Can You Rely on Your Confidentiality Clause?

November 18, 2014

A recent decision of the Ontario Divisional Court confirms that employers can rely upon properly worded non-disclosure clauses contained in settlement agreements.

Facts

Jan Wong, a unionized employee of the Globe and Mail, alleged she had been wrongly denied a claim for sick leave and that she had been terminated without just cause. Her union filed a grievance against the Globe and Mail on her behalf. The parties eventually negotiated a settlement agreement in 2008 with the assistance of the grievance arbitrator acting as mediator. The arbitrator remained seized to decide on any breach of the agreement. A key provision of the agreement obligated Wong to refrain from disclosing the terms of the settlement to anyone other than those expressly permitted by the agreement, failing which she would be required to repay all settlement funds.

In 2012, Wong wrote and published a book detailing her struggles with depression. The book made numerous references to the settlement with the Globe and Mail, although she did not disclose the exact terms of the agreement. As expected, the Globe and Mail took issue with what they felt was a clear breach of the confidentiality clause.

The Globe and Mail applied to the arbitrator for a declaration that the agreement had been breached and for an order to recoup the settlement funds. The arbitrator ordered Wong to repay all settlement funds, totalling $209,912, after finding that 4 of an alleged 23 passages in the book breached the confidentiality provision, those passages were as follows:

  • … I can’t disclose the amount of money I received
  • I’d just been paid a pile of money to go away …
  • Two weeks later a big fat check landed in my account.
  • Even with a vastly swollen bank account …

Wong filed an application for judicial review of the arbitrator’s decision.

Decision

Upon review, the Divisional Court of Ontario, in Wong v. Globe and Mail Inc. 2014 ONSC 6372, dismissed the application on the basis that Wong was not a party to the proceedings and therefore did not have standing to file the application unless she could establish that the union’s representation of her had been deficient. Her argument in this regard failed and that disposed of the matter.

However, the Court did go on to address the arbitrator’s decision on the merits and found it to be reasonable and correct. The employee’s subjective understanding of the agreement was irrelevant. The provision was clear and unambiguous. The Court confirmed that confidentiality or non-disclosure clauses in settlement agreements can be strongly relied upon. The Court upheld the arbitrator’s decision and ordered $30,000 in costs against Wong.

What This Means for Employers

This case makes it clear that a properly worded unambiguous confidentiality/non-disclosure clause can be enforced.   Practically speaking, it will not always be easy for an employer to prove a breach of the settlement agreement. Nevertheless, it is wise to include clauses of this nature.

While this case involved a unionized employee, the issue is contractual in nature and therefore the legal principles relating to confidentiality/non-disclosure clauses are applicable to all employment relationships.

In the unionized context, this decision should also serve as a deterrent to employees from applying for judicial review of an arbitrator’s decision, absent evidence of deficient representation by their union.

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