Primary Group (UK) Ltd & Ors v The Royal Bank of Scotland Plc & Anor

A contractual assurance that customer information will remain confidential may override inconsistent standard terms where it was intended to induce entry into the contract and was relied upon. A broad group-information clause will not be limited by implication where its language provides no basis for doing so, but it may not govern information obtained under a later, inconsistent facility agreement. An equitable obligation of confidence is assessed objectively by reference to a reasonable person in the recipient’s position. A third party may use confidential information only for the purpose for which disclosure is reasonably believed to be authorised. Negotiating damages remain compensatory and may reflect the risk of misuse even where that risk does not materialise.

The claimants, an insurance group and its principal shareholder, claimed that RBS breached contractual confidentiality obligations by disclosing confidential KPMG reports about the group to Direct Line, a competing company within the wider banking group. The disclosure followed breaches of financial covenants in a senior facilities agreement and RBS’s appointment of KPMG to review the claimants’ financial position. The issues included the effect of earlier assurances, the contractual terms governing disclosure, Direct Line’s equitable obligations, and the appropriate assessment of damages.

1. RBS claim. The assurances given by RBS concerning confidentiality were specific assurances intended to be relied upon in Primary’s decision to continue banking with RBS. Primary relied upon them. They were therefore contractually binding and were breached when RBS disclosed the Medway reports to Direct Line.
2. The 2005 Business Current Account Terms and Conditions were incorporated only for the new current account and information referable to it. They did not regulate the parties’ wider relationship or the later senior facilities agreement. Although the group-disclosure clause was broad, there was no sufficient textual basis for implying a reasonable-necessity limitation. The Medway reports were obtained under clause 24.7(d) of the SLF and disclosure was governed by clause 28.7, which did not authorise disclosure to Direct Line. Alternatively, disclosure would not have been reasonably necessary under the banker’s implied duty of confidentiality.
3. Damages. Negotiating damages are compensatory. The hypothetical negotiation must consider the parties’ bargaining positions, the available alternatives, the commercial context and the risk that confidential information might be misused, even if that risk did not materialise. An inquiry was unwarranted because there was no realistic prospect of substantial recovery. The covenant nevertheless had value, so damages were summarily assessed at £5,000.
4. Direct Line claim. The equitable claim required confidential information, circumstances importing an obligation of confidence, unauthorised use to the claimant’s detriment, and absence of lawful excuse. The test was objective: a reasonable recipient’s position had to be considered. Direct Line’s representatives reasonably believed that RBS was entitled to disclose the reports for the limited purpose of advising RBS and used them only for that purpose. They therefore did not breach their equitable obligations.
5. The claim against RBS succeeded with damages of £5,000. The claim against Direct Line was dismissed.