Clear Wealth Pty Ltd v Kwong (No 2)

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.