Several issues arise for developer/borrowers here particularly those who have been through NAMA. (1) When do cases get into the Commercial Court? (2) What is a breach of confidence claim? (3) What's the difference between a breach of confidence claim and a misuse of private information claim? (4) What legal duties are broken when a confidence is breached? (5) What is misfeasance in public office?
When do cases get into the commercial court? At this stage you would imagine that this was old hat to experienced business people. But it still causes confusion. Very generally speaking, if the claim is worth in excess of €1 million and there has not been a significant delay, the case will be admitted to the Commercial Division of the High Court.
The question of delay always causes confusion. It is not the delay from the date that a company could have taken a case that matters. As long as, having issued proceedings, there is no substantive delay in seeking to admit the matter to the Commercial Division of the High Court then it is usually admitted. We have seen delays of eight weeks being sufficient to prevent a matter being entered into the Commercial List.
What is a breach of confidence claim? In essence it is a claim that a party disclosed confidential information about you to your detriment. But the information has to have been given in such a way as to give rise to a duty of confidence. The information itself needs to have the necessary quality of confidence. So if, for example, you gave confidential business information to your bank to secure funding then that will be confidential information. If the bank then uses that information to run a competing business in receivership for example, that could amount to a breach of confidence.
What’s the practical difference between a breach of confidence claim and a misuse of private information claim? This in my view is where this O’Flynn case is interesting. Because a recent decision in the UK held that the misuse of private information is a tort within its own right but that a breach of confidence is not a tort. Why does this matter? Well, a tortious action allows a Court to award damages if negligence has been shown. That would in certain circumstances allow a Judge to award exemplary damages if the action was sufficiently egregious. Where a breach of confidence action is not tortious then tortious damages can’t be awarded. Instead, damages are an equitable remedy entirely at the discretion of the Judge. So you should consider claiming under both heads.
What legal duties are broken when confidence is breached? Well, there could be a number of answers to that question but I'll focus on the Data Protection legislation. When an individual gives their personal details to an organisation that organisation has a duty to keep those details private and safe. That’s data protection in essence.
So if you give your information to a bank then the bank becomes a data controller. The data controller can only get and use the information fairly; keep it for only one or more clearly stated and lawful purposes; use and make known this information only in ways that are in keeping with these purposes; keep information safe; and keep information for no longer than is needed for the reasons stated.
Currently the fine for breaching Data Protection legislation is €250,000. However, the new General Data Protection Regulation provides that breaches could result in sanctions of as much as 4% of global revenues. Yikes indeed.
What is misfeasance in public office and why does it matter here? In the very rare event that it can be shown that a public body was acting mala fides as well as being reckless in its actions then the tort of misfeasance in public office is available. This is a very difficult one to bring home and the Supreme Court has shown extreme reluctance to permit it.
Leman Solicitors regularly advises developer borrowers on legal issues around lending and NAMA. We have acted for clients in discrete cases involving the breach of confidence in joint venture scenarios and where a bank has allegedly used information it obtained in a lending contract to compete against the borrower subsequently. Leman Consulting advises corporate clients about their very onerous data protection obligations and how to ensure that systems are in place to minimise risk.
The National Assets Management Agency and a company of the agency “very much deny” claims they leaked “confidential” information of businessmen Michael and John O’Flynn and their company O’Flynn Construction Ltd, the Commercial Court has been told.