Dorchester Project Management Ltd v BNP Paribas Real Estate Advisory & Property Management UK Ltd

In construing a poorly drafted commercial confidentiality and non-circumvention deed, the court must identify the meaning conveyed to a reasonable person with the relevant background, including the transaction’s objective. A businesslike construction is appropriate, but operative words cannot be disregarded merely because an obligation appears unusual or onerous. Where an intermediary is permitted to disclose confidential information to a funder or other receiving party, it must procure a back-to-back agreement containing similar non-disclosure and non-circumvention obligations. Responsibility for unauthorised disclosure is not confined to information physically supplied by the intermediary. It may extend to information supplied directly by the disclosing party and to circumvention by the receiving party.

Dorchester entered into a non-disclosure and non-circumvention deed with BNPPRE so that BNPPRE could introduce IKEA as a potential funder for a development opportunity. Dorchester alleged that BNPPRE disclosed confidential information to IKEA without obtaining the required back-to-back agreement, and that IKEA subsequently approached the seller directly.

Following a trial of preliminary construction issues, the High Court held that BNPPRE was not liable for circumvention carried out solely by IKEA and that its responsibility for unauthorised disclosure was limited to information supplied by BNPPRE: 2012 EWHC 1323 (Ch). The central questions on appeal were whether the deed required BNPPRE to procure non-circumvention as well as non-disclosure obligations, and whether those obligations covered information supplied directly by Dorchester.

1. The appeal was allowed unanimously. Arden LJ gave the leading judgment. Beatson LJ agreed with her conclusions and added brief reasons; Jackson LJ agreed with both judgments. The two construction questions were answered in the affirmative.
2. The proper approach to contractual interpretation is to ascertain the meaning conveyed to a reasonable person with the background knowledge reasonably available to the parties. That background includes the objective aim of the transaction. The court relied on the businesslike approach described in Mitsui Construction Co Ltd v AG of Hong Kong (1986) 33 BLR 14. Poor drafting may justify avoiding semantic niceties which produce an improbable or unbusinesslike result, but it does not permit the court to disregard operative words. Words may be ignored only where no sensible meaning can be given to them. The court must not reject a construction merely because it considers the obligation unusual or onerous.
3. The deed’s purpose was to protect Dorchester against both unauthorised disclosure and circumvention, including circumvention by a third party introduced through BNPPRE. Clause 4.2.1 therefore required BNPPRE, before disclosing confidential information to a receiving party, to procure a back-to-back agreement containing similar obligations of both non-disclosure and non-circumvention. This gave effect to the words of the deed and its commercial objective.
4. The back-to-back obligations applied to confidential information supplied directly by Dorchester as well as information supplied by BNPPRE. The responsibility provision was not confined to information physically passed on by BNPPRE. It also prevented BNPPRE from relying on the fact that it had obtained the back-to-back agreement, and provided an incentive to enforce it. BNPPRE could consequently be liable where it failed to obtain the agreement when required and for unauthorised disclosure of information falling within the deed’s definition, whatever its source.
5. Whether particular information supplied to IKEA was confidential information for the purposes of the deed remained for determination at trial. The appeal was allowed because the High Court’s contrary construction substantially diluted the contractual protection.

• Court of Appeal (Civil Division): allowed the appeal and answered both construction questions in favour of Dorchester.
• High Court of Justice (Chancery Division): following the preliminary-issues trial, held that the deed did not impose liability on BNPPRE for circumvention carried out solely by the receiving party and limited responsibility for disclosure to information supplied by BNPPRE: 2012 EWHC 1323 (Ch).