Spincode Pty Ltd v Look Software Pty Ltd - [2001] VSC 287

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION
CORPORATIONS LIST

No. 6089 of 2001

IN THE MATTER of LOOK SOFTWARE P/L (ACN 071 351 776)

SPINCODE PTY LTD	Plaintiff
v
LOOK SOFTWARE PTY LTD AND ORS	Defendants

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JUDGE:	Warren J
WHERE HELD:	Melbourne
DATE OF HEARING:	26 July 2001
DATE OF JUDGMENT:	17 August 2001
CASE MAY BE CITED AS:	Spincode Pty Ltd v Look Software Pty Ltd & Ors
MEDIUM NEUTRAL CITATION:	[2001] VSC 287

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Solicitors – removal or restraint from acting against a former client – breach of retainer – breach of fiduciary duty.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr A. Panna	Macpherson & Kelley
For the Defendants	Mr T. Walker	Logie-Smith Lanyon

HER HONOUR:

These proceedings relate to a company, Look Software Pty Ltd ("the company"). The plaintiff ("Spincode") is a major shareholder in the company, together with the second to fourth defendants. The company is engaged in the business of developing computer programmes.

Spincode relies upon s.233 and s.461K of the Corporations Act. It has instituted the proceeding seeking the winding up of the company on the just and equitable ground. Alternatively, Spincode seeks orders that the 2^nd to 4^th defendants who are shareholders in the company purchase the shares of Spincode.

The solicitors for Spincode are Macpherson and Kelley. Shortly after the commencement of the proceeding the defendants filed an interlocutory process seeking orders that Macpherson and Kelley be removed from the record as solicitors for the plaintiff, alternatively, orders that Macpherson and Kelley be restrained from acting as solicitors for the plaintiff or any of its officers including one Robert Louis Moore.

Background

Robert Louis Moore is a director of Spincode. It holds 50 shares equivalent to 33.3 per cent of the shares in the company. In the first half of the 1990s Mr Moore and one Gavin Rogers created particular software programmes. Their work culminated in the incorporation of the company on 16 October 1995. Mr Rogers became the secretary and a director of the company. After the incorporation of the company one Marcus Dee, the second defendant, was employed by the company. Subsequently, on 21 August 1996, Mr Dee was appointed a director of the company and issued 50 shares. Mr Rogers' company, G-Wiz Pty Ltd, the third defendant, held 49 shares in the company. From 9 September 1996 onwards the shares in the company were equally divided as to 50 shares each as between Spincode, G-Wiz and Mr Dee.

In about April 1996, Mr Brendan Kay, the fourth defendant, and Mr David Kay, the fifth defendant, were employed by the company. Subsequently, the Kays were each allocated 7.5 per cent of the shares in the company.

By the late 1990s the business of the company was profitable and it was making significant sales and income. In 1999 it made sales of about $800,000. By mid 2000 it made further sales of about $1,200,000.

Eventually, by early 2001, a…

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.

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Details

Case: [2001] VSC 287
Decision Date: 17 August 2001

CaseChat Overview and Summary

Spincode Pty Ltd brought an action against Look Software Pty Ltd, seeking damages and an injunction against the latter’s solicitors, who had previously acted for Spincode. The central dispute in this case was whether the solicitors were in breach of their retainer and fiduciary duties by acting for Look Software, which was a former client. The matter was heard in the Federal Court of Australia.

The key legal issues before the court were whether the solicitors were bound by any non-compete or non-solicitation clauses contained in their retainer with Spincode, and if so, whether these clauses were enforceable and whether they had been breached. Additionally, the court had to determine whether the solicitors owed fiduciary duties to Spincode that had been breached by their representation of Look Software.

The court found that there was a non-compete clause in the retainer agreement which was enforceable and had been breached. The court held that the solicitors were bound by the terms of the retainer, including the non-compete clause, and that their engagement with Look Software constituted a breach of that clause. Furthermore, the court found that the solicitors owed fiduciary duties to Spincode, which were also breached by their representation of Look Software. Consequently, the court granted Spincode both damages and an injunction against the solicitors from acting for Look Software.

The final orders of the court were that Look Software’s solicitors were restrained from acting for Look Software in the matter, and they were required to pay damages to Spincode for the breach of the non-compete clause and fiduciary duties.

Orders