Tue, 19 Nov 2019
Non-Disclosure Agreements in Financial Remedy Proceedings
The national press has relished reporting the ongoing saga of Ant McPartlin’s divorce from his former wife, Lisa Armstrong. The public have been informed of the details regarding the extent of the couple’s wealth (reported to be around £62m), the amount the couple have spent on legal costs (reported to be £1.5m) and the latest offer made by Ant (reported to consist of a package which would leave Lisa with around £31m). Lisa denies that Ant has made such an offer but perhaps of most interest to divorce lawyers is the suggestion that whatever the true extent of Ant’s offer, Lisa is not prepared to sign a consent order due to Ant’s insistence that any such order should contain a non-disclosure agreement (N.D.A.)
N.D.A.s (or ‘confidentiality agreements’) are no longer confined to financial remedy proceedings involving the rich and famous. I have drafted a number of consent orders which have included N.D.A.s. The most common basis for inserting an N.D.A. seems to be the desire to protect against disclosure of sensitive commercial information such as company valuations, but they are also increasingly seen as a means of serving the more general purpose of preventing dirty laundry from being aired via social media.
If an N.D.A. is required within the body of a consent order there is no proscribed format, but there are a few basic elements that should always be present:
- A definition of the information that is to be protected – e.g. ‘all documents produced in relation to the valuation of the Claimant’s/Respondent’s shareholding in the company known as …’ or more generally ‘all evidence produced during the discussions and negotiations pertaining to this agreement’.
- A definition of any third parties to whom disclosure is permitted – this will usually be limited to the parties’ legal and/or financial advisors (both of whom will be bound by their own professional duty of confidentiality).
- The length of time the party or parties should be bound by the N.D.A. – the actual timeframe is usually more important in commercial agreements (e.g. those that seek to restrict competition or limit employment opportunities) than within in the context of a financial remedy claim where there will often be no time-limit placed upon the duration of the N.D.A. While a permanent N.D.A. would be unlikely to survive the scrutiny of the commercial courts or the employment tribunal, the financial remedy courts are, in my experience, alive to the reasons why disclosure should not necessarily be time-limited and therefore less likely to query a permanent obligation.
In terms of provisions that should NOT be included within an N.D.A., it will not be permissible to use an N.D.A. to prevent disclosure of illegal activity and any attempt to prevent disclosure of relevant information to professional advisors is unlikely to be regarded as ‘reasonable’.
If a breach of a confidentiality clause is established, injunctive proceedings can be issued to prevent further disclosure and potentially the party breaching the agreement can be sued for damages. N.D.A.s should not be entered into lightly and certainly not without proper consideration of the consequences of a breach. This may be behind Ms. Armstrong’s reluctance to enter into an N.D.A. as she might intend to ‘have her say’ regarding what she may view as Ant’s reprehensible behaviour, when the proceedings are over.
Despite a possible lack of familiarity with N.D.A.’s in general, there is little doubt that financial remedy lawyers are best placed to draft those clauses within the particular context of financial remedy proceedings. It must be sensible therefore, for financial remedy specialists to familiarise ourselves with the basic requirements of such agreements.