V&P had approached R about a possible acquisition of a company called H&T. V&P and R had entered into a confidentiality agreement about this. In breach of that agreement, R bought H&T without even contacting V&P. R later sold on H&T at a massive profit. The High Court agreed that R had breached the duty of confidentiality, but the big question it had to rule on was whether V&P could just claim for damages for the breach of duty of confidentiality or whether it could also make a claim for R to account for its big profits. Damages would be for the loss of the notional transaction by effectively buying a release from V&P for their rights.
The High Court ruled that account of profits could sometimes be claimed for breach of confidentiality, but not in this case. It all depended on the circumstances. Duties of confidentiality related to a big range of possible situations. As to whether an account of profits was available as a remedy depended on the particular type of situation and whether it would be just and equitable that the defendant should retain absolutely no profit from that particular type of situation. The nature of a duty of confidentiality could apply in the following big variety of situations:
- Akin to a fiduciary duty.
- Akin to an intellectual property right.
- Arising out of a contractual duty.
- In relation to use of private information obtained from a stranger, and therefore a situation similar to tort.
In this case, there was no fiduciary relationship or intellectual property right type situation and so an account of profits was not appropriate. The relationship was based on a contractual relationship. Therefore, damages was the appropriate remedy rather than V&P having the right to claim an account of profits.