Silence Is Golden: What happens when confidentiality provisions are breached?

The Applicant and the Respondents agree to maintain confidentiality of the terms of these Minutes of Settlement, an shall not discuss or disclose the terms of the settlement with anyone other than immediate family, or legal or financial advisors, or as required by law.

In the hours immediately following the settlement, Ms. Tremblay got busy on social media and posted the following messages on her Facebook page:

Well court is done didn’t get what I wanted but I still walked away with some…
Well my mother always said something is better than nothing … thank you so much saphir [a friend who had attended the mediation] for coming today…

The postings were drawn to the attention of the employer almost immediately and a decision was made not to pay the settlement funds in light of the breach of confidentiality.

Eventually the matter made its way before the Tribunal with the employer arguing that it ought not be required to pay the settlement funds. The employer took the position that the confidentiality provision was important as it was doing business in a small community, the disclosure undermined its denial of liability and, finally, that the publication of settlement might open the door to other complaints if it were known that the employer would settle such disputes.

Ms. Tremblay took the position that her postings on Facebook did not breach the confidentiality provision as they did not clearly relate to the settlement of her Application, made no mention of the employer by name, did not mention any amounts and, further, that Facebook was a private communication. In the circumstances, Ms. Tremblay argued that she was entitled to additional damages for the employer’s failure to meet its obligation to provide the payment.

So how did the Tribunal deal with these competing positions?

Ms. Tremblay’s arguments that she had not breached the confidentiality provision were rejected. The Adjudicator noted the “public nature” of Facebook and found that it was clear that the postings were making reference to Ms. Tremblay’s dispute with the employer. That Ms. Tremblay did not mention specific monetary amounts was of no assistance to her as it was clear from the postings that some monetary payment was involved.

Ms. Tremblay’s request for additional damages because of the employer’s failure to pay the settlement amounts failed as well and the Adjudicator’s observation on this point is of interest:

The failure to pay was a direct result of the breach of confidentiality and was an understandable reaction on the part of the respondents. The respondents were unrepresented and stated that they wanted the Tribunal to sort it out. I find that, in the circumstances of this case, no damages remedy is warranted.

With respect to the employer’s position that it ought not to be required to pay the full amount of the settlement as a consequence of Ms. Tremblay’s breach, the Adjudicator reduced the settlement required by $1,000.00 and ordered that the balance be paid (with interest at the pre-judgment rate of 1.3%). While the Adjudicator honoured the confidentiality provision by not disclosing the original amount of settlement, it would be my expectation that the original settlement would not have been significant given the size of the employer’s operation, its denial of any liability, the nature of the allegations etc.

There are a number of points worth noting:

• Confidentiality provisions do have meaning and should be included where appropriate.
• It may be appropriate to not pay settlement amounts where a breach of confidentiality has occurred, however, I would urge caution in this regard as the circumstances in each case are different. An employer’s failure to make a significant payment because of a minor breach might well result in a damages award against the employer. Proportionality is key.
• Social media has increased the likelihood that there will be a record of breaches.
• The more detail that is disclosed, the greater the damages or the reduction of any payment
(the Adjudicator took into account that no monetary amounts were disclosed in setting the amount of the reduction in this case).
• One case cited in this decision involved damages awarded for an employer’s breach of a confidentiality provision. Depending on the clause, the obligation applies to both sides.
• The more important confidentiality is, the more precise you should be about damages in the event of a breach. Where serious concern exists consider specifying the amount to be paid or requiring the repayment of the settlement payment.
• A party alleging breach of a confidentiality provision must be prepared to prove that breach with clear evidence.
• If a party believes it has suffered real and significant damage as a result of the breach, it should be prepared to call evidence of those damages.

If you have any questions or would like more information on this topic, please contact Chris White at[email protected] or call 519-672-2121.