ACN 656 077 020 Pty Ltd v Li [2024] FCA 964 | Case summary

ACN 656 077 020 Pty Ltd v Li [2024] FCA 964 | Case summary | Zoe

[5]

Introduction 1 This is an application for interlocutory relief. The applicants, ACN 656 077 020 Pty Ltd and Oakwood Partners Pty Ltd, seek interlocutory orders: (a) restraining the respondents from soliciting or dealing with, or assisting another person to solicit or deal with, certain clients; (b) restraining the respondents from using or disclosing to any person certain confidential information; and (c) requiring the respondents to keep written accounts of the accounting business performed in relation to the certain clients. Ms Manlin Li, the first respondent, and MLI Accounting and Taxation Services Pty Ltd, the second respondent, oppose the making of the interlocutory orders. 2 In the substantive proceeding the applicants allege that Ms Li, a former employee of Oakwood, has breached statutory, fiduciary and contractual duties owed by her to the applicants. The applicants also allege that, MLI, a company of which Ms Li is the sole shareholder, secretary and director, knowingly received information and knowingly assisted in Ms Li's fiduciary breach, and was accessorily liable for Ms Li's statutory breach. In the substantive proceeding the applicants seek final restraints against the respondents, together with orders for compensation and damages. 3 The statutory breach alleged by the applicants is a breach of s 183(1) of the Corporations Act 2001 (Cth). The applicants allege that Ms Li was under an obligation not to use information she obtained as a director of ACN 656 077 020, to improperly gain advantage for herself or MLI or to cause detriment to ACN 656 077 020. The applicants allege that Ms Li used information that included: ACN 656 077 020's client list; requests from clients to ACN 656 077 020 to perform services; the fees charged by ACN 656 077 020; the details of the services provided by ACN 656 077 020; and ACN 656 077 020's professional relationships with clients (the confidential information). The applicants allege that Ms Li used the confidential information to compete with ACN 656 077 020. 4 The fiduciary breach alleged by the applicants arises as the result of Ms Li having been a director of ACN 656 077 020. The applicants allege that Ms Li was in a position that gave her a special opportunity to exercise her powers or discretions and use knowledge gained by virtue of that directorship to the detriment of ACN 656 077 020. They allege that Ms Li used the confidential information in breach of her fiduciary duty. 5 The contractual breach alleged by the applicants is a breach of an employment contract entered into between Ms Li and Oakwood. That contract is said to include a term that Ms Li would not use confidential information for any purpose other than the benefit of Ms Li's employer. The applicants allege that Ms Li used the confidential information in breach of that contractual term. 6 The matter was before me for a case management hearing on 14 June 2024. Ms Li was given leave to represent MLI at that hearing only. At that case management hearing the matter was referred for urgent mediation. That mediation took place on 24 June 2024 and was unsuccessful. On 16 July 2024 I handed down judgment with respect to Ms Li's application to further represent MLI. I refused that application. The applicants then sought the hearing of their application for interlocutory orders on a date not before 30 July 2024. I heard that application on 31 July 2024. 7 For the reasons set out below I make interlocutory orders in favour of the applicants.

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Messrs George and Peter Delis 13 Mr George Delis, director of ACN 656 077 020, and Mr Peter Delis, the sole director of Oakwood, a service company for ACN 656 077 020, each swore an affidavit dated 12 April 2024. They relevantly deposed: (a) That Ms Li was a director of ACN 656 077 020 from 15 December 2021 to 19 February 2024; (b) On 7 January 2022, Ms Li entered into an employment agreement with Oakwood. Ms Li was employed as a senior accountant; (c) On 29 January 2024: (i) Ms Li sent Mr Delis an email advising that she was resigning as a director of, and supervised tax agent for, ACN 656 077 020; (ii) Ms Li emailed Mr Peter Delis providing four weeks' notice of her resignation of her employment with Oakwood; (iii) Ms Li registered MLI as a company; (d) On 18 or 19 February 2024, Mr Peter Delis provided Ms Li with a notice of immediate termination and instructed Ms Li not to return to work; and (e) On 19 February 2024, Ms Li sent Mr Delis a further email advising she was resigning as director of ACN 656 077 020. (f) During her employment with Oakwood and her directorship of ACN 656 077 020, Ms Li performed work for the clients of ACN 656 077 020 and was privy to sensitive commercial information including pricing information, strategic information and customer information; (g) Mr Peter Delis gave evidence he was contacted by clients of ACN 656 077 020 advising him that they had been contacted by Ms Li. That evidence was that: (i) On or about 22 February 2024, Mr Peter Korsak telephoned Mr Delis and said Ms Li: (A) Asked him to engage her to prepare his tax return; (B) Stated that she would do it for half price; and (C) Stated that she would do a better job than ACN 656 077 020; (ii) On or about 23 February 2024, Mr Grant Fraser telephoned Mr Delis and said Ms Li asked him to engage her as his accountant and that she sent him a photo of a business card for MLI; (iii) On or about 4 March 2024, Mr John Natisoulas telephoned Mr Delis and said that Ms Li offered to provide accounting services to him and that she sent him a photo of a business card for MLI; (iv) On or about 5 April 2024, Mr Harry Spatiotis telephoned Mr Delis and said that Ms Li offered to provide accounting services to him and provided him a photo of a business card for MLI; (v) On 9 April 2024, Mr Michael Pastore telephoned Mr Delis and said that Ms Li had offered to provide accounting services to him; (vi) On 10 April 2024, Ms Maria Martino telephoned Mr Delis and said that Ms Li had contacted her and offered to provide accounting services to her; and (vii) On 10 April 2024, Ms Megan Walton telephoned Mr Delis and said Ms Li had contacted her and offered to provide accounting services to her. (h) Mr Peter Delis also gave evidence that he has ongoing concerns about Ms Li contacting clients of ACN 656 077 020 to attempt to solicit work. Mr Peter Delis deposed that Ms Li only obtained the identities, contact details, accounting requirements and the type and price of services supplied to them from her role as a director of ACN 656 077 020 and as an employee of Oakwood.

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Ms Li 18 The respondents rely on two affidavits of Ms Li to oppose the interlocutory orders. Those affidavits were admitted into evidence without objection. In her first affidavit Ms Li made various, not presently relevant, accusations against Messrs George and Peter Delis and the applicants and relevantly deposed that: (a) The clients of ACN 656 077 020 were her personal intellectual property; and (b) Without Ms Li ACN 656 077 020 was only a shell. 19 In her second relevant affidavit Ms Li deposed that: (a) She was initially employed by Oakwood Services Pty Ltd, a predecessor to Oakwood, who provided services to a predecessor company to ACN 656 077 020; (b) Oakwood Services Pty Ltd ceased to trade in January 2022; (c) ACN 656 077 020 was registered as a company tax agent on 14 March 2022; (d) Ms Li was employed by Oakwood from 7 January 2022 until February 2024; (e) Ms Li says she established her new business on 29 January 2024 and: (i) promoted her business to contacts; (ii) did not promote the business using any contact details she obtained while she was a director of ACN 656 077 020; (iii) only contacted clients she had provided services to prior to the establishment of the applicants; and (iv) "In most instances, where I contacted persons who were also clients of [ACN 656 077 020] I requested those persons refer their acquaintances to me." (f) Ms Li says she did not retain or take any files, documents or materials capable of being returned to ACN 656 077 020. She says Oakwood did not have any clients, and that she complied with her employment contract regarding solicitation and property retention; (g) Ms Li gave evidence about her conversation with Mr Peter Korsak. Ms Li says she said she would provide "competitive pricing, as compared to the fees commonly charged by accounting firms in Melbourne." Ms Li did not respond directly to Mr Fraser's evidence that she offered to provide accounting services to him at a 20% discount on what he was currently paying to "the second plaintiff".

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Is there a serious question that Ms Li has contravened s 183 of the Corporations Act 2001 (Cth)? 20 Section 183 of the Corporations Act provides: Use of information - directors, other officers and employees (1) A person who obtains information because they are, or have been, a director or other officer or employee of a corporation must not improperly use the information to: (a) gain an advantage for themselves or someone else; or (b) cause detriment to the corporation. Note 1: This duty continues after the person stops being an officer or employee of the corporation. Note 2: This subsection is a civil penalty provision (see section 1317E). (2) A person who is involved in a contravention of subsection (1) contravenes this subsection. Note 1: Section 79 defines involved. Note 2: This subsection is a civil penalty provision (see section 1317E). 21 The elements of a contravention of s 183 of the Corporations Act may be summarised as: (a) a person was at the relevant time an officer of the corporation; (b) they acquired the relevant information; (c) they did so by virtue of their position as officer of the corporation; (d) they made improper use of that information; (e) they made that improper use in order to gain directly or indirectly an advantage for themselves or for some other person; or, (f) they made that improper use to cause detriment to the corporation of which they were an officer. See Smart EV Solutions Pty Ltd v Guy [2023] FCA 1580 at [69] (Derrington J) citing Huang v Wang [2015] NSWSC 510 at [41] (McLelland J), Commissioner for Corporate Affairs v Green [1978] VR 505 at 510 (McInerney J) and Forkserve Pty Ltd v Jack [2000] NSWSC 1064; (2001) 19 ACLC 299 at [114] - [118] (Santow J). 22 The test for impropriety, relevant to (d) to (f) above, was set out in R v Byrnes (1995) 183 CLR 503 at 514 - 515 (Brennan, Deane, Toohey and Gaudron JJ): a breach of the standards of conduct that would be expected of a person in the position of the alleged offender by reasonable persons with knowledge of the duties, powers and authority of the position and the circumstances of the case. 23 The applicants submit that Ms Li acquired confidential information while she was a director of ACN 656 077 020. They allege Ms Li then used that client information to improperly benefit her, and MLI, by calling those clients and seeking to provide them accounting services, including in some cases at a reduced rate. 24 The respondents submit that Ms Li did not acquire the confidential information while she was a director of ACN 656 077 020, instead they say she acquired the information prior to her directorship and while she was employed by a predecessor of Oakwood. 25 There is no dispute that Ms Li commenced her directorship of ACN 656 077 020 on 15 December 2021. She resigned that directorship on 29 January 2024 and again on 19 February 2024. Ms Li established MLI on 29 January 2024. The evidence of Mr Peter Delis and Messrs Tsapepas, Fraser and Spatiotis is that clients of ACN 656 077 020 were contacted by Ms Li in February, March and April of 2024. The evidence establishes that each of those clients was a client at the time they were contacted by Ms Li. The evidence also suggests that in contacting those clients Ms Li used the following client information: (a) The identity of those clients and their phone numbers; (b) The business needs of those clients, insofar as they required accounting services; and (c) Pricing information of ACN 656 077 020 given that Ms Li is said to have offered services at a cheaper price than currently paid by Mr Korsak and Mr Fraser. 26 On the material before me I am satisfied that there is a serious question that Ms Li breached s 183 of the Corporations Act. That is, I am satisfied that there is a serious question that Ms Li was a director, that she acquired the confidential information by virtue of that position and that she used that information to advantage herself or MLI, or to cause detriment to ACN 656 077 020. 27 I am not persuaded that the serious question is defeated by Ms Li's assertion that she obtained any confidential information prior to her directorship of ACN 656 077 020. I am satisfied, for the purposes of a serious question, that the confidential information included information that each of the clients contacted: remained a client of ACN 656 077 020 at February to March 2024; continued to require accounting services in 2024; required particular services in 2024; and, paid certain amounts for those services in and prior to 2024. Indeed, the evidence of Mr Fraser was that Ms Li offered a 20% discount on what he was currently paying. Mr Fraser also gave evidence that Ms Li said she was "equipped to complete my tax return because she was handling my file". I understood that to be a reference to Ms Li's knowledge of Mr Fraser's accounting requirements in 2024, not his requirements prior to December 2021 when she became a director of ACN 656 077 020.

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Is there a serious question that Ms Li had and breached fiduciary duties to ACN 656 077 020? 28 The applicants submit that a director is a special relationship that establishes a fiduciary duty. After the hearing, and with leave, the applicants provided and relied upon Courtenay Polymers Pty Ltd v Deang [2005] VSC 318 (11 August 2005) at [90] where Whelan J, relying on the Full Court of the Supreme Court of South Australia in Southern Real Estate Pty Ltd v Dellow [2003] SASC 318; (2003) 87 SASR 1, said: The principles which emerge from that decision, and which I adopt, are the following: 1. Obligations of loyalty owed by an employee are subsumed in the more onerous fiduciary duties owed as a director. 2. The statutory and fiduciary duties of directors exist side by side. There is both a statutory and a fiduciary duty on directors to act in the best interests of the company and not to promote their own interests or the private interests of others. 3. Taking steps which are against the company's interests with a view to resignation and subsequent involvement in a competing business will be, in the absence of full disclosure or other extraordinary circumstances, a breach of both statutory and fiduciary duty, even if those steps involve no misuse of confidential information. 4. The statutory and fiduciary duties of directors do not simply end at the point of resignation, but there is uncertainty as to when a former director might properly begin to compete with the company. Where a former director covertly puts everything in place so as to be in a position to compete with the company immediately upon resignation, and does in fact enter into competition immediately following resignation, there is no need to determine at what point the director might properly have commenced a competing business. 29 In BCI Finances Pty Limited (in liq) v Binetter [2018] FCAFC 189; (2018) 362 ALR 597, the Full Court of this Court (Allsop CJ, Moshinsky and Colvin JJ) jointly stated at [596] that: It has long been accepted that company directors owe a fiduciary duty to exercise their powers bona fide in the interests of the company as a whole. 30 The nature of the fiduciary duty owed by a director to a company was set out in Mills v Mills (1938) 60 CLR 150 by Dixon J at 185: Directors of a company are fiduciary agents, and a power conferred upon them cannot be exercised in order to obtain some private advantage or for any purpose foreign to the power. That reasoning was recently adopted by Cheeseman J in von Bernstorff v Balamara Resources Limited [2023] FCA 757; (2023) 168 ACSR 260 at [32] and McEvoy J in Australian Securities and Investments Commission v iSignthis Limited [2024] FCA 669 at [592] - [598]. 31 The applicants submit that Ms Li owed a duty not to permit her duties to ACN 656 077 020 to conflict with her personal interest. Further, they say Ms Li owed a duty to ACN 656 077 020 not to obtain any unauthorised benefit, advantage or profit for herself or a third party from her directorship of ACN 656 077 020. The applicants allege that Ms Li breached these duties by attempting to attract clients of ACN 656 077 020 to her competing business, MLI, using information she obtained while she was a director. 32 In determining whether a person owing fiduciary duties has placed themselves in a position of conflict between interest and duty, the courts have applied a practical objective test. The Court must be satisfied there is a real or substantial possibility of conflict: Boardman v Phipps [1967] 2 AC 46 at 124, Lord Upjohn. The Boardman reasoning was applied by the Full Court of this Court in Hylepin Pty Ltd v Doshay Pty Ltd [2021] FCAFC 201; (2021) 288 FCR 104 at [25] (Markovic, Anderson and Banks-Smith JJ). 33 In this case, Ms Li resigned as a director of ACN 656 077 020 on 29 January 2024 (and again on 19 February 2024). On 29 January 2024 Ms Li established MLI. There was no challenge to the submission that MLI is in competition with ACN 665 077 020. Shortly after establishing MLI, Ms Li contacted a number of clients of ACN 656 077 020. Ms Li either sought they engage her to provide accounting work or sought that those clients refer her work from other sources. Ms Li's evidence was that "in most instances, where I contacted persons who were also clients of [ACN 656 077 020] I requested those persons refer their acquaintances to me" (emphasis added). There was also evidence that on two occasions Ms Li offered to provide accounting services at a cheaper price than those clients were paying at that time. 34 I am satisfied that there is a serious question that Ms Li was a director of ACN 656 077 020 and placed herself in a position of conflict between interest and duty. I am satisfied that there is a serious question that Ms Li owed a fiduciary duty to act in the best interests of ACN 656 077 020 and to not to promote her own interests or the interests of MLI. I am satisfied that there is a serious question that by her communications with clients of ACN 656 077 020, as described above, she breached that obligation.

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Is there a serious question that Ms Li breached her contract of employment? 35 The applicants submit that Ms Li breached the contract of employment she entered into with Oakwood. The applicants submit that Ms Li breached clause 18(b) of the contract of employment which relevantly states: You agree at all times during and after your employment with the Employer: (b) not to use the Confidential Information for any purpose other than for the benefit of the Employer; 36 The contractual confidential information is defined as: Confidential Information means all the information including trade secrets, Intellectual Property, marketing and business plans, client and supplier lists, computer software applications and programs, business contacts, finance, remuneration details, data concerning the Employer or any of its related entities or any client of the Employer's, finances, operating margins, prospect's lists, and transactions of the Employer, but does not include information in the public domain otherwise than through a breach of an obligation of confidentiality. 37 The applicants say that the contractual confidential information used by Ms Li was contractual confidential information of a "client of the Employer's". The client of Oakwood was ACN 656 077 020, where Oakwood was a service provider to ACN 656 077 020. 38 The respondents state that the information is not confidential because it was acquired prior to 2021. As I set out above, I am satisfied, for the purposes of a serious question, that the contractual confidential information, included information that each of the client's contacted: remained a client of ACN 656 077 020 at February to March 2024; continued to require accounting services in 2024; required particular services in 2024; and, paid certain amounts for those services in and prior to 2024 39 I am satisfied that there is a serious question that Ms Li breached her employment contract by her communications with clients of ACN 656 077 020 in the period February to April 2024.

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Is there a serious question that MLI knowingly received confidential information and assisted in the breach of fiduciary duties? 40 The applicants allege that MLI is liable for Ms Li's breaches of fiduciary duty through the two limbs of Barnes v Addy (1874) LR 9 Ch App 244. The first limb relevantly makes a third party liable for "knowing receipt" of property held or controlled by another in a fiduciary capacity, if the third party receives it with knowledge that the fiduciary has given or disposed of it to them in breach of a fiduciary duty: see Grimaldi v Chameleon Mining NL (No 2) [2012] FCAFC 6; (2012) 200 FCR 296 at [20]. The applicants allege that MLI knowingly received the confidential information of ACN 656 077 020, and where Ms Li was the only person involved in MLI, knew that they had received it in breach of Ms Li's fiduciary duty. I was not addressed on whether the confidential information was property for the purposes of the first limb. Whilst there is certainly some doubt about that matter, I am, for the purposes of a serious question, prepared to accept that it arguably has proprietary characteristics so as to enliven the protection at which Barnes v Addy is directed: see Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 at [118]. 41 The second limb relevantly makes a third party liable if they assist with knowledge in a dishonest design of a fiduciary: see Grimaldi at [20]. The applicants say Ms Li's attempts to solicit the clients of ACN 656 077 020 was a dishonest design. 42 Whether both limbs are satisfied depends on the level of knowledge of MLI: see Grimaldi at [259]. The applicants' say that MLI is an emanation of Ms Li. Therefore, if there is a serious question to be tried for Ms Li, then it follows that there is a serious question to be tried for MLI. 43 In O'Brien v Dawson [1942] HCA 8, (1942) 66 CLR 18 and 32, Starke J said, quoting Ferguson v Wilson (1866) LR 2 Ch App 77, 89 (CA), that a company "cannot act in its own person for it has no person ... it must of necessity act by directors, managers, or other agents." That was cited with approval by the Full Court of this Court in Pioneer Mortgage Services Pty Ltd v Columbus Capital Pty Ltd [2016] FCAFC 78; (2016) 250 FCR 136 at [49] (Davies, Gleeson and Edelman JJ). 44 Ms Li is the sole director, secretary and shareholder of MLI. At the hearing, the applicants submitted that Ms Li was the only person involved in MLI. The respondents did not challenge that submission. 45 Given the unchallenged submissions of the applicants that Ms Li is the only person involved in MLI, and the evidence before the Court about Ms Li's contact with clients of ACN 656 077 020, I am satisfied that there is a serious question that MLI knowingly received the confidential information of ACN 656 077 020 and that the confidential information was property held or controlled by another in a fiduciary capacity. I am also satisfied that there is a serious question that the communications between Ms Li and the clients of ACN 656 077 020 were a dishonest design in breach of her fiduciary duties and that MLI knowingly assisted Ms Li in that endeavour.

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Is there a serious question that MLI is accessorily liable under s79 of the Corporations Act 2001 (Cth)? 46 The applicants submit that MLI was "involved" in Ms Li's breach of s 183 of the Act pursuant to s 79 of the Corporations Act. 47 Section 79 provides: A person is involved in a contravention if, and only if, the person: (a) has aided, abetted, counselled or procured the contravention; or (b) has induced, whether by threats or promises or otherwise, the contravention; or (c) has been in any way, by act or omission, directly or indirectly, knowingly concerned in, or party to, the contravention; or (d) has conspired with others to effect the contravention. 48 The applicants allege that MLI was 'knowingly concerned in' Ms Li's contraventions of s 183(1) and therefore involved in Ms Li's contravention. Accordingly by s 183(2), MLI is taken to have contravened s 183 of the Corporations Act. 49 Relevantly, subs 79(c) of the Corporations Act requires MLI to have been an intentional participant in the contravention of s 183. In order to form the necessary intent it must have had knowledge of the essential matters, essential facts or essential elements of the contravention: Yorke v Lucas (1985) 158 CLR 661 at 667 and 670 and Productivity Partners Pty Ltd v Australian Competition and Consumer Commission [2024] HCA 27 at [347] (Beech-Jones J). 50 The evidence of Peter Delis, Grant Fraser and Harry Spatiotis is that Ms Li contacted clients of ACN 656 077 020 and offered accounting services, provided clients of ACN 656 077 020 with a photo of MLI's business card and that she had advised them she had opened her own accounting practice. 51 I am satisfied that there is a serious question that Ms Li breached s 183 of the Corporations Act. That is, I am satisfied that there is a serious question that Ms Li was a director, that she acquired the confidential information by virtue of that position and that she used that information to advantage herself or MLI, or to cause detriment to ACN 656 077 020. Where that conduct was engaged in by Ms Li on her own behalf and on behalf of MLI, I am satisfied, for the purposes of a serious question, that MLI had the requisite knowledge for the purposes of s 79 of the Corporations Act.

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Balance of convenience 53 The applicants identify four matters they say result in the balance of convenience favouring the making of the interlocutory orders. 54 First, the applicants say that damages may not be an adequate remedy. They state that Ms Li's conduct may cause the applicants to lose long-term relationships between the applicants and their clients. They say if clients where to cease using ACN 656 077 020, it would be difficult to establish that the conduct of Ms Li caused the loss and so the applicants may never be in a position know what they have lost. 55 Second, they say that it is hard to quantify the value of the loss of the long-term relationships, including relationships that have existed for decades. The respondents submit that these relationships could not have existed for decades given that ACN 656 077 020 was only established in 2021. While that is true, there is evidence that some clients have had a relationship with Messrs George and Peter Delis for decades, although this may have been with different but predecessor corporate entities. 56 Third, the applicants say that Ms Li has expressed the view that the clients of ACN 656 077 020 are her intellectual property and has indicated that she may continue contacting those clients. The applicants say accordingly Ms Li's attitude weighs in favour of granting the interlocutory orders. 57 Fourth, the applicants say that even if they are successful in bringing a claim against the respondents, they may struggle to recover their loss. Ms Li has given evidence in this proceeding that she is in difficult financial circumstances. Ms Li's evidence about her financial position suggests there is a risk that she is unable to satisfy an order of damages against her. 58 I am satisfied that the first, third and fourth matters weigh the balance in favour of the applicants. 59 The respondents only submission regarding balance of convenience was that the orders would prevent Ms Li from promoting her business to people she knows and has worked with previously. Given I have found that there is a serious question to be tried about whether Ms Li is able to lawfully contact those persons, this is not a factor that weighs the balance in favour of Ms Li. 60 In those circumstances, I am satisfied that the balance of convenience weighs in favour of the applicants.

[18]

Disposition and orders 61 Having found serious questions in respect of each claim made against the respondents, and that the balance favours the applicants, I am satisfied that it is appropriate to make interlocutory orders in favour of the applicants. 62 The applicants seek the following interlocutory orders: 1. The Defendants be restrained up to and including final determination of this proceeding, or until further order, from soliciting or dealing with or assisting another person to solicit or deal with any Restricted Client [as defined by a list]. 2. Up to and including final determination of this proceeding, or until further order, the Defendants be restrained from using or disclosing to any person Confidential Information [as defined], other than for the purpose of complying with these orders. 3. Up to and including the final determination of this proceeding, or until further order, the Defendants keep written accounts in relation to the Restricted Clients of all business of an accounting nature conducted by the Defendants since 1 February 2024. Where: a) Confidential Information means information acquired by the First Defendant up until 19 February 2024 including: i) the Firm's client list, names and contact details; ii) requests from the Firm's clients for accounting services; iii) quotes re price of Firm providing such services to the Firm's clients; and iv) accounting services provided to the Firm's clients. b) Restricted Client means the list of the Plaintiffs' clients in the attached Schedule. 63 As to the orders generally, the respondents complain that the orders are not sufficiently referable to the breaches alleged. I am satisfied that the alleged breaches, for which I have found there exists a serious question, are the result of the behaviour to which the interlocutory orders are directed. 64 As to the first order, the applicants allege that the clients listed are clients of ACN 656 077 020. There was no challenge by the respondents to the content of the list, rather the respondents seek the order be limited to "further soliciting" in place of "soliciting or dealing with". I am not satisfied that "further soliciting" would appropriately enjoin the respondents in respect of existing communications that I have found establish a serious question of statutory and fiduciary breaches. 65 As to the second order, the respondents sought the restriction of the confidential information to information acquired during the period in which Ms Li was a director of ACN 656 077 020; namely from 15 December 2021 to 29 January 2024. The applicants sought a period "up until 19 February 2024", being the date of Ms Li's second resignation as director, and on the submission that it should be assumed that Ms Li resigned a second time because there was some deficiency with her first resignation. I am satisfied that it is appropriate to restrict the interlocutory order to confidential information acquired between the date that Ms Li became a director of ACN 656 077 020 and her resignation as director, noting that period pre-dates the date on which Ms Li entered the contract of employment with Oakwood. I am satisfied that the period should end at the time of the first resignation. On the evidence presently before me there is nothing to suggest that first resignation was not effective. 66 As to the third order, the respondents submitted they had no objection to such an order, save that they said the order reflected existing statutory obligations of MLI. I am satisfied that the order is necessary and appropriate, as it directs the keeping of accounts specifically in respect of the listed clients. 67 In all of the circumstances set out above, I am prepared to make orders of the type sought, with modifications including to the period in which the confidential information was acquired. I will otherwise reserve costs. I certify that the preceding sixty-seven (67) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Dowling.

ACN 656 077 020 Pty Ltd v Li

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Judgment (18 paragraphs)

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Cases Cited (32)