The recent case of CF Partners (UK) LLP v Barclays Bank PLC and another  has served as a reminder to the recipients of confidential information that a duty of confidence may arise even in the absence of a Non-Disclosure Agreement or a confidentiality agreement.
CF Partners (IK) LLP (“CF Partners”) the claimant in the proceedings, was a customer of Barclays Bank PLC (“Barclays”) who provided detailed information to the bank in support of a loan application for the acquisition of a carbon trading company (the “Target Company”). The Target Company was also made a defendant in the proceedings. CF Partners believed that the Target Company had been significantly undervalued, making it a very attractive proposition. The information surrounding it had been provided in confidence.
When negotiations between CF Partners and Barclays broke down, the bank took advantage of the knowledge they had gained as recipients of the information. Barclays purchased the Target Company and made a substantial profit on its sale.
It was agreed that there was no fiduciary duty between CF Partners and Barclays or the Target Company, instead it was argued that there was an equitable breach of a duty of confidence and of an obligation of exclusivity by both of the Defendants. Although a claim of a breach of an obligation of exclusivity did not succeed, the judge found that a duty of confidence will arise
“…whenever a person receives information he knows or ought to know is fairly and reasonably to be regarded as confidential.”
The judge held that Barclays knew the information they had received was confidential, that it was not “public property and public knowledge” and was of considerable value. Barclays and the Target Company were found jointly liable to pay the sum of €10 million. This was the sum the claimant might reasonably have negotiated for the confidential information prior to Barclays using the information. These are known as “hypothetical” negotiation damages or “Wrotham Park” damages. An account of profits could not be ordered as there was no fiduciary relationship between Barclays and CF Partners.
In essence, the case is based on the principle of conscience and that recipients of information must not take advantage of information they have gained in confidence. The case principally highlights that an equitable duty of confidence may be imposed even in the absence of a binding contract.