Insights + Resources

August 9, 2023

The PwC Cautionary Tale – Reminders for Handling Sensitive Commercial Information

The recent unauthorised disclosure of inside government information by PwC partners shocked and infuriated the federal Government, and has been roundly condemned. It led to a near immediate fire-sale of PWC’s government business, and caused enormous damage to the brand. The partners involved were subject to non-disclosure agreements (NDAs). These extremely commonplace documents are designed to maintain business secrets, yet there can be a tendency in some circles to treat them casually. As we explore in this article, the cautionary tale of the PwC scandal provides timely reminders for business people to treat their confidentiality obligations seriously, or face serious consequences.

The PwC breach

It is hard to remember a more blatant example of betrayal of client confidence by trusted advisors, than the redeploying by certain PwC partners of information imparted in confidence by Government officials, into commercial gain for the PwC Australia partnership and their clients looking to side-step new tax laws.

PricewaterhouseCoopers International Limited (PwC), is an international partnership of professional service providers, of which the Australian ‘partner-owned’ accounting firm is an international member. Importantly, the federal government violations related only to the PwC Australia entity and not the international organisation.[1]

PwC Australia’s biggest client was the federal government. In FY2022, PwC Australia delivered total revenue of $2.84 billion[2], of which the government business accounted for more than half a billion in the past two years. So when certain PwC partners implemented schemes to assist private clients avoid corporate tax, having been given privileged access to that information in their capacity as trusted advisors, it is hardly surprising that members of Government were outraged. Home Affairs Minister, Clare O’Neil, did not mince her words, describing it as a “grotesque betrayal of trust”[3].

These so-called ‘sidestep schemes’ assisted PwC private clients to avoid, by some estimates, A$180 million in annual corporate tax revenue[4], and allegedly resulted in A$2.5 million in fees for PwC[5].

The error of judgement was so immense that PwC Australia was forced to almost immediately offload their highly profitable and important government business. The suddenly burning wreck of a business, which had been bringing in a quarter of a billion annually[6], was sold to Allegro Funds for a dollar[7]. The Reserve Bank also confirmed it will not contract with the firm again until it “delivers a satisfactory response to the tax scandal”.

What is confidential information?

Confidential information (CI) refers to information that is not in the public domain, including the business or affairs of a party, which is disclosed by that party, or on its behalf, to another party in connection with an agreed purpose.

In the course of business, ‘trade secrets’ are considered to be a category of ‘confidential information’, and it can include any type of commercially valuable information. Examples include lists of client names, strategic market information, information about competitors, secret business methods, formulas and recipes, algorithms; designs, and other inventions.

The value of the information is typically connected to its secrecy, because that secrecy may provide the owner with an unjust form of enrichment or unfair advantage of some kind. The Coca-Cola recipe is recognised as one of the world’s best kept ‘trade secrets’.[8]  Now valued at over US$260 billion, had the recipe been disclosed, competitors may have replicated the product and in turn diminished its market share and brand value.

In the case of the PwC issue, the protected information was government data regarding forthcoming tax changes. Its’ value lay in the fact that, if the data was disclosed to those it was planning to regulate, then they could prepare to avoid or limit the effect of the new taxes.  The foreseeable consequence of the breach was that the Government would under-recover tax revenue.

It is best-practice for an NDA to tailor the description of the confidential information based on the relationship, but in commercial environments this is often not the case. Instead many NDAs opt for a lengthy default description that covers the field of protected information, rather than honing in on what is likely to be important in the particular case.

Timely Reminders for those handling Confidential Information

Watch Out 1:  Individuals may be bound by a Corporate NDA they din not sign

The way NDAs often work in modern business practice is that Company A will enter into an NDA with Company B in which CI is disclosed for a particular purpose (Corporate NDA). If the discloser is highly concerned about maintaining the secrecy of the CI, it may require Company B employees and representatives to also sign an NDA personally. However, if they do not do so, it will fall on Company A to procure compliance with the NDA through their own contracts with employees and other representatives.

Thus corporate employees and representatives need to be aware that they may be bound by the terms of the Corporate NDA, even if they have not specifically signed it. It is prudent to check the terms of your own engagement (employment or other retainer agreement) to see if this the case.

Watch Out 2:  CI does not necessarily need to be in writing or even identified

The definition of CI in an NDA can be extremely broad, and it pays to carefully read what is covered. It is not always the case that the CI needs to be written down (an important distinction with copyright), or even specifically identified.

Watch Out 3:  Your liability may be unlimited

Often an NDA may not have a liability cap or exclude indirect loss. If this is the case, the recipient is potentially subject to unlimited liability exposure for a breach of the NDA.

Watch Out 4:  Your confidentiality obligations may have no end date

An NDA may not have an end date by which the duty of confidentiality expires. If this is the case, the recipient is notionally obliged to maintain the confidence of the information forever, or at least until the information becomes public. The High Court has noted that confidentiality agreements with no expiry date will be enforceable until the information enters the public domain.[9]

Watch Out 5: You may have confidentiality obligations without an agreement

It is often the case in the commercial world that the relevant CI to be protected is defined in an NDA. However, under Australian common law, a party can take legal action for a breach of confidence where there is no agreement. The High Court recognised breach of confidence as an equitable cause of action in 1984[10] in order to prevent “extreme unfairness”, where:

  • the CI is not already in the public domain,
  • the CI is confidential in nature,
  • the confidentiality of the CI has been communicated to the receiver; and
  • the CI is used for a purpose which is unauthorised.

It is not even necessary to show that detriment has been suffered to establish breach of confidence.

To resolve the often challenging question of whether a confidentiality obligation arises outside contract, the Courts use two existing tests to ascertain whether the above criteria has been met:

  1. The Reasonable person test: Would a reasonable person in the circumstances have realised upon reasonable grounds that the information that was being given to them was confidential.[11]
  2. The Limited purpose test: Was the information disclosed for a particular purpose, to the exclusion of other purposes.[12]

Concluding Remarks

Maintaining the secrecy of confidential information is an integral part of a healthy commercial ecosystem. However, it requires the co-operation and integrity of those involved to ensure that information that comes into their hands is used for the purpose provided, and in accordance with the agreed conditions.

There may be some unpleasant surprises in store for those who fail to read, understand or negotiate their NDAs. Even where there is no written NDA, be aware that the equitable doctrine of breach of confidence can make you responsible for maintaining secrecy.

As the ongoing PwC corporate government saga has shown under the light of a bonfire, the consequences of getting confidentiality wrong can be extreme, and potentially irrecoverable.

E+Co Legal are experts in commercial law and the protection of confidential business relationships. If you require advice, please contact us below.


[1] PwC, ‘How we are structured?’ <>.

[2] Hannah Wootton, ‘Behemoth’ big four consulting firms keep getting bigger’ The Australian Financial Review (Article, 8 November 2022) <>.

[3] Home Affairs Minister Clare O’Neil on 25 May 2023 on ABC Radio.

[4] Neil Chenoweth and Edmund Tadros, ‘PwC behind 15 schemes to sidestep tax, says ATO’ The Australian Financial Review (Article, 30 May 2023) <>.

[5] Neil Chenoweth and Edmund Tadros, ‘‘For your eyes only’: How PwC leaks helped global clients dodge tax’ The Australian Financial Review (Article, 3 May 2023) <>.

[6] Edmund Tadros, Neil Chenoweth and Kylar Loussikian, ‘Allegro to pay just $1 to save PwC’s government business’ The Australian Financial Review (Article, 25 June 2023) <>.

[7] Lewis Jackson, ‘PwC Australia to sell government business for A$1, appoint new CEO’ Reuters (Article, 25 June 2023) <,as%20first%20reported%20on%20Friday.>.

[8] R. Mark Halligan, ‘The Secret Of Trade Secret Success’ Forbes (Article, 19 February 2010) <>.

[9] Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70.

[10] Moorgate Tobacco Co Ltd v Philicritp Morris Ltd (No 2) (1984) 156 CLR 414, 437-8.

[11] Mense v Milenkovic [1973] VR 784, 801.

[12] Castrol Australia Pty Ltd v Emtech Associates Pty Ltd & Ors (1981) 33 ALR 31, 46-47.

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