Injunction Preventing Disclosure of Confidential Information Upheld Against Former Employee
05/05/2021
Bonnier Books UK Holdings v Johnson [2021] EWHC 603 (QB)
As the economic pressure of the Coronavirus pandemic continues to mount, redundancies are sure to affect both the public and private sector. Before the government extended its Job Retention Scheme in late October 2020, around 370,000 people were made redundant between August and October, as the second wave of Covid-19 swept across the country.
Settlement Agreements are regularly used in redundancy situations as they negate the need to go through a lengthy redundancy process and the employer does not have to fear a future Employment Tribunal claim.
One of the most important aspects of a Settlement Agreement is the terms surrounding confidentiality. The confidentiality clause protects employers from employees making negative comments about the organisation and/or disclosing that a Settlement Agreement was entered into.
In Bonnier Books UK Holdings v Johnson, the High Court ruled that an interim injunction preventing a former employee from disclosing information could continue. In the Settlement Agreement between the parties, the former employee had agreed to return the relevant information and following threats made, it was likely that without the injunction, the former employee would disclose the confidential material.
The background to the decision
The Defendant, D had been the CEO of the Claimant company, C until he had been dismissed for gross misconduct in 2018. He had also been a director of C and other organisations within the group. D argued that any information he disclosed about C was protected because he was a whistleblower.
A Settlement Agreement was entered into by C and D in July 2018. The agreement defined ‘confidential information’ and D stated that he had returned all of C’s confidential information that he obtained during his employment.
C subsequently brought professional negligence proceedings against its accountant. D was not part of the proceedings; however, he was mentioned in the particulars of claim in relation to misuse of funds and misconduct.
On 30 January 2021, D emailed executives of C’s parent company stating that he had damning evidence against C from when he was an employee which he would release publicly, including to C’s shareholders, if his name was not removed from the professional negligence proceedings.
C obtained an injunction preventing disclosure on the same day D sent his threatening email. On 2 February 2020, D emailed C’s executives asking them to leave him alone. Later that day D sent a further email alleging that he did not have any documents from the time he was employed, he had nothing that was not already in the public domain, no one was holding company information on his behalf ready to release it on his instruction, and requested that he not be contacted on the address he was emailing from. C replied explaining that the injunction must be complied with and outlined the consequences of failing to do so.
C applied to the Court for a continuation of the ex-parte (without notice) injunction against D.
The Court’s decision
The Court granted C’s application. It concluded that under the terms of the Settlement Agreement, D was required to return all documents that were made, compiled, or acquired whilst he was employed by C.
D had made several contradictory statements; in January 2020 he informed C that he had a large swathe of documents belonging or relating to C, then in February he changed his story and denied he possessed any such material. In the Court’s opinion, this behaviour justified C’s nervousness and desire to extend the prohibitory injunction.
C agreed that D’s rights under art.10 of the European Declaration of Human Rights (ECHR) had been engaged by the injunction and accepted that the Human Rights Act 1998 s.12(3) and (4) required that no interim injunction be granted unless C was likely to win at trial. However, the Court was satisfied that the injunction complied with art.10 and, on the evidence, C was likely to be successful should a trial occur.
Comment
Organisations in the private and public sector will appreciate this decision. At a time when professional reputations can be swiftly ruined via trial by social media, confidentiality clauses in Settlement Agreements provide much-needed protection. The fact the injunction was continued illustrates that the Courts are prepared to enforce confidentiality clauses, including in cases where the employee has denied confidential information is in their possession.
