Injunction prevents ex-director revealing confidential information

The Court of Appeal has upheld an injunction preventing a director from revealing confidential information about his former company.

The court heard that the company had been owned in equal shares by two directors.

Relations between the parties broke down and they entered into a settlement agreement under which one agreed to sell his shares to the other.

There was also a compromise agreement in which they both agreed to keep certain confidential information secret and not to make it available to any third party.

The definition of confidential information in the settlement agreement extended to include any information regarding the company or any documentation that might be deemed to be confidential to its business. 

Clause 10.5 of the compromise agreement contained a separate covenant not to make any adverse or derogatory comment about the company, its directors or employees or to do anything which might bring any of them into disrepute.

The company alleged that the departing director had breached the terms of the agreement by making various allegations against it to the police and to HMRC, and threatening to make those allegations known to its major client.

The allegations included sexual misconduct, money laundering, forgery, bribery, tax fraud, racism and anti-Semitism.

The judge granted an injunction to prevent the director from publishing or disclosing confidential information; using or disclosing any information which was liable to identify the company as a party to the legal proceedings; and making adverse or derogatory comments about the company or its staff.

The director appealed saying that the contractual provisions relied on as the basis for the injunctions were too uncertain to support the orders made and, in any event, the orders were insufficiently clear to operate as injunctions.

The Court of Appeal upheld the original decision.

It held that the judge had been entitled to conclude that the information put before the court fell within the definition of confidential information in the settlement agreement and so should be protected.

Please contact Faith Widdowson if you would like more information about the issues raised in this article or any aspect of employment law.