Can a breach in confidentiality result in stopped payments?

In the line of employment, confidentiality plays a major role for many companies. Within a number of employment contracts, you will most likely come across confidentiality clauses which ensure that employees keep certain company information private. However, in other types of agreements, confidentiality can be a bit of a grey area. One example is confidentiality in a COT3 agreement.

A COT3 is an agreement which helps settle existing or potential claims at the Employment Tribunal. Within a COT3, an ACAS conciliation officer helps both an employer and employee agree and record terms of a settlement. It is considered a legally binding document.

In some COT3 cases, a breach in confidentiality can sometimes make an employer believe they are entitled to stop making payments to their employee. Though this may seem like a way out for an employer, this approach is not favourable. Duchy Farm Kennels v Steels is a case that explores this idea further.



Mr Steels, a former employee of Duchy Farm Kennels (DFK), was under a COT3 agreement. Within the agreement, DFK agreed to pay Mr Steels a sum of £15,500 in 47 weekly instalments. There was also a confidentiality clause where Mr Steels was bound to keep the terms of the agreement confidential and not disclose this to a third party.

When it was discovered that Mr Steels had breached his confidentiality clause, DFK subsequently put a stop to any remaining payments. Mr Steels sued DFK for this and took the case to the County Court on the basis that any outstanding sums were no longer recoverable under contract law. The court held that DFK was not in a position to stop payments, regardless if the confidentiality clause was breached. The reason was because the breach was of an ‘intermediate’ or ‘innominate’ term of agreement rather than a ‘condition’ of the contract.

DFK appealed to the High Court. They brought up two routes:

  • Is the term a condition of the contract?
  • If it isn’t, then the term is an intermediate term and the breach is a repudiatory breach

Looking closely at the COT3, the High Court upheld the decision of the County Court, concluding that the confidentiality clause was an ‘intermediate’ term rather than a ‘condition’. They also held that Mr Steel’s disclosure of information to the third party was a not so serious breach as it did not result in any commercial issues for DFK. Overall, this type of breach would not have given DFK the right to stop payments.

The appeal was dismissed.

What does this case teach us and how can we apply this to the world of sports?

This case teaches us the careful need to draft confidentiality clauses, especially where confidentiality is seen as very beneficial to the employer. It also shows us what consequences could arise if it is drafted generically and not expressed as a ‘condition’.

As Front Row Legal specialises in all areas of sports law, this case can also be applied in a sports and business context. For example, sports coaches spend a lot of time building a working relationship with players and this means an exchange of confidential information, whether it’s personal information about a player or the club they play for. Both parties will need to establish what information is deemed ‘confidential’. Any sports employers and employees currently under a COT3 agreement or looking to enter into this type of agreement can learn from the case of Mr Steels and DFK, particularly in terms of confidentiality clauses and how they are drafted.


For more information on COT3 agreements and Duchy Fam Kennels v Steels, please visit the following websites:


Front Row Legal are a boutique law firm that specialises in Sport, Media and Business Law in England and Wales. They have specialist knowledge in these areas of law, which means they can help where many law firms won’t have the experience. They are based in Leeds with a national client base.

Published May 26, 2020

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