Eavesflopping: lessons from a hearing about overhearing

In the recent decision of Clearhouse Partnership Acquireco Ltd, Gerard Gualtieri and Joshua Rowe -v- Manoj Jethwa [2022] EWHC 1199 (QB) the High Court continued an interim non-disclosure order (INDO), a form of injunction, against an ‘eavesdropper’ in claims for breach of confidence, misuse of private information and data protection legislation (Claims).

The facts 

The claimants comprised technology business Clearhouse Partnership Acquireco Ltd (CPA), CPA’s CEO (Mr Gualtieri) and CPA’s Head of Mergers and Acquisitions and director (Mr Rowe). The defendant (Mr Jethwa) was a part-owner and CEO of a company CPA was interested in acquiring. 

During the acquisition negotiations in August 2020, Mr Gualtieri, Mr Rowe and Mr Jethwa met at the target company’s offices. Upon entering the offices, Mr Rowe and Mr Jethwa were given notice that CCTV was in operation in the office building.

Mr Jethwa left the meeting at one point to allow Mr Gualtieri and Mr Rowe to discuss privately. Mr Gualtieri and Mr Rowe proceeded to have an ‘unguarded and candid’ private conversation on such matters as the progress of the negotiations, strategy, their plans for the target company and the likelihood that Mr Jethwa would be removed as CEO.

Whilst these private discussions took place, Mr Jethwa sat in his office adjacent to the meeting room. He could hear everything being said by Mr Gualtieri and Mr Rowe. For reasons he was unable to explain, Mr Jethwa took a screenshot of Mr Gualtieri and Mr Rowe on the meeting room’s ‘bubble’ CCTV camera (which Mr Jethwa asserted was visible, but which both Mr Gualtieri and Mr Rowe stated they did not notice).

The acquisition completed in September 2020. Unfortunately, a dispute followed with CPA sending a letter of claim to Mr Jethwa in early March 2022. 

On 30 March 2022, Mr Jethwa sent a copy of the CCTV screenshot to Mr Gualtieri alongside a message stating ‘You should know this doesn’t do you any favours. Whilst I walked out and what you both say should be interest[ing] for social.’ The claimants viewed that as a threat to leak potentially embarrassing or commercially sensitive material on social media unless a more favourable settlement offer was put on the table. The messages led the claimants to believe that Mr Jethwa had a recording of the entire private meeting. 

Action taken by the claimants

On 1 April 2022, the claimants sought and obtained an INDO restraining disclosure of the private conversation and any recordings of them. Such order was obtained ‘without notice’ to Mr Jethwa. A second (or ‘return’) hearing was listed for the court to consider whether the INDO ought to be continued to trial. 

Mr Jethwa was served with the INDO and the claimants issued proceedings for the Claims. Mr Jethwa denied the Claims in his defence and in evidence served in response to the INDO. At the return hearing on 12 May 2022, the court considered whether the claimants were likely to succeed at trial. 

Breach of confidence

There are three aspects necessary to establish a claim in breach of confidence. Firstly, the information in question must have the necessary quality of confidence. This depends on the circumstances of the case, but generally it must not be something which is public property and public knowledge.

Secondly, the information must be imparted to a defendant in circumstances importing an obligation of confidence. A common example is confidential information imparted to an employee under a contract of employment. However, a defendant does not need to have agreed to keep information confidential for the obligation to arise; a duty will also be implied where a person has notice that the information is confidential. Therefore, it can arise even where the communication of the information was made accidentally, such as in a case of eavesdropping. 

Finally, the information must have been used, or there must be a threat that the information would be used, without authorisation.

Misuse of private information

A claim for misuse of private information involves a two-stage test. The first question is whether the claimant has a reasonable expectation of privacy in relation to the information in question. The court will take into account all of the circumstances of the case including, by way of example, the attributes of the claimant, the nature of the activity in which the claimant was engaged, the place at which it was happening, the nature and purpose of the intrusion, the absence of consent and whether it was known or could be inferred, the effect on the claimant and the circumstances in which and the purposes for which the information came into the hands of the defendant.

If there is a reasonable expectation of privacy, the court will then balance the claimant’s privacy right against the rights of others, for example the right to freedom of expression. The courts have held that ‘blackmail represents a misuse of free speech rights’ (LJY -v- Persons Unknown [2017] EWHC 3230). 

Data protection 

This concerned the screenshot taken by Mr Jethwa. Article 5 of the UK GDPR (which came into effect on 1 January 2021) requires personal data to be processed in accordance with data protection principles, including that personal data shall be ‘processed lawfully, fairly and in a transparent manner in relation to the data subject’ and that they shall be ‘collected for specified, explicit and legitimate purposes.’ Article 6 sets out the criteria for lawful processing including (non-exhaustively) consent of the data subject or processing that is necessary for legitimate interests.

Mr Jethwa asserted that Mr Gualtieri and Mr Rowe had provided implied consent to the use of the CCTV within the building given the notice at the entrance. The claimants relied on Article 4(11) of the UK GDPR which provides that consent must be given by way of a ‘freely given, specific, informed and unambiguous indication of the data subject’s wishes by which he or she, by a statement or by a clear affirmative action, signifies agreement to the processing of personal data relating to him or her.’ 

Decision 

The court held that all of the Claims were likely to succeed at trial. 

The court held that a reasonable person in Mr Jethwa’s shoes would appreciate that a conversation held behind closed doors between individuals on the opposite side to him in a business negotiation was confidential and private. Whilst Mr Gualtieri and Mr Rowe were unable to recall the exact contents of the conversation, they were able to identify the subject-matter of the information which was sufficient. 

It would have been obvious to Mr Jethwa that the discussion between Mr Gualtieri and Mr Rowe was private and confidential insofar as it extended to aspects of the proposed transaction and commercial intentions and future plans for the target business. The fact that Mr Jethwa may have been eavesdropping unintentionally (at least at first) did not assist him. There is an important public interest in protecting the confidentiality of private and commercially sensitive conversations and disclosure of the same was likely to be detrimental to the claimants.

In respect of the data protection claims, consent was not obtained by Mr Jethwa in respect of his processing of the screenshot. The general CCTV warning did not assist in showing Mr Gualtieri and Mr Rowe had consented to the private and personal copying and storage by Mr Jethwa of their images.

The threat that Mr Jethwa would disclose the confidential and private information remained, not least because Mr Jethwa refused to give undertakings requested by the claimants. The judge continued the INDO (with revisions) to trial. Unless the claim is settled, the trial judge will now determine the Claims and consider whether to make the INDO permanent. 

Comments

Perhaps the most obvious learning point from the interim decision is the need to exercise caution when engaging in private business discussions. Check whether you are in a secure location and whether there is any CCTV or other recording devices in use. Ask to see a copy of your host’s privacy policy. If you are in any doubt, move elsewhere or limit your discussions. 

In any event, the decision indicates the court’s willingness to prevent disclosure of overheard private business conversations even when a claimant is unable to recall the exact discussions. The court stressed the ‘important public interest’ in protecting the same and took a dim view of Mr Jethwa’s behaviour together with his ‘difficult to follow’ explanation of his eavesdropping. The fact that a defendant may come into possession of private and confidential information accidentally and/or unintentionally will not act as a defence.

The interim decision also acts as an important reminder on data protection issues arising from the use of CCTV. Not only do you need a lawful basis to use CCTV, but your use of CCTV must be fair and transparent. A basic notice is unlikely to suffice, and you should not store or use any CCTV footage for ulterior purposes.

For further information on this topic, please contact Kate Steele.