Breach of Confidence Explained

The three elements of a breach of confidence claim

To succeed in a breach of confidence claim in Ontario, a claimant must establish all three of the following elements. Each has its own requirements and nuances.

1. The information had the necessary quality of confidence

The information must not have been publicly known or freely accessible at the time it was shared. This does not mean the information needs to be a formal trade secret: any information that has value precisely because it is not generally known can qualify.

Courts look at whether the information was truly private at the time of disclosure. If the information was already in the public domain, the claim fails at the first element regardless of how the defendant obtained or used it. However, a compilation of individually public pieces of information can still be confidential if the compilation itself has commercial value and is not publicly available as a package.

2. The information was shared in circumstances importing an obligation of confidence

This element focuses on the context and relationship in which the information was shared. The obligation of confidence can be express (created by a written NDA or confidentiality clause) or implied (arising from the nature of the relationship itself).

Relationships that typically give rise to implied obligations of confidence include:

• Employer and employee, particularly regarding business-sensitive information
• Professional and client (lawyers, accountants, doctors, consultants)
• Business partners and joint venture partners
• Parties in commercial negotiations where sensitive information is exchanged
• Parties to mediation or settlement discussions
• Contractors and suppliers who receive access to proprietary systems or data

Courts ask whether a reasonable person in the position of the recipient would have understood that the information was being shared in confidence. If yes, the obligation arises regardless of whether anyone said the words "this is confidential."

3. Unauthorized use or disclosure causing detriment

The defendant must have used or disclosed the information without authorization, and that use or disclosure must have caused detriment to the person who provided it. Detriment can be financial loss, damage to competitive position, reputational harm, or the loss of a business opportunity. Courts have also found that the mere act of unauthorized disclosure can constitute sufficient detriment, even where the financial consequences are difficult to quantify precisely.

What does commercial in confidence mean?

The phrase "commercial in confidence" is commonly used in business settings to designate information shared between parties with the mutual understanding that it will remain private, will not be disclosed to third parties, and will be used only for the purpose for which it was provided.

When a document, proposal, or communication is marked or described as "commercial in confidence," it signals that the recipient is receiving the information subject to an obligation of confidentiality. This designation does not automatically create a binding legal agreement, but it is strong evidence of the circumstances in which the information was shared and the reasonable expectations of the parties, both of which are central to the second element of a breach of confidence claim.

Common examples of commercial in confidence information include:

• Pricing schedules, discount structures, and cost models shared during procurement or tendering
• Financial projections and business valuations shared in merger or acquisition discussions
• Product development roadmaps and technical specifications shared with potential partners
• Contractual terms shared between counterparties to avoid disclosure to competitors
• Client and supplier databases shared with service providers under engagement
• Settlement terms and mediation communications

If information you designated or understood to be commercial in confidence has been shared with a competitor, used for purposes other than those for which it was provided, or disclosed in breach of your reasonable expectations, you may have a claim even without a formal NDA.

Breach of confidence examples in Ontario

Understanding how breach of confidence arises in practice helps clarify when a claim is available. The following are examples of conduct that Ontario courts have found, or would be likely to find, constitutes a breach of confidence.

Employee disclosure to a competitor

A departing employee takes a copy of the company's client database and uses it to solicit clients on behalf of their new employer. The client list was developed over years and was not publicly available. The employee received it in the course of their employment, in circumstances that clearly imported an obligation of confidence. Using it to benefit a competitor is a textbook breach of confidence, likely also accompanied by breach of fiduciary duty if the employee was in a senior role.

Misuse of information shared in business negotiations

Two companies enter into discussions about a potential joint venture. Company A shares its proprietary manufacturing process and cost structure to demonstrate the value it would bring to the partnership. The deal falls through. Company B then uses the information A shared to develop its own competing product. This is precisely the scenario addressed in Lac Minerals: information shared in arm's-length commercial negotiations can still be protected, and misuse of it gives rise to a breach of confidence claim.

Consultant or contractor misuse

A business retains a consultant to review and improve its operations. The consultant receives access to financial data, client contracts, and internal processes. After the engagement ends, the consultant uses that information to advise a direct competitor. The circumstances of engagement clearly imported an obligation of confidence, and using the information for unauthorized purposes constitutes a breach.

Disclosure of mediation or settlement terms

Parties to a commercial dispute agree to mediate. During mediation, one party discloses sensitive financial information as part of the settlement discussions. The other party later discloses those details to third parties, damaging the first party's reputation and business relationships. Mediation communications carry a strong implied obligation of confidence, and disclosure of them can give rise to both a breach of confidence claim and a breach of the mediation agreement.

Joint venture partner misappropriation

Two companies form a joint venture and share proprietary technology and client relationships for the venture's purposes. One partner then uses the shared technology and client list to establish a competing business outside the joint venture. The information was shared for a specific purpose, and using it beyond that purpose for personal commercial gain is a breach of the confidence in which it was provided.

Professional disclosure of client information

A lawyer, accountant, or other professional discloses a client's confidential business information to a third party without authorization. Professional obligations of confidentiality are among the strongest recognized in law, and unauthorized disclosure exposes the professional to both a breach of confidence claim and professional discipline proceedings.

What does breach of trust and confidence mean?

"Breach of trust and confidence" can refer to two related but distinct legal concepts, and understanding which one applies to your situation matters for determining your legal options.

In a general confidentiality context, breach of trust and confidence refers to conduct that violates both the duty to keep information confidential and the broader duty of good faith and loyalty that exists in relationships of trust, such as employment, professional, or fiduciary relationships. The breach is compounded because it involves not just unauthorized disclosure but a violation of the trust that the relationship itself was built on.

In employment law specifically, the implied term of mutual trust and confidence is a recognized term in employment contracts under English law and has been considered in Canadian employment cases. It provides that neither party will, without reasonable cause, conduct themselves in a manner calculated or likely to destroy or seriously damage the relationship of trust and confidence between employer and employee. An employer who systematically undermines an employee, strips their responsibilities, or forces them into an impossible position may be found to have breached this implied term, giving rise to a constructive dismissal claim.

If you are unsure which type of "breach of trust and confidence" applies to your situation, a litigation lawyer can assess the facts and advise you on the correct legal framework.

Breach of confidence vs breach of contract: what is the difference?

These two claims frequently arise from the same facts and are often pleaded together, but they are legally distinct and have different requirements.

A breach of contract claim requires a binding agreement, offer, acceptance, consideration, and a specific term that was breached. In the confidentiality context, this typically means an NDA or a confidentiality clause in a larger agreement. If no binding agreement exists, or if the confidentiality clause is unenforceable, the contract claim fails.

Breach of confidence is a tort that arises from the nature of the relationship and the circumstances of disclosure, independent of any contract. This makes it a valuable alternative or additional claim where:

• No written confidentiality agreement was ever signed
• The NDA was poorly drafted and may not cover the specific information or conduct
• The contractual limitation period has expired but the tort limitation period has not
• The defendant argues the contract is unenforceable for some other reason

In practice, plaintiffs in confidentiality disputes almost always plead both claims in the alternative, relying on whichever provides stronger protection on the specific facts.

Defences to a breach of confidence claim

Being accused of breach of confidence does not mean the claim will succeed. There are several well-established defences available to defendants in Ontario.

The information was not confidential

If the information was already publicly known or freely accessible at the time of the alleged disclosure, the first element of the tort fails. A defendant who can demonstrate that the same information was available from public sources, published in trade literature, or already known in the industry has a strong defence to the claim.

No obligation of confidence arose

If the circumstances in which the information was shared did not give rise to an obligation of confidence, the second element fails. This defence is most available where information was shared openly, without any indication that it was private, or in circumstances where a reasonable person would not have understood it to be confidential.

Authorized use

If the defendant had express or implied permission to use or disclose the information in the manner complained of, the claim fails. This defence requires the defendant to show that the use was within the scope of what was authorized at the time the information was shared.

Public interest

In limited circumstances, disclosure of confidential information may be justified where it serves a compelling public interest, such as revealing serious wrongdoing, preventing harm to the public, or exposing illegal conduct. This is a narrow defence and courts apply it cautiously: the public interest in disclosure must clearly outweigh the interest in maintaining confidence.

Limitation period expired

In Ontario, under the Limitations Act, 2002, a breach of confidence claim must generally be commenced within two years of the date the claimant discovered, or ought to have discovered, that the information was used or disclosed without authorization. In BC, the same two-year period applies under the Limitation Act. Missing this deadline bars the claim regardless of its merits.

Remedies for breach of confidence in Ontario

Ontario courts have a broad range of remedies available in breach of confidence cases, and the appropriate remedy depends on the nature of the breach, the harm caused, and the conduct of the defendant.

Injunction

An injunction is often the most urgent remedy sought in breach of confidence cases. Where confidential information is being used or is about to be used or disclosed, an injunction can stop the misuse immediately. Courts can grant interim injunctions on short notice where there is a serious risk of imminent and irreparable harm. An injunction can prohibit a defendant from using the information, from disclosing it to any further parties, and from benefiting from it in any commercial way.

Damages

Monetary compensation is available for financial losses caused by the breach, including lost business, lost contracts, loss of competitive advantage, and reputational harm. Where financial losses are difficult to quantify, courts may also award a reasonable royalty or licence fee representing what the plaintiff would have charged for authorized use of the information.

Account of profits

Rather than claiming damages, a plaintiff may elect to seek an account of profits: an order requiring the defendant to disgorge all profits made through the unauthorized use of the confidential information. This remedy is particularly appropriate where the defendant profited significantly from the misuse but the plaintiff's own losses are difficult to quantify.

Delivery up or destruction

Courts can order a defendant to deliver up or destroy all copies of materials containing the confidential information, including documents, electronic files, and any products incorporating the information.

Punitive damages

Where the breach was deliberate, calculated, or particularly egregious, courts may award punitive damages over and above the compensatory award. Punitive damages are intended to denounce the conduct and deter similar behaviour, not merely to compensate the plaintiff.

Breach of confidence in British Columbia

BC courts apply the same three-part test from Coco v. A.N. Clark and the same principles developed in Canadian common law, including Lac Minerals. The tort of breach of confidence exists independently of contract in BC as it does in Ontario, and the same range of remedies is available.

The primary procedural difference is that BC claims are commenced in the BC Supreme Court rather than the Ontario Superior Court, and BC's Limitation Act applies rather than Ontario's Limitations Act, 2002. Both provide a two-year basic limitation period from the date of discovery.

For BC businesses, the same practical advice applies: mark sensitive information clearly, use written confidentiality agreements where possible, and seek legal advice immediately if you discover that confidential information has been misused. BC courts have been equally willing to grant injunctive relief in breach of confidence cases where the urgency and merits warrant it.

---