AMP Services Ltd v Manning (No 2)

[2007] FCA 82

FEDERAL COURT OF AUSTRALIA

AMP Services Ltd v Manning (No 2) [2007] FCA 82

DAMAGES – breach of fiduciary duties – loss of clients – compensation for lost income – how assessed – loss of chance of retaining clients – capital value – how assessed

Target Holdings Limited v Redferns(a firm) [1996] 1 AC 421

In the matter of AMP Services Ltd and Arrive Wealth Management Ltd

AMP SERVICES LTD AND ARRIVE WEALTH MANAGEMENT LTD v ANGELA MANNING AND POLLIANNA HARKNESS

NSD 983 of 2004

FINKELSTEIN J
9 FEBRUARY 2007

MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 983 of 2004

In the matter of AMP Services Ltd and Arrive Wealth Management Ltd

BETWEEN:	AMP SERVICES LTD and ARRIVE WEALTH MANAGEMENT LTD Plaintiffs
AND:	ANGELA MANNING and POLLIANNA HARKNESS Defendants

JUDGE:	FINKELSTEIN J
DATE OF ORDER:	9 FEBRUARY 2007
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1.The first defendant pay the second plaintiff compensation fixed in the sum of $45,000. 

2.Costs reserved.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 983 of 2004

In the matter of AMP Services Ltd and Arrive Wealth Management Ltd

BETWEEN:	AMP SERVICES LTD and ARRIVE WEALTH MANAGEMENT LTD Plaintiffs
AND:	ANGELA MANNING and POLLIANNA HARKNESS Defendants

JUDGE:	FINKELSTEIN J
DATE:	9 FEBRUARY 2007
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1. This is the second part of a “split” trial.  In the first part Ms Manning was found to have breached the equitable duty of good faith she owed to her former principal, Arrive Wealth Management Ltd, for having induced Arrive’s clients to transfer their business to her new employer, Goldman Sachs JBWere Services Pty Ltd.  The purpose of this part of the trial is to determine what compensation Ms Manning ought to pay for the breach of that duty.

2. The principles according to which equitable compensation is to be assessed have been identified.  They are set out in my reasons delivered at the conclusion of the first part of the trial.  The parties had been invited at that time to make submissions and for their assistance were referred to several relevant authorities.  The parties turned down the invitation.  Nonetheless, during the hearing on damages Mr Braham, counsel for Arrive, made detailed submissions on the subject, which in some aspects depart from my description of the principles.

3. A convenient place to begin a consideration of the quantum of Arrive’s claim is to explain how it arrived at the amount it claims.  First it calculated the decline in its annual revenue since Ms Manning’s departure.  It said the drop was $1,636,130.  It attributed this decline solely to Ms Manning’s breach of duty by asserting that there was no other cause.  (In fact, as will be seen, there were several other causes.)  Then it placed a capital value on the lost revenue.  The capital value was derived from prices paid by purchasers…