FEDERAL COURT OF AUSTRALIA
Next Generation Advice Pty Ltd (in liq) v Doumani [2024] FCA 1129
File numbers: QUD 541 of 2024 Judgment of: SARAH C DERRINGTON J Date of judgment: 23 September 2024 Date of publication of reasons: 25 September 2024 Catchwords: INJUNCTION – application for continuation of interim orders made on 13 September 2024 restraining respondents from soliciting applicants’ clients and staff, misusing the applicants’ confidential information, and general involvement in any business competitive with the applicants’ business – whether the applicant can establish it has a prima facie case and the balance of convenience favours the continuation of interim orders Legislation: Corporations Act 2001 (Cth) ss 79, 181, 182, 183
Federal Court Rules 2011 (Cth)
Cases cited: Blatch v Archer (1774) 1 Cowp 63; 98 ER 969
JK Meats Proprietary Limited, Re [2018] NSWSC 525
New Aim Pty Ltd v Leung [2021] FCA 1329
Norwich Pharmacal Co v Commissioner of Customs and Excise [1974] AC 133
Division: General Division Registry: Queensland National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 34 Date of hearing: 23 September 2024 Counsel for the Applicant: Mr B O’Donnell KC with Mr E Robinson Solicitor for the Applicant: McInnes Wilson Lawyers Solicitor for the First Respondent: Ms A Fayad of Alfa Legal Group Counsel for the Second Respondent: The Second Respondent did not appear Counsel for the Third to Fifth Respondents: Mr G Handran KC with Mr R McDermott Solicitor for the Third to Fifth Respondents: Cronin Miller Litigation ORDERS
QUD 541 of 2024 BETWEEN: NEXT GENERATION ADVICE PTY LTD (IN LIQUIDATION) ACN 120 066 113
First Applicant
INTEGRAL ADVISORY SOLUTIONS PTY LTD (IN LIQUIDATION) ACN 639 094 956
Second Applicant
INTEGRAL WEALTH GROUP PTY LTD (IN LIQUIDATION) ACN 632 978 173
Third Applicant
AND: JAMES DOUMANI
First Respondent
BENJAMIN HOPKINS
Second Respondent
JORDAN GITANI (and others named in the schedule)
Third Respondent
ORDER MADE BY:
SARAH C DERRINGTON J
DATE OF ORDER:
23 SEPTEMBER 2024
UPON THE UNDERTAKING OF THE APPLICANTS:
1.To submit to such Order, if any, as the Court may consider to be just for the payment of compensation to be assessed by the Court or as it may direct, to any person, whether or not a party, adversely affected by the operation of the interim order or undertaking or any continuation, with or without variation, thereof; and
2.To pay compensation referred to above to the person there referred to.
THE COURT ORDERS THAT:
1.Annexure A (b) of the Order dated 13 September 2024 is amended to replace the word “now” with “not”.
2.Orders 1 to 3 of the Order dated 13 September 2024 are vacated on and from 23 September 2024 and without retrospective effect.
3.From the date of this Order until further order, the first respondent be restrained from:
(a)being concerned or interested or employed or otherwise involved, directly or indirectly, in the management, operation or marketing of any business providing financial advisory services, other than that conducted by the applicants,…
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- Case
- [2024] FCA 1129
- Decision Date
CaseChat Overview and Summary
The court ordered that the first respondent be restrained from, among other things, being involved in any business providing financial advisory services, misusing the applicants' confidential information, and enticing or soliciting employees of the applicants. The court ordered that the second to fourth respondents be restrained from, among other things, misusing the applicants' confidential information, and enticing or soliciting employees and clients of the applicants. The court ordered that the fifth respondent be restrained from, among other things, misusing the applicants' confidential information. The court ordered that the matter be referred to the National Operations Registrar to be allocated to a docket judge, to be listed for an expedited trial. The court ordered that the applicants file and serve a concise statement identifying the confidential information for which it seeks final relief, and any further affidavit material upon which they intend to rely. The court ordered that the respondents file and serve a concise statement of response, and any further affidavit material upon which they intend to rely. The court ordered that discovery be by way of categories, and that the parties confer for the purposes of agreeing the categories for discovery. The court ordered that the parties have liberty to apply on 3 business days’ notice. The court ordered that costs be paid in the proceeding.
Orders
Orders of the court
1. Annexure A (b) of the Order dated 13 September 2024 is amended to replace the word “now” with “not”.
2. Orders 1 to 3 of the Order dated 13 September 2024 are vacated on and from 23 September 2024 and without retrospective effect.
3. From the date of this Order until further order, the first respondent be restrained from:
(a) being concerned or interested or employed or otherwise involved, directly or indirectly, in the management, operation or marketing of any business providing financial advisory services, other than that conducted by the applicants, while he remains a director of any of the applicants;
(b) using, copying, forwarding, publishing, distributing, disclosing, impairing, disposing of, exploiting or dealing with the applicants’ confidential information in Annexure A;
(c) taking any steps to induce or encourage any client, former client or potential client of the first applicant to terminate, withdraw or amend the terms of their engagement with the first applicant or not to engage the first applicant;
(d) enticing or soliciting or assisting another to entice or solicit any employee, contractor, director or officer of any of the applicants; and
(e) inducing or procuring:
(i) Madelaine Edwards to breach cll 21 and 24 of the Employment Contract with the second applicant dated 15 June 2020;
(ii) Xiaoli Li to breach cll 20 and 23 of the Employment Contract with the second applicant dated 15 June 2020;
(iii) Phillip Barbaro to breach cll 11 or 23 of the Employee Contract with the first applicant dated 13 October 2022;
(iv) Marcus Warren to breach cll 11 or 23 of the Employee Contract with the first applicant dated 17 January 2023;
(v) Kasandra Siljanovski to breach cll 11 or 23 of the Employee Contract with the first applicant dated 2 February 2023;
(vi) Jacob Grima to breach cll 11 or 23 of the Employee Contract with the first applicant dated 6 February 2023;
(vii) Tyler Martin to breach cll 11 or 23 of the Employee Contract with the first applicant dated 13 February 2023;
(viii) Hayley French to breach cll 11 and 23 of the Employment Contract with the second applicant dated 27 February 2023;
(ix) Madison Ross-Keough to breach cll 11 or 23 of the Employee Contract with the first applicant dated 15 March 2023;
(x) Siyu Li to breach cll 11 and 23 of the Employment Contract with the second applicant dated 26 June 2023;
(xi) David Valderamma Rojas to breach cll 11 or 23 of the Employee Contract with the first applicant dated 1 August 2023;
(xii) Laura Bland to breach cll 20 and 23 of the Employment Contract with the second applicant dated 10 August 2023;
(xiii) Shandell Walne to breach cll 11 or 23 of the Employee Contract with the first applicant dated 20 September 2023;
(xiv) Harley Turner to breach cll 11 or 23 of the Employee Contract with the first applicant dated 31 October 2023;
(xv) Flynn Morton to breach cll 11 or 23 of the Employee Contract with the first applicant dated 9 November 2023;
(xvi) Jayme Witherdin to breach cll 11 or 23 of the Employee Contract with the first applicant dated 11 December 2023;
(xvii) Peter Smirnov to breach cll 11 or 23 of the Employee Contract with the first applicant dated 30 January 2024;
(xviii) Janessa Pham to breach cll 11 or 23 of the Employee Contract with the first applicant dated 6 February 2024;
(xix) Josua Vereb to breach cll 11 or 23 of the Employee Contract with the first applicant dated 13 March 2024;
(xx) Kristen Wood to breach cll 11 or 23 of the Employee Contract with the first applicant dated 1 July 2024;
(xxi) Jason Hales to breach cll 11 or 23 of the Employee Contract with the first applicant dated 1 July 2024;
(xxii) Divinia Darynne Kencana to breach cll 11 or 23 of the Employee Contract with the first applicant dated 9 July 2024;
(xxiii) Benjamin Hopkins to breach cll 11 or 23 of his Employee Contract which is Annexure “NK-10” to the affidavit of Nikita Keramos sworn 13 September 2024;
(xxiv) Omar Salkic to breach cll 11 or 23 of his Employee Contract which is Annexure “NK-11” to the affidavit of Nikita Keramos sworn 13 September 2024.
4. From the date of this Order until further Order, the second to fourth respondents be restrained from:
(a) using, copying, forwarding, publishing, distributing, disclosing, impairing, disposing of, exploiting or dealing with the applicants’ confidential information in Annexure A;
(b) in the case of the second respondent:
(i) enticing, soliciting or assisting another to entice or solicit any employee, contractor, director or officer of the second applicant with whom the second respondent had dealings within the 12 months prior to 6 September 2024;
(ii) canvassing, enticing or soliciting, or assisting another to canvass, solicit or assist, any employee of the second applicant with whom the second respondent had dealings within the 12 months prior to 6 September 2024 to leave his or her employment with the second applicant;
(iii) canvassing, soliciting, dealing with, counselling, procuring or assisting another person to canvass, solicit or deal with any client, or any former client, of any of the applicants with whom the second respondent had dealings within the 6 months prior to 6 September 2024;
(c) in the case of the third respondent:
(i) enticing, soliciting, or assisting another to entice or solicit any employee, contractor, director or officer of the third applicant with whom the third respondent had dealings within the 12 months prior to 27 August 2024;
(ii) canvassing, enticing or soliciting, or assisting another to canvass, solicit or assist, any employee of the third applicant with whom the third respondent had dealings within 12 months prior to 27 August 2024 to leave his or her employment with the third applicant;
(iii) canvassing, soliciting, dealing with, counselling, procuring or assisting another person to canvass, solicit or deal with any client, or any former client, of any of the applicants with whom the third respondent had dealings within the 6 months prior to 27 August 2024.
(d) in the case of the fourth respondent:
(i) enticing, soliciting or assisting another to entice or solicit any employee, contractor, director or officer of the first applicant with whom the fourth respondent had dealings within the 12 months prior to 6 September 2024;
(ii) canvassing, enticing or soliciting, or assisting another to canvass, solicit or assist, any employee of the first applicant with whom the fourth respondent had dealings within the 12 months prior to 6 September 2024 to leave his or her employment with the first applicant;
(iii) canvassing, soliciting, dealing with, counselling, procuring or assisting another person to canvass, solicit or deal with any client, or former client, of any of the applicants with whom the fourth respondent had dealings within the 6 months prior to 6 September 2024;
(e) inducing or procuring any breach of the contracts set out in Order 3(e).
5. From the date of this Order until further order, each of the third and fifth respondents (by themselves, their servants, agents or otherwise howsoever) be restrained from:
(a) performing services for, or entering into any contract or other arrangement to perform services for:
(i) any current client of any of any of the applicants; or
(ii) any person who was a client of any of the applicants within twelve months prior to the order for winding up of the applicants made on 23 August 2024; or
(iii) Wayne McCulloch, Kim Maree McCulloch, Amanda Lee Walker, Michelle Anne Rowe, Anthony Scott Hoffensetz, William Andrew Southee, Kenneth Paul Maley, Troy Phillip Turner, Jeffrey John McNamara, Roderick John Douglas, Mitchell Lagden, Gavin Kitching, Adam Pitiera Hiraka, Dwayne John Archer, Patrick Allen or Shane Kerry Hugo; or
(b) communicating to Colonial First State, HUB24, Netwealth, AIA Group Limited, AMP Super Fund, N.M. Superannuation Proprietary Limited, BT Financial Group Pty Limited, Integrity Australia Limited, MetLife Insurance Limited, MLC Limited, NEOS Life, Australian Life Development Pty Ltd, Encompass Insurance Company, MLC Limited, Resolution Life Australasia Limited, TAL Dai-ichi Life Australia Pty Limited, OnePath, Zurich Australia Limited (trading as OnePath Life), Asteron Life TAL Life Limited or Zurich Australian Insurance Limited
(i) any client has ceased to be advised under the first applicant’s AFSL; or
(ii) the fifth respondent or any related company has taken over the role of advisor to a client previously recorded as being advised under the first applicant’s AFSL.
6. From the date of this Order until further Order, the fifth respondent be restrained from:
(a) using, copying, forwarding, publishing, distributing, disclosing, impairing, disposing of, exploiting or dealing with the applicants’ confidential information in Annexure A; and
(b) inducing or procuring any breach of contracts set out in Order 3(e).
7. The matter is referred to the National Operations Registrar to be allocated to a docket judge, to be listed for an expedited trial.
8. The evidence-in-chief at trial be given by affidavit.
9. On or before 4 October 2024, the applicants file and serve:
(a) a concise statement which precisely identifies the confidential information for which it seeks final relief; and
(b) any further affidavit material upon which they intend to rely.
10. On or before 14 October 2024, the respondents file and serve:
(a) a concise statement of response; and
(b) any further affidavit material upon which they intend to rely.
11. Discovery is to proceed by way of categories.
12. On or before 1 November 2024, the parties are to confer for the purposes of agreeing the categories for discovery.
13. All parties have liberty to apply on 3 business days’ notice.
14. Costs in the proceeding.
Date orders authenticated: 25 September 2024
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Annexure A – Confidential Information
NGA means Next Generation Advice Pty Ltd ACN 120 066 113
IAS means Integral Advisory Solutions Pty Ltd ACN 639 094 956
IWG means Integral Wealth Group Pty Ltd ACN 632 978 173
Confidential Information means:
(a) all documents, whether in hard or electronic form;
(b) that are not lawfully in the public domain;
(c) which contain or show NGA’s, IAS’s or IWG’s:
a. customer lists, sales data, relationship contacts or similar information;
b. customer contact details;
c. client database detail;
d. potential client lists, including but not limited to the excel document titled
e. “Leads2024_08_31” or any document containing similar information; e. sales history
f. financial information;
g. marketing plans, operations an similar information;
h. business operations and similar information;
i. company records (including original agreements, resolutions, minutes);
j. any information sourced from the web-based computer system called
k. “AdvisorLogic”; and
(d) which were created by, at the instruction of, or for NGA, IAG or IWG; and
(e) includes all emails sent to, or received by, any email addresses maintained NGA, IAG or IWG.
Background
Background to the litigation
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
The three applicants in this proceeding (Next Generation Advice Pty Ltd (in liq) ACN 120 066 113, Integral Advisory Solutions Pty Ltd (in liquidation) ACN 639 094 956 (IAS) and Integral Wealth Group Pty Ltd (in liquidation) ACN 632 978 173 (IWG), respectively) seek the continuation of interim Orders made on 13 September 2024, with certain modifications that, in broad terms, restrain the five respondents (Mr James Doumani, Mr Benjamin Hopkins, Mr Jordan Gitani, Mr Omar Salkic and Smartmove Advice Pty Ltd ACN 667 350 370, respectively) from soliciting the applicants’ clients, misusing the applicants’ confidential information, soliciting the applicants’ staff members, and, in the case of the first respondent, who remains a director of each of the applicants, generally being involved in any business which is in competition with the applicants’ business. The applicants also seek orders requiring Mr Gitani to provide an affidavit identifying any clients with whom he, or Smartmove Advice, have had any communications regarding that person becoming a client of Mr Gitani or Smartmove Advice, and similarly, identifying any former employees or contractors of the applicants who have become employees or contractors of Smartmove Advice. The first, third, and fifth respondents opposed the continuation of the Orders. There was no appearance by the second respondent, who had been served with the application. The fourth respondent has not been served with the application, and apparently has been unable to be served.RELEVANT BACKGROUND Next Generation conducts a business providing financial advisory services to clients. IAS and IWG are part of the same corporate group (the Group) and conduct marketing and referral activities for the purpose of procuring clients of Next Generation. Mr Doumani is a current director of each of Next Generation, IAS and IWG. He is also one of the ultimate owners of, at least, Next Generation Advice. Mr Hopkins, Mr Gitani and Mr Salkic were, until very recently, employees of, respectively, IAS, IWG and Next Generation. Mr Hopkins was employed by IAS until 6 September 2024. His signature block in emails described him as “Head of Advice & Responsible Manager”. Mr Gitani was an employee of IWG until 27 August 2024. It appears that he was a “manager” from September 2023 to 27 August 2024, and Mr Gitani's evidence is that, prior to that time, his role was as a general adviser. Mr Gitani's evidence is that he was an independent contractor, rather than an employee. Mr Salkic was employed as Financial Controller of Next Generation Advice until 6 September 2024. Mr Gitani is also a director and the sole shareholder of Smartmove Advice. Following Mr Hopkins' and Mr Densley's departure as directors on 3 and 5 September 2024, respectively, Mr Gitani is now the sole director of Smartmove Advice. It is the applicants’ contention that there is, at least, a prima facie case that Mr Doumani, in fact, controls Smartmove Advice.SHOULD THE ORDERS BE CONTINUED?