Compromise Agreements & Confidentiality Examining the impact of Duchy Farms Kennels Ltd v. Steels on confidentiality clauses in settlement agreements.
The Old Position • Boilerplate confidentiality clauses in most COT3/Settlement Agreements. • Usually only different where case had particularly sensitive features.
Duchy Farms Kennels Ltd v. Steels [2020] EWHC 1208 (QB) https://www.bailii.org/ew/cases/EWHC/QB/2020/1208.pdf
The Facts: • S brings ET proceedings against DFK which are compromised in a COT3 on 25/1/2019. • Terms are DFK agree to pay S £15,500 by way of weekly installments. • COT3 contains generic confidentiality clause (see next slide). • DFK became aware in April 2019 that S had discussed terms of settlement with third party. • DFK allege repudiatory breach of contract and cease making weekly payments. • S issues County Court proceedings. DFK defend citing breach of contract.
The Confidentiality Clause: ‘The parties will treat the fact of and the terms of this Agreement as strictly confidential and the parties will not disclose them to any other person or entity, save as set out in this clause or as may be required by law or to any regulatory authority or to professional advisers subject to them maintaining the same level of confidentiality. ’
The Decision: No fundamental breach with DFK still liable to pay settlement monies on the following basis: • Confidentiality not at the core of the agreement. • Standard dispute with no issues that required particular sensitivity. • No significant commercial risk to DFK from the breach. • Generic clause used as a matter of course in settlement agreements.
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