Clear Wealth Pty Ltd v Kwong (No 2) - [2012] NSWSC 1233

Supreme Court

New South Wales

Medium Neutral Citation: Clear Wealth Pty Ltd v Kwong (No 2) [2012] NSWSC 1233
Hearing dates: 11 - 12 April 2012; 15 - 16 August 2012
Decision date: 05 October 2012
Jurisdiction: Equity Division
Before: Rein J
Decision:
1. Judgment for the plaintiff against the defendants in the amount of $56,000 plus interest calculated in accordance with Practice Note SC Gen 16.
2. Order that first defendant hand over all copies of and delete from his computer, USB drives and hard drives all files containing client lists of the plaintiff, including but not limited to the following: Client database Aug 2010.csv, Client database Aug 2010.xlsx and CustomerList_430990_2009Apr08_095419.csv.

Catchwords:
INTELLECTUAL PROPERTY - confidential information - whether client lists were copied by the defendant - where client lists were found on defendant's computer - where client lists were accessed on defendant's home computer - whether defendant used this information to contact clients - where significant portion of defendants' new clients had transferred from the plaintiff - whether information was confidential - where client lists only available to employees of the plaintiff - held that defendants copied and used confidential information of the plaintiff

TRADE AND COMMERCE - restraints of trade - validity and reasonableness - whether clause a restraint of trade - where defendant by contractual clause agreed that restraints were reasonable - three month non-solicitation of employer's clients reasonable to protect the legitimate interests of the employer
DAMAGES - measure of damages for use of confidential information and breach of restraints - whether clients would have changed financial planners regardless of former employee's actions - where employer did not contact clients after employee had left - where employee did not inform clients of who would handle their accounts - 30 per cent discount to allow for by factors outside former employee's actions
Legislation Cited: Practice Note SC Gen 16
Restraints of Trade Act 1976
Cases Cited: Cactus Imaging Pty Ltd v Peters (2006) 71 NSWLR 9; [2006] NSWSC 717
Faccenda Chicken Ltd v Fowler [1987] Ch 117
Forkserve Pty Ltd v Pacchiarotta (2000) 50 IPR 74; [2000] NSWSC 979
IceTV Pty Ltd v Ross [2009] NSWSC 980
Jardin and Jardim Investments Pty Ltd v Metcash Ltd (2011) 285 ALR 677
John Fairfax Publications Pty Ltd v Birt [2006] NSWSC 995
Koops Martin Financial Services Pty Ltd v Reeves [2006] NSWSC 449
Mid-City Skin Cancer & Laser Centre Pty Ltd v Zahedi-Anarak (2006) 67 NSWLR 569
NP Generations Pty Ltd v Feneley (2001) 80 SASR 151
Robb v Green [1895] 2 QB 1
Ross v IceTV Pty Ltd [2010] NSWCA 272
Weldon & Co Services Pty Ltd v Harbinson [2000] NSWSC 272
Willis Australia Group Services Pty Ltd v Griggs [2012] NSWSC 659
Category: Principal judgment
Parties: Clear Wealth Pty Ltd (Plaintiff)
Jason Kenneth Kwong (First Defendant)
Your Life Now Pty Ltd (Second Defendant)
Representation: Counsel:
G Lucarelli (11 - 12 April 2012); R Notley (15 - 16 August 2012) (Plaintiff)
J Smith (Defendants)
Solicitors:

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Keep reading for free

Create a free CaseChat account to read Clear Wealth Pty Ltd v Kwong (No 2) and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2012] NSWSC 1233
Decision Date: 05 October 2012

CaseChat Overview and Summary

In the Federal Court of Australia, Clear Wealth Pty Ltd brought an action against Kwong for the alleged misuse of confidential information and breach of restraint of trade clauses. The plaintiff, Clear Wealth, is a financial planning company that provides services to clients. The defendant, Kwong, was formerly employed by Clear Wealth as a financial planner and subsequently left to establish his own financial planning business. Clear Wealth alleged that Kwong copied client lists from his former employer and used the information to contact clients, many of whom transferred to Kwong's new business. Clear Wealth further alleged that Kwong's actions breached non-solicitation clauses in his contract with Clear Wealth.

The primary legal issues the court needed to address were whether the client lists constituted confidential information, and if so, whether Kwong had copied and used this information in breach of his contractual obligations. Additionally, the court had to determine the validity and reasonableness of the non-solicitation clauses. The court found that the client lists were indeed confidential, as they were only available to Clear Wealth's employees and contained sensitive information. The evidence demonstrated that Kwong had accessed and copied the lists from Clear Wealth's computer and subsequently used them to solicit former clients, many of whom transferred to his new business. The court held that Kwong's actions constituted a misuse of confidential information and a breach of the non-solicitation clauses.

The court also examined the reasonableness of the non-solicitation clauses, which restricted Kwong from soliciting Clear Wealth's clients for three months after his employment ended. The court found that a three-month non-solicitation period was reasonable to protect Clear Wealth's legitimate business interests. Regarding damages, the court awarded Clear Wealth 70% of the revenue generated from the clients who transferred to Kwong's business, reflecting a 30% discount to account for factors outside Kwong's actions, such as clients potentially changing financial planners regardless of his involvement. The court did not order any further specific performance or injunctive relief.

Orders