feature as part of settlement of a dispute, to avoid the terms of a settlement being aired in public. Typically an NDA includes a joint statement (usually something very bland!) which can be used either proactively or reactively by the parties to the settlement, ensuring restraint with regards to what is disclosed in public. Generally speaking, it is in neither party’s interests to “air their dirty laundry in public”.

The extent of the confidentiality obligations under standard NDAs will have limits. For example, the receiving party can disclose information which is in the public domain or for other regulatory purposes, such as audits.

Despite NDAs being a fairly standard document in business, they have come in for some bad press recently when the extent of their use by some businesses to conceal sexual harassment  of employees was revealed, particularly following the #MeToo movement. At its worst, there have been allegations of such misconduct being covered up by the making of a payment in exchange for the silence of the victim. However, confidentiality provisions are still otherwise very standard when settling employment claims and documenting an employee’s departure.

This takes us to an important limitation on the overall effect of NDAs. They cannot be used to prevent genuine whistleblowing of misconduct, whether that is sexual harassment or some other criminal conduct. Employment settlement agreements require the employee to take independent legal advice and it is now standard (and an ethical requirement) for these agreements to contain a carve-out to allow public interest disclosures.

While not an employment case, Oakeshott has pointed to the public interest to justify her disclosure to The Telegraph. This defence may not be straightforward. Whilst it may well be in the public interest for certain information concerning what went on behind the scenes during the pandemic to be disclosed, Hancock asserts that all of this information has already been provided to the public inquiry – this claim has not been confirmed.

It is not a great surprise that The Telegraph and Oakeshott did not give any notice prior to release of their story. It is open to the disclosing party to seek an interim injunction to prevent a breach of an NDA and that can be sought at very short notice. If an injunction is secured, it would be a contempt of court to release information in breach of an NDA.

In the event that the opportunity to prevent disclosure of information in breach of an NDA is lost then it may be possible to seek financial compensation for damage resulting from the breach, as well as repayment of any sum paid under the NDA. Even if the horse has bolted, some recompense can be sought.

NDAs are an effective and standard device for securing information which should legitimately be kept confidential. But care must be taken when agreeing their terms and expert legal advice should be obtained by all parties involved. Breaching an NDA, either deliberately or accidentally, could still carry significant consequences.