Elston Private Wealth Pty Ltd v Wilson Advisory and Stockbroking Ltd [2022] ACTSC 237

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title: Elston Private Wealth Pty Ltd v Wilson Advisory and Stockbroking Ltd

Citation: [2022] ACTSC 237

Hearing Dates: 15 – 16, 18, 23 – 24 March 2022

Decision Date: 2 September 2022

Before: Mossop J

Decision: See [537]

Catchwords: EQUITY – FIDUCIARY DUTIES – Fiduciary duty to employer – first plaintiff’s employee left to commence work as a corporate authorised representative of the second defendant – employee retained confidential information acquired in the course of his employment about the clients and business - employee contacted client about moving custom to the second defendant prior to resignation – breach of fiduciary duty established – no “clear plan” prior to resignation – plaintiffs did not establish that contact with other clients after resignation amounted to a breach of fiduciary duty EQUITY – FIDUCIARY DUTIES – Whether second defendant knowingly assisted the breach of fiduciary duty – plaintiffs’ confidential information received by the second defendant as part of due diligence process – information used by first defendant in business plan – knowledge of breach of duty did not amount to knowledge of dishonest or fraudulent conduct – no evidence that but for the use of confidential information the second defendant would not have entered into corporate authorised representative agreement with first defendant – knowing assistance not established

Legislation Cited: Civil Law (Wrongs) Act 2002 (ACT), s 107B Corporations Act 2001 (Cth), ss 181, 182, 183, 191

Cases Cited: Advanced Fuels Technology Pty Ltd v Blythe [2018] VSC 286 Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society [2018] HCA 43; 265 CLR 1 Barnes v Addy (1874) LR 9 Ch App 244 Cassegrain v Cassegrain [2016] NSWCA 71 Consolidated Paper Industries Pty Ltd v Matthews [2004] WASC 161 Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 14 FCR 434 Del Casale & Ors v Artedomus (Aust) Pty Ltd [2007] NSWCA 172; 73 IPR 326 Digital Pulse Pty Ltd v Harris [2002] NSWSC 33; 166 FLR 421 Edgewater Homes Pty Ltd v Donohoe [2019] NSWSC 44 Farm Transparency International Ltd v New South Wales [2022] HCA 23; 403 ALR 1 at [238]; Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; 230 CLR 89 George v Webb [201] NSWSC 1608 Grimaldi v Chameleon Mining NL (No 2) [2012] FCAFC 6; 200 FCR 296 Harris v Digital Pulse Pty Ltd [2003] NSWCA 10; 56 NSWLR 298 Hasler v Singtel Optus Pty Ltd [2014] NSWCA 266; 87 NSWLR 609 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 Nexgen Sydney Pty Ltd v Bakarat [2022] NSWSC 312 Southern Real Estate Pty Ltd v Dellow [2003] SASC 318; 87 SASR 1 Steadfast ICT Security Pty Ltd v Peak [2021] ACTSC 199 Vestergaard Frandsen A/S v Bestnet Europe Ltd [2013] 1 WLR 1556 Zibara v Ultra Management (Sports) Pty Ltd [2021] FCAFC 4; 283 FCR 18

Texts cited: Alison Gurr, ‘Accessory Liability and Contribution, Release and Apportionment’ (2010) 34 Melbourne University Law Review 481 R Meagher, D Heydon and M Leeming, Meagher, Gummow and Lehane’s Equity Doctrines & Remedies (LexisNexis th Butterworths, 4 ed, 2002) J D Heydon, M J Leeming and P G Turner, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (LexisNexis th Butterworths, 5 ed, 2015)

Parties: Elston Private Wealth Pty Ltd (First Plaintiff) EP Financial Services Pty Ltd (Second Plaintiff) Timothy Leslie Anderson (First Defendant) Wilson Advisory and Stockbroking Ltd (Second Defendant) Fortis Private Pty Ltd (Third Defendant)

Representation: Counsel P Walker SC with R Ross-Smith (Plaintiffs) J Moffett (First and Third Defendants) S Onitiri (Second Defendant)

Solicitors DW Fox Tucker (Plaintiffs) Bradley Allen Love (First and Third Defendants) Herbert Smith Freehills (Second Defendant)

File Number: SC 82 of 2021 MOSSOP J:

Introduction

The first and second plaintiffs are members of the “Elston Group”, a group of companies providing financial planning and advice services. The Elston Group relevantly includes:

(a) the first plaintiff, Elston Private Wealth Pty Ltd (EPW) which was the operating and employing entity for Elston’s offices and advisers;

(b) the second plaintiff, EP Financial Services Pty Ltd (EPFS) which was the holder of Australian Financial Services Licence 325252;

(c) Elston Asset Management Pty Ltd, the Elston Group’s asset management entity which holds the funds under management (FUM) of each client of EPFS; and

(d) Elston Group Pty Ltd (EGPL), the parent company and majority shareholder of the abovenamed entities.

(Collectively referred to in these reasons as “the Elston Group” or “Elston”.)

Timothy Leslie Anderson (Anderson) is the first defendant. He was an employee of EPW. He subsequently resigned and became associated with the second defendant.
The second defendant, Wilsons Advisory and Stockbroking Ltd (Wilsons), is another financial advisory business which operated in competition with the Elston Group.
The third defendant, Fortis Private Pty Ltd (Fortis), is a company owned and controlled by Anderson.
EPW claimed damages and a permanent injunction against Anderson. EPFS claimed damages, equitable compensation and equitable damages against Anderson. EPW claimed equitable compensation and an account of profits against Fortis. EPW and EPFS claimed equitable compensation, equitable damages or an account of profits against Wilsons. EPFS claimed orders requiring the destruction of certain documents.

The claim against Anderson and Fortis

EPW and EPFS relied upon a variety of causes of action against Anderson and Fortis. EPW claimed that Anderson had breached:

(a) employment restraints set out in his contract of employment;

(b) the confidentiality clause in his contract of employment; and

EPW also claimed that Anderson had:

(a) breached his statutory duties as an officer of EPW under ss 181, 182, 183 and 191 of the Corporations Act 2001 (Cth); and

(b) breached his fiduciary duty to EPW and an equitable duty of confidence.

EPW as “Company” and EFPS as “Licensee” were also parties to a “Services Agreement”, which provided that “the Licensee provides Financial Services to Clients through Authorised Representatives employed by the Company subject to the Licensee giving each Authorised Representative a Letter of Authority”. The agreement also required EPW to indemnify EFPS for any loss or damage caused to EFPS by EPW or its employees or authorised representatives. Anderson was liable pursuant to a clause in his contract (cl 18.7) to indemnify EPW against losses incurred by it as a result of breaches of certain provisions of his contract.
EPFS alleged that Anderson had:

(a) breached his equitable duty of confidence to it; and

(b) breached a fiduciary duty owed to it.

The plaintiffs’ claim against Anderson and Fortis was settled. Judgment was entered in favour of EPW and EPFS against Anderson and Fortis in the sum of $3.25 million. A fixed sum costs order of $1.4 million was made in favour of EPW and EPFS.
The trial then proceeded in relation to the plaintiffs’ claim against Wilsons only. The claim against Wilsons was that it had been a knowing participant in the conduct of Anderson and that as a result was liable to EPW and EPFS for an account of profits, equitable compensation or equitable damages.
The scope of the proceedings was significantly altered by the plaintiffs settling the claim against Anderson and Fortis and confining the case to the claim against Wilsons. That was because, leaving aside the order related to destruction of documents, the claim against Wilsons by EPW and EPFS was limited to equitable compensation, equitable damages and an account of profits. As presented at trial, the claim was limited to equitable compensation. That meant that many of the issues that might have arisen relating to the contractual claims against Anderson fell away. The case against Wilsons was confined to its knowing involvement in the asserted breaches of fiduciary duty and duty of confidence as that was the cause of action available to EPW and EPFS. Its knowledge of or participation in any breaches of contract were not relevant except to the extent to which that conduct also amounted to a breach of fiduciary duty or duty of confidence.

Claim against Wilsons

The plaintiffs’ claim against Wilsons has, as its foundation, certain pleaded conduct of Anderson which the plaintiffs assert was knowingly and intentionally undertaken by Anderson during the course of, and after, his employment with EPW and with the intent of procuring a benefit for himself, Fortis and/or Wilsons at the expense of EPW or EPFS.
In summary, the conduct pleaded was as follows.
Paragraph 54 of the Second Further Amended Statement of Claim (SOC) asserts that Anderson breached the confidentiality clause of his contract, in that he retained “Confidential Information” or information termed “Confidential Sale Information”, used that information and then contacted and solicited clients, the identity and details of whom constituted confidential information. This included:

(a) approaching the “Known Clients”, a list of clients with whom Anderson had a direct working relationship during and as a result of his employment with EPW, and other clients of EPFS; and (b) sending to Wilsons a PowerPoint presentation entitled “Business Plan 2020” (the Business Plan) which contained “account codes” and amounts of FUM for a number of clients referred to as the “Business Plan Clients”.

Paragraph 56 alleges that Anderson breached an equitable duty of confidence which he owed to EPW by reason of his employment. He is alleged to have done that by using and revealing Confidential Information and/or Confidential Sale Information in a number of ways:

(a) keeping details of the Known Clients in his mobile phone and failing to return or delete those details following his resignation;

(b) disclosing (as alleged in paragraph 54) information in relation to the Business Plan including account codes and FUM amounts in relation to listed clients;

(d) using Confidential Information and or Confidential Sale Information for the purpose of causing Wilsons to approach the known clients and have them transferred away from EPW;

(e) from 31 December 2020 using the Confidential Information or Confidential Sale Information to approach and solicit the Known Clients of EPFS;

(f) from 1 January 2021 using the Confidential Information or Confidential Sale Information to begin servicing the Known Clients; and

(g) servicing former clients of EPFS other than the Known Clients.

Paragraph 61 alleges that Anderson breached his duty of fidelity in a number of respects:

(a) forming an intention to resign his employment and join a business in direct competition with EPW without disclosing that intention to EPW;

(b) retaining Confidential Information about clients of EPW and Confidential Sale Information;

(d) accessing Confidential Information for the purpose of servicing clients in a competing business;

(e) using Confidential Information and or Confidential Sale Information for the purpose of permitting Wilsons to approach those clients;

(f) actively preparing to enter into competition with EPW and EPFS;

(g) placing himself in a position to compete with EPW and EPFS;

(h) meeting or having telephone discussions with Known Clients for the purpose of soliciting their engagement of Wilsons, having planned for those communications before his resignation; and

(i) soliciting known clients away from EPFS to Wilsons.

Paragraph 62 alleges that Anderson took certain steps immediately following his resignation with an intention to join Wilsons and use Confidential Information of EPW or EPFS:

(a) meeting with or having telephone conversations with Known Clients for the purpose of soliciting their work in favour of Wilsons; and

(b) sending the Known Clients correspondence with a view to soliciting their custom using Confidential Information, namely their identity and their mobile telephone numbers.

The plaintiffs allege that Wilsons was a knowing participant in that conduct because it had knowledge of Anderson’s breaches (as set out in the SOC) as it:

(a) engaged in negotiations with Anderson in relation to him being appointed as an authorised representative and thereafter appointed him as an authorised representative;

(b) took over the Known Clients of EPFS;

(c) engaged in the receipt and transfer of the commissions, fees, rebates or volume bonus payments attributable to the Known Clients;

(d) engaged Fortis under a “Corporate Authorised Representative” (CAR) arrangement to establish a profit-sharing arrangement between Fortis and Wilsons; and

(e) received certain confidential information contained in the “Business Plan”.

It is alleged that Wilsons had knowledge for the purposes of the claim because of its:

(a) calculated abstention from enquiry; or

(b) because an honest person with knowledge of the circumstances known to Wilsons would have reasoned that Anderson’s conduct amounted to a breach by Anderson and/or Fortis of their equitable duties.

The SOC pleads that from 15 January 2021 Wilsons was expressly put on notice that Anderson’s conduct was in breach of a restraint clause and statutory and equitable duties owed to the plaintiffs. The SOC also pleads that Wilsons knowingly received commissions, fees, rebates or volume bonus payments attributable to the Known Clients when it had knowledge of Anderson’s and/or Fortis’s breaches.
Although claims for an account of profits and equitable damages were sought in the SOC, the plaintiffs made an election to pursue only the claim for equitable compensation from Wilsons.

Personalia

Apart from the parties to the proceedings, other people are referred to in these reasons. Their names are as follows. Capitalised titles are those which are given to them by their respective organisations.

(a) Damon Bensein (Bensein), Team Leader and Senior Wealth Advisor of EPW;

(b) Kelsi Blumson (Blumson), a Client Support Officer at Elston; (c) Nathalie Bunge-Krueger (Bunge-Krueger), Chief Administration Officer at Elston;

(d) Anthony Castellaro (Castellaro), Director and Senior Private Wealth Adviser at Elston;

(e) Gia Frino (Frino), a Wealth Management Assistant at Elston;

(f) Brooke Lye (Lye), Adviser Support Officer to Anderson at Elston and then team assistant to Anderson employed by Fortis;

(g) Andrew McKie (McKie), Co-founder and Executive Director of EGPL;

(h) Timothy McLaughlan (McLaughlan), a Strategy Adviser at Elston;

(i) Ben McNamara (McNamara), Chief Operating Officer of EPFS;

(j) Peter McVeigh (McVeigh), Executive Chairman of EGPL;

(k) Michael Papandrea (Papandrea), Anderson's wife’s cousin and also a referral partner of Elston;

(l) Andrew Rosetta (Rosetta), a Strategy Adviser at Elston;

(m) Richard Taylor (Taylor), an employee of EPW and then Fortis;

(n) Bruce Williams (Williams), Executive Director of EGPL;

(o) Paul Bryant (Bryant), Head of Private Wealth Advisory and Authorised Investment Manager at Wilsons;

(p) Brad Gale (Gale), Chief Executive Officer of Wilsons;

(q) Duncan Gamble (Gamble), Institutional Equity Adviser and board member of Wilsons;

(r) Mariam Shelbourne (Shelbourne), Head of Compliance, Risk and Legal at Wilsons;

(s) Lindsay Clement-Meehan (Clement-Meehan), Head of Communications and Public Relations at Wilsons;

(t) Tara Ross (Ross), General Manager Private Wealth Advisory at Wilsons;

(u) Dean Easterby (Easterby), Financial Adviser and Director of Parker Financial Services Pty Ltd; and

(v) Robert Neill (Neill), Chartered Accountant employed by Seaview Consulting Pty Ltd.

Facts

Timothy Anderson

From 2008 to 1 January 2021 Anderson was an employee of EPW pursuant to a series of contracts of employment.
From 2008 to 2011 Anderson was employed as a private wealth adviser at Elston’s Ballina office. In 2011, Anderson accepted an offer to transfer to Elston’s Canberra office.
From 2011 to 2021 Anderson was employed at Elston’s Canberra office. From 2011 to 2013 Anderson was the sole adviser at the Canberra office.
As the Canberra office grew and took on more clients, its staff size began to expand such that in December 2020 the Canberra office employed two private wealth advisers, two strategy advisers and four support staff.
From no later than 2013 Anderson was appointed team leader of the Canberra office and held that role until 31 December 2020.
In 2016 Wilsons was considering expanding into Canberra, Perth and Adelaide. Bryant was introduced to a number of potential recruits, including Anderson. Anderson ultimately indicated that he was not prepared to leave Elston.
In about September 2018 Elston implemented a requirement for its advisory staff to enter into renewed employment contracts annually. Anderson entered into employment contracts on:

(a) 24 July 2018;

(b) 15 July 2019; and

From at least 24 April 2013 Anderson was an “Authorised Representative” of EPFS.

Anderson contacts Wilsons

In June 2020 the executive committee of Elston resolved to attempt to sell the Canberra office. In the same month, Anderson commenced discussions with Bryant of Wilsons to investigate becoming an authorised representative of Wilsons. Anderson initially requested a telephone meeting. On 12 June 2020 Bryant had a telephone conversation with Anderson about Wilsons in general. Bryant understood from the conversation that Anderson was looking to purchase his client base from Elston, as that was possible under his employment contract, and that Anderson thought Elston would agree a fair price with him. Following this telephone conversation, Bryant provided Anderson with a confidentiality agreement and draft CAR agreement to review.
On 8 July 2020 Bryant and Anderson met for lunch in Brisbane to discuss further what Wilsons could offer Anderson. The lunch lasted approximately 90 minutes. So far as Bryant was concerned, the meeting was an introductory meeting to see whether Anderson would be a good fit for Wilsons. Bryant also discussed the opportunity to open an office in Canberra (under a CAR agreement). Bryant reported to senior people within Wilsons that he was “relatively confident” that he could get Anderson’s “team across as a CAR” and that the timing could be “September/October”.
On 3 August 2020 Bryant sent by email to Anderson details to log in to Wilsons’ client portal so that Anderson could access and review the quality of resources that Wilsons’ clients have access to.

Proposed sale of Elston’s Canberra office

In about August 2020 the shareholders of EGPL resolved to restructure EPW and, as part of that restructure, sell the Canberra office. On 18 August 2020 EGPL engaged Neill of Seaview Consulting to facilitate the sale of the Canberra office on behalf of EPW.
In around September 2020 Anderson and McKie had discussions regarding the strategic options available for the Elston Canberra office, which included its potential sale.
On 15 September 2020 a list of potential purchasers was proposed by Neill and settled on after some input from McKie. That input included McKie suggesting removing Wilsons from the list of potential purchasers.
By 25 September 2020 Neill had prepared a “Business Brief” and an “Information Memorandum” for circulation to interested parties. On the same day McKie and McVeigh attended a meeting with Anderson at Hotel Realm in Canberra. At this meeting:

(a) McKie explained that given Anderson’s position as the manager/team leader and a key stakeholder of the Canberra office, Elston wished to have him involved in the sale process;

(b) Anderson was presented with and signed a memorandum acknowledging the confidentiality of the information to which he was to become privy at the meeting;

(c) McKie presented a slideshow to Anderson which set out the rationale for, goals of, and possible outcomes for the sale, which included a potential bonus payment to Anderson of up to $1.44 million if the sale was successful;

(d) McKie outlined the four options for the future of the Canberra office, being:

(i) a third-party purchase, pursuant to which Anderson would remain the team leader of the Canberra office and receive a substantial bonus payment on the sale;

(ii) an adviser purchase of the Canberra office by the advisers there;

(iii) retaining and improving the Canberra office; or

(iv) “disfunction” [sic].

McKie informed Anderson that the approximate purchase price of the Canberra office was $6 million and that he could undertake the same process as any other bidder to make an offer. During the meeting, Anderson and McKie discussed a list of potential purchasers and a distribution list for the supply of information.
McKie noted his concern that Anderson may have a conflict of interest. Anderson informed McKie that he would handle any conflict of interest and would not interfere with the sale process.
Anderson also agreed to be a key point of contact and assist with the sale of the Canberra office.
On 28 September 2020 McKie introduced Anderson and Neill to one another by email. Anderson had indicated that he was interested in purchasing the Canberra office. Neill sent Anderson a copy of the Business Brief and Information Memorandum on that date.
On 12 October 2020 Clime Investment Management Ltd (Clime Investments) submitted a non-binding indicative offer to purchase the Canberra office. On 19 October 2020 Parker Financial Services Pty Ltd (Parker Financial) submitted a non-binding indicative offer to purchase the Canberra office. Both parties were given access to the due diligence materials in respect of the Canberra office on 29 October 2020.
On 14 October 2020 EPFS and EPW executed the Services Agreement: (see [8] above) whereby EPFS was to provide financial advisory services to Elston clients through an authorised representative employed by EPW.

Further dealings between Anderson and Wilsons

On 14 October 2020 Bryant sent an email to Anderson attaching some Wilsons research on asset allocation.
On 20 October 2020 Anderson called McKie and expressed his interest in purchasing the Canberra office. That did not go anywhere.
On 21 October 2020 Elston and Anderson signed a further employment agreement. Anderson's position was “Manager Canberra, Private Wealth Adviser". Bunge-Krueger said in a message that the employment agreement was needed for the data room (being prepared for the sale of the Canberra office).
On 25 October 2020 Anderson sent an email to Bryant saying that things were “moving quickly”, that he wanted to “progress [their] discussions to the next step” and that he would like to fly to Brisbane with Taylor to meet Bryant.
On 29 October 2020 Bryant emailed Anderson a Wilsons questionnaire. He explained:

Attached are the things we would need from a DD [due diligence] perspective. Obviously with the client file requirement it would be with all names etc removed and is more for our Compliance area to be able to get a feel for the type of advice you are providing. From our discussions it is going to be almost identical to what we do

The documents sought were in four categories, including:

(a) “Client Information” including the number of clients, the FUM and the revenue for retail and wholesale clients;

(b) “Advisor Information” including the current authorisation letter for each authorised representative and copies of academic transcripts;

(c) “Practice Governance” including details of complaints, “breach and incident register”, any regulator correspondence and other matters; and

(d) “Client File” which requested:

Two current client files which include: • Data collection documents • Risk profiling documents • Advice documentation • File notes • Client presentation documentation • FDS [fee disclosure statement] • Opt-In renewals
On 7 November 2020 Anderson responded to this email from Bryant and provided his personal email address.
On 5 November 2020 Bryant met Anderson and Taylor for lunch in Brisbane to discuss the opportunity to enter into a CAR arrangement. Bryant told Anderson that if he could not buy his clients, “we will want to make sure you don’t breach your contract”.
This was the first time Bryant met Taylor. Bryant did not recall a detailed discussion of Anderson or Taylor's obligations to Elston at that meeting, or a discussion about Elston trying to sell its Canberra office. He believed there was limited discussions of Anderson's post-employment restraints. The discussion was to the following effect:

Anderson or Taylor: We are going to get legal advice about when we can start. Bryant: That’s good. Make sure you follow the legal advice and follow your obligations so we don’t have any trouble at the end.

After 5 November 2020 Bryant understood from Anderson that Anderson was developing a plan to purchase clients from Elston.
Bryant gave evidence that he said words to the effect of:

I agree that clients come first. If you can buy them and there are no issues with that, it is great. If it doesn’t go that way, we will want to make sure that you don’t breach your contract. As a CAR, I don’t care if you bring in zero or one hundred clients. Our philosophy is that we want really high quality advisors, and we will back them to build a client base over time.

Potential sales do not proceed

By 9 November 2020 Clime Investments did not express further interest in participating in the sale of the Elston Canberra office.
On about 16 November 2020 Easterby of Parker Financial requested a meeting with Elston and, in particular, Anderson, in order to advance the possible purchase by Parker Financial.
On 20 November 2020 McKie, McVeigh and Anderson met with Easterby, Paul Cooke, Julian Farmer, and Sam Furler of Parker Financial at the Commonwealth Club. At the meeting, Anderson was observed by McKie to be withdrawn, aloof and did not engage with the representatives from Parker Financial. McVeigh provided examples including Anderson not responding seriously to queries from Parker Financial and Anderson reclining his chair and putting his hands behind his head. Mr Farmer made a comment to McKie and McVeigh to the effect that “well, you could tell he [Anderson] didn’t want to be here”. Neill received a message from McKie saying that the meeting had not gone well and that Anderson had “blown it up”.
Immediately after the Parker Financial meeting, McVeigh had a meeting with McKie and Papandrea. In that meeting, Papandrea indicated that he was worried about Anderson's state of mind.
On 23 November 2020 McKie called Easterby, who informed McKie that Parker Financial would be withdrawing the offer to purchase the business. Anderson’s conduct in the meeting at the Commonwealth Club, alongside the significant financial commitment, were cited as reasons why Parker felt no longer comfortable with the sale. Easterby noted that Anderson was a key person in the Canberra office and as such, there was too much key person risk for Parker Financial to proceed with the purchase.
McKie called McVeigh to inform him that Parker Financial would not be proceeding with the purchase.
Parker Financial subsequently withdrew their offer to purchase the Canberra office. The behaviour of Anderson at the 20 November meeting was, at the least, a significant reason for that decision. Elston meetings with Anderson 26-27 November
On 24 November 2020 Elston’s board had a meeting regarding Anderson’s behavior and the fact that Parker Financial had withdrawn from the purchase. Three directors resolved to travel to Canberra to meet with Anderson to determine what he wanted out of the process and the nature of his issues and concerns.
On 26 November 2020 McKie, McVeigh and Williams met with Anderson in Canberra to inform him that Parker Financial had withdrawn their bid and that Anderson’s conduct at the meeting was a reason why. The purpose of the meeting was to ascertain Anderson’s intention and what he wanted from that point on. Anderson said words to the effect of “well, I can’t control what others will think of me.” After McKie replied in words to the effect of saying “well, you can control the way you conduct yourself in meetings.” Anderson proceeded to “storm out” and did not return to the office for the rest of the day.

Decision not to sell the Canberra office

On 27 November 2020 in the afternoon, shortly after the meeting with Anderson, McKie, McVeigh and Williams met to discuss whether a continued sale process would yield a fair result. The meeting unanimously agreed that given Anderson was not “on board” with the sale, they could not risk going out to the market and getting a similarly poor result.
Elston took no further steps to sell the Canberra office after Anderson’s resignation.

Possible purchase by Anderson

On 15 December 2020 Anderson participated in a telephone meeting with McVeigh and discussed:

(a) Anderson possibly purchasing the Canberra office;

(b) that Anderson expected a discounted purchase price; and

McVeigh agreed to provide some additional information to Anderson concerning the purchase of the Canberra office.

On 16 December 2020 Anderson sent an email to McVeigh asking:

Will you be able to have a quasi IM of sorts to confirm your expectations as they relate to an adviser purchase of the Canberra office to me by tomorrow? I’d like to be able to give it some thought and get some independent advice and come back to you early January. The sooner I get your thoughts, the sooner I will come back to you with mine.

On 17 December 2020 Anderson sent a text message to McVeigh requesting information for an adviser purchase of the Canberra office. McVeigh responded that he had taken some time off and that Anderson should follow up with Williams. Anderson then took a screenshot of his conversation with McVeigh and sent it to Williams. Board decision to put Anderson on leave
After the 26 November meeting, because of Anderson’s behaviour, McVeigh sought legal advice from Suzanne Wishart of Murdoch Lawyers about Elston’s obligations to Anderson arising out of his concerns for Anderson’s wellbeing and mental health. Further information about Anderson’s behaviour and personal circumstances led McVeigh to conclude that Anderson should be put on leave for his own wellbeing and the morale of the Canberra office.
On 17 December 2020 McVeigh and Bunge-Krueger had a meeting with Ms Wishart in relation to Anderson.
The same day, McVeigh emailed Bunge-Krueger, McKie, Williams and Bensein with a “list of incidents that raise concern” about Anderson. McVeigh asked others to add to the list “so Nat can collate as reasons to put him on special leave”. The list identified a series of incidents between June and December 2020.
On 17 December 2020 Elston resolved to place Anderson on paid leave to allow him to take time to address his mental health and personal issues. That day, McKie, McVeigh, and Williams flew from Brisbane to Canberra to meet with Anderson and discuss his mental health issues but he was absent from the office.
On 18 December 2020 Bunge-Krueger sent an email to Anderson which attached a letter placing him on paid leave for a period of three months. Later that day, Bunge-Krueger sent the letter to Anderson by text message. Anderson responded to the email stating that he was currently on “personal/carers leave”, did not accept the direction to take leave and would be returning to work on 4 January 2021.
On 18 December 2020 Anderson was placed on special leave by EPW and locked out of the Elston computer systems. The locks to the Canberra office were changed on 20 December 2020.

Anderson’s actions after being placed on leave

After being placed on leave, Anderson called Bryant and said that the meeting with McKie went poorly, that most of his clients are family and friends and Elston wanted Anderson to pay a “ridiculous” amount for them. Anderson said that he was forced to take three months of mental health leave, and that he was getting some advice about what he could do.
Bryant said that “new recruits are encouraged to meet their contractual obligations to their previous employers and not breach them. I’m glad to hear you are getting legal advice”. Bryant noted that some advisers had recently left Wilsons for Shaw and Partners Limited and refused to work out their notice period.
On 18 December 2020 Anderson sought advice from Jennifer Wyborn of Clayton Utz as to the validity and enforceability of his employment restraint. On 22 December 2020 at Anderson's request, Ms Wyborn provided Anderson with a written advice. The advice set out her views, including on the enforceability of the restraints in Anderson’s contract of employment. The written advice included the following:
In summary, my view is that the restraint of trade clause in the Contract in not enforceble. However, you are nonetheless prevented from contacting clients of Elston as it would breach the confidentiality clause in the Contract as well as the Corporations Act 2001 (Cth). Further, if Elston is sold, they can assign these confidential information protections to the purchaser.
It would be a breach for you to use information you gained during your employment with Elston to contact Elston’s clients, directly or indirectly, even if Elston no longer has a physical presence in Canberra or if the clients choose to leave Elston. However, if you were to advertise your new business and the clients approached you, I do not consider that it would be a breach of the confidentiality clause or the Corporations Act 2001 (Cth) if you accepted their business.
On 20 December 2020 Anderson emailed Bryant explaining that he would resign on 4 January 2021:

Hi Mate, Here is what I was thinking in terms of timing; th • I am resigning on the 4 of January • I already have a dormant shelf company I could use as the CAR company – but may look to set up a new entity with my lawyer/accountant as soon as I resign. I would like to be in a position to start to call clients week starting 4 January if possible, to at least [let] them know I have left and will be in touch.

He referred to his assistant (Lye) returning from maternity leave on 18 January 2021 and being available to start with him immediately. Lye in fact started employment with him in February 2021. He refers to another casual assistant starting with him “at any stage”. The email continues:

As discussed, post my meeting with Peter Mcveigh last Tuesday to discuss the purchase of clients, I have subsequently had all my access to systems suspended and the office locks were changed today. As far as Elston are concerned they have put me on ‘special leave’ for 3 months on full pay to give me some personal time to help my mother who has some health issues to deal with. Why they then felt it necessary to change the locks and cut my access as well is quite laughable really..!! I’ve sought legal advice regarding the above from Clayton Utz and have been guided by them th – hence the resignation on the 4 of January. I have all my DD documents ready to send you tomorrow. I will email you the business plan too. I have also made contact with Dean Brumby and will start the PI process this week as well. Lots to do, but am looking forward to getting on with it ASAP. Drop me an email if you have any questions.

Bryant responded the next morning, suggesting that they speak later in the day.
On 21 December 2020 Bryant, Anderson and Taylor were due to meet and Gale (Chief Executive Officer of Wilsons) in person in Sydney. However, due to COVID-19 restrictions, they instead had a Zoom meeting. At that meeting, Anderson discussed resigning from EPW, the notice period and the restraints in his contractual agreement.
Either in the Zoom meeting or in a separate telephone call that day, Anderson told Gale that he had legal advice and a one-month notice period, that he intended to resign on 1 January 2021 and then could start the CAR arrangement from 1 February. Anderson told him that he could not contact his clients during the notice period but could accept approaches from them.
On 22 December 2020 Anderson forwarded Wilsons’ research to an Elston client, stating that the direct purchase of international shares might be something to consider when things were “up and running”.
On 31 December 2020 Anderson emailed Bryant, in which he distinguished between clients (meaning Elston clients) and “referral partners”, saying:

I’m resigning tomorrow as well. I’m also working with my lawyer to at least go to Elston and offer to purchase those clients that have been referred to me by one of my referral partners (Papandrea Partners).

Anderson resigns from Elston

On 1 January 2021 Anderson resigned from his employment with Elston. His email to Bensein, copied to Bunge-Krueger, provided:

Please be advised I hereby provide notice of resignation from employment. Given I am currently on personal leave, I trust you will be happy to pay me my 4 week notice period in lieu. I am happy to attend the office on Monday, 11 January to return all my property and documents.

Bryant understood that Anderson resigned from this date.
Rosetta and McLaughlan received a text message from Anderson stating that he had resigned.
McLaughlan received a text message from Anderson stating that he had resigned.
On 4 January 2021 Bensein instructed Elston staff to “get on the front foot with the top clients” to inform them of Anderson’s resignation and that it would be business as usual.
On 5 January 2021 Elston accepted Anderson’s resignation. The acknowledgement letter set out Anderson’s five-week notice period and that payment was to be made in lieu of that notice. Elston reminded Anderson of his obligations under his employment agreement. It also reminded Anderson of the “substantial monetary benefits” he stood receive under the Deferred Employee Entitlement Policy (DEEP) if he satisfied the requirements of a “good leaver” and outlined what was required of him to meet the good leaver criteria. This was an Elston policy which identified payments to be made to former employees who met certain criteria after their departure. Those criteria included not soliciting Elston clients or staff and not breaching the terms of their employment agreement. Under the terms of the DEEP, Anderson could receive a payment in excess of $700,000.

Elston’s actions after Anderson’s resignation

Elston Group’s board of directors instructed the Canberra office to contact all Elston clients that Anderson had contact with, to inform them that Anderson had resigned, and that the Canberra office would continue to provide financial services.
On 5 January 2021 McLaughlan began calling clients that Rosetta and Anderson jointly serviced. He and Rosetta kept an excel spreadsheet of these calls. McLaughlan also kept contemporaneous notes of these calls. Contact was made with approximately 75 to 80 Elston clients who were previously in contact with or advised by Anderson. As these calls involved explaining the resignation of Anderson, this led some clients to get in contact with Anderson. Anderson’s actions after resignation
On 7 January 2021 Anderson registered Fortis.
The same day Anderson sent an email to Bryant which responded to the request made by Bryant on 29 October 2020 for due diligence information see [49] above. The body of the email sent by Anderson provided:

Breakdown of client book • Most clients are Individual Managed Accounts. ~230 clients. There are some additional SMA clients on Hub 24 and Macquarie Wrap • All IMA clients above have accounts and HINS with UBS Securities Australia (market participant). Elston act as the Financial Intermediary • All IMA clients are STP via UBS and all have Macquarie Cash Management accounts Advisor Information • I will provide this information in a separate email Practice Governance • There have been no adviser complaints recorded in the last five years • There have been no adviser breaches or incidents in the last five years • There has been no regulator correspondence in the last five years • I will attach the advisor compliance/audit reports in a separate email • I consent to background and bankruptcy checks – presume I will need to sign something to give consent? • Trading activity overview to be sent in a separate email Client Files • I will forward these files in a separate email

A document with the filename “Corporate Authorised Representative DD Requirements.docx” was annexed. Within that document there was a table headed “Breakdown of client book” which was partially completed. It disclosed that there were 230 clients with $263 million in FUM and revenue of $2 million with brokerage fees of $115,000 and statement of advice fees of $147,000.
Elston client file notes were provided by email at 9pm. This document was wholly redacted in the exhibit because of its confidentiality. It is not clear whether or to what extent the contents were redacted when sent to Bryant.
An example of Elston’s fee disclosure statement and opt-in renewal notice was provided by email at 9:03pm on 7 January 2021. These were standard forms. On these documents, some details had been blacked out but the names of the sample clients remained.
An “Adviser Compliance Audit report” was provided at 9:04pm. This was a review prepared by a compliance consultancy for Elston in August 2020 relating to Anderson. It was 10 pages long. The review appeared to involve the completion of a questionnaire by Anderson, an interview and a file review involving assessment of file notes, statements of advice, reviews and files generally. It identified issues arising from the examination of those files.
An Elston risk assessment document was provided at 9:49pm. This was a document in which various multiple-choice items were ticked which allowed an assessment of the risk appetite of the client. The full names of the clients were redacted but their signatures and first names were not redacted.
An Elston statement of advice was provided at 9:51pm. This too was wholly redacted in the exhibit and it is not clear what redactions were made on the document when it was provided to Bryant.
Each of the documents provided on 7 January 2021 was a confidential document of Elston which, in the absence of consent, should not have remained in the possession of Anderson.
On 8 January 2021 McNamara requested that an external provider, Cyber Audit Team, undertake searches of Anderson’s IT system usage to “see if there is anything that correlates to sneaky removal of data/client details”. The outcome of these searches was that no such activity was identified.
On 8 January 2021 Anderson told Bryant the name of the company for the CAR agreement was Fortis Private Pty Ltd and noted that Taylor would be added as a director at an appropriate time. In a separate email he said that he had “sourced an office solution”.
On 9 January 2021 at 10:18am Anderson emailed Bryant with the subject, "RE: Fortis Private Pty Ltd (Canberra CAR)". The email referred to the fact that Taylor was resigning the next Monday and that Lye had already resigned. In relation to another assistant, Frino, he refers to her moving across at an appropriate time and “(just need to be careful on timing here)” although the reason for this is not explained. He refers to Taylor’s start date and his estimate that he would be “good to go” from mid-February. The email continues:

Oh - one thing, would it be possible to give some thought to the communication strategy upon commencement 1 February? I’ve already had plenty of calls inbound to me as the word has got out that I’ve resigned, however I have been extremely cautious about what I’ve said and communicated to date to anyone. My advice from Clayton Utz is that I will be able to accept clients if they call me/seek me out post 1 February, I just won’t be able to solicit them. Would you give some thought to how we st brand/communicate my move on the 1 of February (once board approved of course)? I was thinking something simple like some help from your marketing team to update my Linkedin page etc but I want to adhere to all the brand guidelines. I will also be posting something on the other social media platforms etc subject to your marketing departments approval. I also have a fair amount of FUM that is family/extended family, that will come across automatically from 1 Feb. Anyways – let me know if you have some thoughts re-marketing strategy from 1 Feb. I just want to make sure I do the right thing and that the communication goes out as soon as possible as it will make it easier for me to accept clients as they call up.

Bryant responded indicating that he would be working up a plan with Clement-Meehan and would have announcements ready for 1 February 2021 as well as giving Anderson help with updating LinkedIn (a professional network on the internet). At 10:33am Bryant emailed Clement-Meehan about Fortis becoming the Canberra CAR. One of the considerations that he pointed to in relation to messaging was that it was: “Important to get the message out that Tim has joined so his clients can see it and help him get business across.” He also asked Shelbourne to review any communications “prior to print”.
At 10:53am Bryant sent an email to Anderson asking him to populate a table with year one, year two and year three estimates for a variety of parameters including FUM and funds under advisement, average FUM per client, client size and number of clients. He had earlier explained that this was “[j]ust for our forecasting for Board approval”. The email also requested confirmation of where Anderson intended to operate from initially and then the estimated timeframe for setting up an office. It sought details of the commencement of Taylor and other staff.
At 11:24am Bryant collated the due diligence materials that had been sent to him by Anderson on 7 January 2020 and sent them to Wilsons’ compliance team to review with the comment, “I have gone through them and can’t see any issues, but please let me know if you think there are any issues, and [Shelbourne] please confirm with me that you are happy with everything as I will need to include confirmation that you are satisfied in the approval memo.”
Also on that day, Bryant updated Gale and Shawn Sanders (an employee of Wilsons) on progress with the CAR.
On 10 January 2021 Anderson sent to Bryant a completed version of the table previously provided by Bryant. This was in response to the email from Bryant the previous day. This email included estimated financial figures for year one, year two and year three of the proposed CAR arrangement. It also included other commentary about office location and the commencement of other staff. The significant parts of the email were as follows:

Hi PB, See below estimate. Its only a very rough estimate. Year 1 will be pretty accurate though. Year 1 Year 2 Year 3 #Investment Advisers EOY 2 3 4 #Financial Advisers EOY 1 2 2 #Associates EOY 1 1 #Assistants EOY 1 1 1 FUM (on platform) discretionary EOY $44,919,000 $110,000,000 $150,000,000 FUA (on platform) non-discretionary EOF $41,916,000 $60,000,000 $90,000,000 CHESS Only EOY Unknown Unknown Unknown Revenue (excl platform/admin fees) for $700,000 $1,700,000 $2,600,000 the 12 months Average FUM Client Size $1,100,000 $1,100,000 $1,100,000 Number of FUM Clients EOY 41 100 150 Average FUA Client Size $4,200,000 $2,000,000 $1,500,000 Number of FUA Clients EOY 10 30 60 % of FUM to be moved to Wilsons 50 60 60 reporting platform % of FUA to be moved to Wilsons 50 40 40 reporting platform … (re the numbers above, I feel I will have a better handle on things within the first 6 months). It is however my intention to strategically grow out the investment adviser numbers within the first 2 to 3 years to about 4, which I think can be suitably serviced by 2 planners. … Hope this all helps mate – please shoot me an email if you have any questions.

The source of the information in this table is not clear. The plaintiffs pointed to the precision of the figures as suggesting they came from documents improperly retained by Anderson. Wilsons, on the other hand, pointed to alternative explanations such as that the number of clients proposed in year one reflected 21 clients which were “ring-fenced” clients of Taylor plus a round figure of 20 other clients. The ring-fenced clients of Taylor were those he had brought to Elston on commencement of his employment with it and in relation to whom there was no contractual restraint on him. It is not possible to reach a conclusion that the number of clients in this table involved the misuse of confidential information as opposed to an estimate based upon Anderson’s knowledge of his previous client base and his assessment of the likelihood that they would move across to Wilsons. However, the figures for FUM, “FUA” (funds under advisement) and average client size are so specific that it is more probable than not that they arose, at least in part, from the use of retained confidential information of Elston.
On 11 January 2021 Taylor provided four weeks' notice of resignation to Elston.
On 11 January 2021 there was email communication between Shelbourne and Bryant in relation to due diligence matters.
On 12 January 2021 there was a further conversation between Bryant and Anderson about the fact that Papandrea, who had referred clients to Anderson, had been arrested for money laundering. The conversation satisfied Bryant that there was nothing in it that would stop Wilsons from proceeding with the CAR agreement. He sought Shelbourne’s confirmation that she agreed.
On 15 January 2021 McKie messaged Gamble, inviting him to have a chat about Wilsons’ intention to license Anderson and potentially Taylor to provide financial services. Gamble and McKie met at the Dicky Beach Surf Club on the Sunshine Coast. McKie made a reasonably contemporaneous note of the conversation on 17 January 2021 which was apparently only for internal purposes and this is likely to be the best evidence of the conversation. McKie explained the background in relation to Anderson and also what had happened with Papandrea. He explained Anderson’s involvement in the abortive sale process. He suggested that it was in Elston’s interest “to run it pretty hard legally” but asked whether it might be possible to work out a deal whereby Wilsons purchased the clients and thus took the money out of Anderson’s commissions.
McKie deposed that he has not heard from Gamble since. There is no evidence that he attempted to contact Gamble after 15 January 2021.
On 18 January 2021 Shelbourne raised a number of follow-up questions in relation to the due-diligence documents, which Anderson responded to on the same day. One of the requests from Shelbourne was for a complete client file but Bryant, when passing on the request to Anderson, said “as you have left the business and would not have access we do not need to get these”. Also on that day, Taylor sent a variety of documents to Bryant and Shelbourne for due diligence purposes. Anderson’s email to Bryant and Shelbourne provided a response to one of Shelbourne’s questions about the advice given to the clients whose risk profiling document and statement of advice had been disclosed: see [101]-[102] above. In doing so he disclosed, as “context” to the advice, information about the personal and financial circumstances of these Elston clients.

Entry into the CAR agreement

On 19 January 2021 Bryant sent Anderson and Taylor the CAR agreement for review and signing.
On Wednesday 20 January 2021 Elston paid Anderson five weeks’ pay in lieu of his notice period.
The same day, Bryant emailed the leadership group of Wilsons a copy of a presentation that he had prepared in relation to the Canberra CAR arrangement, in advance of a meeting the next day. This was a PowerPoint presentation which included financial forecasts for calendar years 2021, 2022 and 2023. The forecasts included number of advisers, funds under advice, revenue and profit contribution to Wilsons. In relation to the move from Elston, the presentation included:

Tim has attempted to buy his client base off Elston (as per a clause in their employment contracts) however this has been rejected by Elston with a payment requested for the business by Elston which was in Tim’s opinion completely unreasonable. Both Tim and Richard have provided 1 months notice period and will not be starting prior to that completing. Tim and Richard reviewed the various offerings in the Private Wealth space and believe Wilsons will provide the best outcomes for their clients and provide the best fit for them.

A more detailed breakdown of the funds under advice, revenue and profit contribution was provided later in the presentation. Under the heading “Due Diligence”, various matters are described under subheadings “Advisor Information”, “Practice Governance” and “Client File (names redacted)”. The document records that this information was reviewed by various people “with no issues identified”. A “Potential Issue” relating to the arrest of Papandrea who had referred clients to Anderson was then discussed. The presentation reports on the pros and cons of the proposal. In relation to the communication strategy, it says “Assistance to the Canberra team to establish their profiles on LinkedIn and any advertising in Canberra to reach out to previous clients.” It identifies that the next step was to seek board approval and complete documentation for a 1 February 2021 start date for the CAR office in Canberra.
That evening, Anderson arranged a zoom conference call on 29 January 2021 to introduce two of his clients from Elston, Clive and Lynlea Rodger (the Rodgers), to Gale.
On 21 January 2021 the Wilsons leadership group approved the Canberra CAR office proposal. That afternoon Shelbourne made arrangements to discuss with Anderson his contractual obligations and advice from Clayton Utz. She later emailed Clement-Meehan about “the comms plan in relation to the Cars” and said “We need to ensure the release of any comms does not conflict with the contractual obligations the two advisers have in relation to Elston their previous employer.”
On 21 January 2021 Anderson sent Taylor an email which included a draft email to McKie and McVeigh which he said had been sitting in his email drafts folder since 21 November 2020. In the draft email, he indicated a non-binding offer for the Canberra office of $4 million and explained the reasons for an offer at that level. The email was never sent to McKie or McVeigh.
On 22 January 2021 after having spoken with Anderson, Shelbourne emailed Bryant. That email included:

Have spoken to Tim and we talked about his obligations. He was happy to send me the advice from Clutz, I am in two minds about receiving the advice, so have held off on that for the time being. I have stated no activity (client meetings etc) until after his start date and advised that we need to be careful around the comms and timing.

On 25 January 2021 Taylor sent Anderson an email about the Business Plan.
On 28 January 2021 Anderson, on instruction from Shelbourne, told Wilsons he would like to reschedule a meeting with his clients the Rodgers until after the Wilsons Canberra office was up and running as he would like to be "sure I'm doing the right thing".
On 29 January 2021 Anderson told Clement-Meehan, Ross and Bryant that "The only clients that have sent Elston a termination request so far are my friends amd [sic] family" and that "I have been very cautious in my capacity as their adviser around changing their circumstances. However the ones that have sent off requests are friends and family [who] will have come across regardless."
On 1 February 2021 Anderson, on behalf of Fortis, signed a CAR Agreement with Wilsons. Anderson and Fortis commenced operating under that CAR Agreement on the same day.
Lye who had resigned her employment with EFPS on 6 January 2021 while on maternity leave, commenced working with Anderson and Taylor.
At no time prior to entering into the CAR Agreement did Wilsons review Anderson’s contract with Elston or written legal advice.

Events after entry into the CAR Agreement

On 1 February 2021 Anderson sent to Ross the Business Plan the same day that the CAR Agreement commenced.
The Business Plan was submitted by Anderson as one of the supporting documents for his Authorised Investment Manager applications. Authorised Investment Managers were able to operate “Managed Discretionary Investments”, a form of investment which allowed discretionary decisions to be made by the Authorised Investment Manager about investments.
The Business Plan included a history of the business, its geographical coverage and a description of the nature of the clients. It was based on the proposition that Anderson and Taylor were responsible for the establishment of the Canberra office “from 2013 for previous private advisory firm”. There was financial information from the “previous AFSL”. That included statements of the approximate normalised earnings before interest, taxes, depreciation and amortization (EBITDA), approximate FUM, approximate number of individual management accounts and a statement of the gross recurring professional advice fees. Graphs were included showing growth in the value of individually managed accounts and separately managed accounts. These graphs covered the period 2015 to 2020. It identified aggregate FUM as $283,243,237 as at December 2020. It provided a breakdown of the revenue as between advice fees, statements of advice and implementation fees and brokerage fees. It identified that the average client had approximately $1.4 million in FUM. It provided some profit and loss figures for after the set-up phase as well as estimated cash flow for the 2021 calendar year. It identified plans for additional employees and the timing of the engagement of those employees.
In slides entitled “Referral Partner Client List” and “Referral Partner Client List (Maybe Subject to Employment Restraint)” it included a three-column table which listed account codes, FUM and 12-month fees. This involved precise disclosure of what must have been Elston information, namely the account codes for these clients, the precise amount of FUM and a precise statement of the 12-month fees. At the end of the table, it indicated that these amounted to approximately $61 million with recurring advice fees for the past 12 months of approximately $706,000.
An additional slide entitled “Ring-Fenced Clients – No Restraint” identified that there were some 25 ring-fenced clients with FUM of $30 million.
Some of the more precise past performance figures in the Business Plan are likely to have been derived from the Information Memorandum or Business Brief prepared by Neill: see [38] above. For example:

(a) some of the figures on page eight of the Business Plan match those on page four of Elston’s Business Brief and page four of Elston’s information memorandum; and

(b) the fees set out on page 14 of the Business Plan match those on page four of the Elston Business Brief.

The Business Plan was one of the attachments to an email circulated to Wilsons “MDA Committee” on 2 February 2021. The MDA Committee was responsible for approving advisers to become AIMs. The committee included Ross, Bryant and Shelbourne. The other attachments to the email circulated to the members of the committee were “Application Form”, “Investment Philosophy”, a curriculum vitae, “Portfolio Performance Samples” and transcripts relating to his educational qualifications. Although Bryant was on the Committee and approved Ross’ email to its members, he did not read its attachments, including the Business Plan, at the time because he supported and approved Anderson based on his knowledge of him. Anderson was approved as an Authorised Investment Manager shortly after 2 February 2021.
On 2 February 2021 Bunge-Krueger wrote to Anderson outlining his continuing obligations to Elston, asserting that he had breached those obligations and requesting that he sign an undertaking.
In early February 2021 Anderson called Bryant to tell him that Elston was telling clients that Anderson had left and that this was good marketing. Bryant confirmed with Anderson that he was meeting his contractual obligations and not actively making calls to clients.
On 2 February 2021 Bryant met (via Zoom) with two of Anderson’s potential clients (who were, at the time, clients of Elston), the Rodgers. The meeting was organised by Anderson at the request of the Rodgers.
On 3 February 2021 the Elston Group's board of directors caused personnel in the Canberra office to issue a short statement to Elston clients notifying them of Anderson's resignation.
Bensein circulated a notice to Elston clients regarding Anderson’s resignation.
On 4 February 2021 Anderson posted an announcement on LinkedIn that he had commenced his professional relationship with Wilsons.
On 8 February 2021 Taylor was registered as an Authorised Representative of Wilsons, and Wilsons posted on its website an announcement that Anderson and Taylor were commencing at Wilsons, "spearheading the firm's activity in the ACT region".
In or about February or March 2021 Gamble had a conversation with Gale about McKie and provided McKie's phone number to Gale.
On 18 February 2021 Gale met with the Rodgers. The meeting was organised by Anderson at the request of the Rodgers.
On 22 February 2021 DW Fox Tucker (solicitors for Elston) wrote to Wilsons in relation to Anderson’s departure from Elston. The letter asserted that Anderson had breached his employment contract as well as equitable, fiduciary and statutory obligations. It made specific reference to Wilsons’ potential liability under the principles outlined in Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australian Friendly Society [2018] HCA 43; 265 CLR 1 (Foresters). On 23 February 2021, Shelbourne wrote to Bryant and Gale saying:

We had contemplated that Elston might engage lawyers. As you know Tim Anderson confirmed that he took advice from Clayton Utz and we agreed that his contract with Elston was a matter between himself and Elston.

On 5 March 2021 Anderson signed an undertaking (without admissions) that he would not provide services to, or solicit, persons that he knew to be clients of Elston as at the date of the undertaking until 19 March 2021.
Between 1 January 2021 and 5 March 2021 a number of Anderson’s former Elston clients terminated their engagement with Elston and subsequently became clients of Anderson and Fortis under their Wilsons CAR agreement. Those clients, and the dates on which they terminated their engagement with Elston, are set out in the plaintiffs’ closing submissions.
In the week commencing 9 March 2021 Gale and Bryant had a discussion to the following effect:

The Elston business is pretty complementary to ours. It looks to me like they are potentially looking to sell it, so I wonder whether you should call Andrew [McKie] to see what their intentions might be and that we may be interested in potentially buying it.

Bryant’s evidence was that he did not recall when he became aware that Elston had been trying to sell its Canberra office, but that he was definitely not aware when he met with Anderson on 5 November 2020 but was aware by 10 March 2021.
On or about 10 March 2021 Gale called McKie. The discussion did not result in any substantive development. Gale then spoke with Bryant and stated, "I spoke with Andrew McKie. He suggested we discuss any potential transaction with Elston after this litigation is all settled."

Proceedings commenced

On 15 April 2021 the Originating Claim was lodged.
On 28 April 2021 the court made orders by consent of the parties to extend Anderson’s undertaking of 5 March 2021 until 1 October 2021.

End of the relationship with Wilsons

Prior to the hearing, Fortis ceased to work with Wilsons under the CAR Agreement. Anderson then worked under the banner of Shaw and Partners.
Between 1 February 2021 and 31 December 2021, Wilsons received $44,657.89 in brokerage, and $496,300.87 in fees from the Known Clients. Of this amount, a large proportion was paid to Fortis under the terms of the CAR Agreement.
As at 27 January 2022 all of the Known Clients who had become clients of Wilsons had ceased to be clients of Wilsons, with the exception of the following:

(a) AFPA Super Pty Ltd;

(b) Mrs Betty Maddern and Mr Barry Maddern;

(d) Burleigh & Hanlon Pty Ltd;

(e) Peter Burleigh and Judy Burleigh;

(f) Marie P Wright Investments Pty Ltd; and

(g) Giuseppe Lumbaca.

The acquisition of Elston clients

The acquisition of Elston clients is identified by Elston as not only being a breach of contract but also evidence of the implementation of the plan which it says Anderson developed while employed by Elston.
44 persons or entities are identified in the list of Known Clients in the SOC which Anderson is alleged to have contacted following his resignation (SOC [37]). However, the plaintiffs’ closing submissions only made reference to Anderson’s contact with a subset of those persons or entities. Excluded from the Known Clients that were the subject of submissions were some of the entities which never became clients of Wilsons: (S.M.P Holdings Pty Ltd (SOC 37.2); Lachma Pty Ltd (SOC 37.38), Douglas Francis and Charlotte Wheeler (SOC 37.39), Sava Momcilovic (SOC 37.40) and Field Family Pty Ltd (SOC 37.42)). Also excluded were some entities that had been Taylor’s clients which were described as the “ring-fenced” clients which he was authorised under his contract of employment to take from Elston (Malcolm Carlin and Leslie Carlin, John Kirkwood and Lillian Kirkwood, Marie P Wright Investments Pty Ltd, Clarkies Pty Ltd, Douglas Francis and Charlotte Wheeler). Three clients who became Wilsons clients and were not ring-fenced clients (Peter Chamberlain and Tate Harris (Wolf Pact Investments Pty Ltd (SOC 37.43)), Tanya Lumbaca (SOC 37.35) and Giuseppe Lumbaca (SOC 37.36) were also not mentioned in the plaintiffs’ closing submissions.
Precisely why not all of the Known Clients were referred to in the plaintiffs’ submissions was not clear. It is likely to be because any contact that occurred was not productive of loss because the clients did not move, or because Taylor was entitled to take the clients if he left Elston. The three clients not referred to in the plaintiffs’ submissions who became Wilsons clients and were not ring-fenced clients are included in what appears below.
It is important to note that the principal complaint in relation to contact with clients was that made against Anderson, in relation to whom breach of contract and breach of statutory duty was alleged. So far as the claim against Wilsons is concerned, what is of significance is the extent to which the contact with and recruitment of those clients is shown to be a breach of Anderson’s fiduciary duty or involve the use of Elston’s confidential information. The relevant breaches would be:

(a) the implementation of a plan formulated prior to the cessation of employment to take the clients and business of Elston; or

(b) the use of wrongfully retained Elston information including contact information in order to implement that plan.

None of the clients or the persons behind those clients gave evidence. Elston’s contentions were based upon documentary records and inferences to be drawn from the circumstances. Each member of the subset of the Known Clients relied upon by the plaintiffs will be dealt with individually below. However, it is necessary to bear in mind that there are alternative possibilities for the circumstances in which each came to be a client of Wilsons.
First, the client may have been within the category of friends or family of Anderson. Although this category of persons was referred to in the evidence, the extent of this category was not explained in the evidence. It is therefore possible that a significant number of the clients who went to Wilsons were within that category. It is notable that on 29 January 2021 Anderson sent the email to Clement-Meehan, Ross and Bryant referred to at [131] above in which he stated that the only clients contacted were “friends and family”.
Similarly, on 3 February 2021 Taylor wrote to a representative of Judo Bank explaining the circumstances at the time and saying:

Since Tim’s departure from the prior AFSL on 1 Jan 2021, approximately $50m of FUM have requested that their services be terminated. A large minority of these clients are friends and family. The balance is pending to meeting his required post-employment obligations and restraints, to the extent they are legally valid, before joining our new practice.

Further, the category of persons who may be described as “friends” needs to be assessed in light of the fact that the business model involved the advisers having close, individualised contact with many of the clients in order to form relationships which established a bond between adviser and client likely to endure for the benefit of the business. That is, the category of “friends” may well include persons who had a relationship of “friendship” arising from the business connection. Thus, it is probably only friends who predated or were formed outside the context of Anderson’s Elston employment in relation to which the friendship might provide a basis for Anderson having their personal information or for being in contact with them other than for the promotion of the business of Elston.
Second, following Anderson’s departure, Elston, seeking to be “proactive”, contacted clients in order to tell them that Anderson had departed: see [94]. If those persons did not already know, then this may have been the trigger to make enquiries of Anderson if they wished to continue to have him responsible for the management of their money.
Third, Wilsons assisted to update Anderson’s LinkedIn profile and to give some publicity to the newly established presence of Wilsons in Canberra: see [147]-[148]. This may have been a source of knowledge to clients of Elston that Anderson had moved elsewhere.
Anderson’s contact with the subset of Known Clients relied upon by the plaintiffs is set out below.

Vik and Sumathi Sundar (V & S Sundar Pty Ltd (SOC 37.01))

On 18 January 2021 Sumathi Sundar sent an email to McLaughlan following a conversation the previous week (i.e. the week of 11-15 January 2021). The email included:

During our conversation last week, you had mentioned that you wanted me to sign a Form for Elston to continue managing my investments. After giving this much thought and in view of the Staff changes at Elston I have decided not to renew my engagement with Elston. Please could you suspend my Account and all fees until I provide instructions of where I will be transferring my Accounts too. Thank you for the services you rendered all these years. It was much appreciated.

There appears to have been an email from McLaughlan to which Ms Sundar responded on 22 January 2021. She repeated that she had been grateful for the services that she had provided and again requested the relevant form. On 22 January 2021 McLaughlan responded. The same day Blumson sent Ms Sundar a termination letter.
On 2 February 2021 Vik Sundar sent a text to Anderson asking him to call Ms Sundar. He did so.
On 11 February 2021 Anderson emailed Ms Sundar and asked her to request a copy of her statement of advice from Elston and provide it to Anderson. That is consistent with Anderson going through the proper channels to obtain that client’s specific confidential information.
On 24 February 2021 Anderson again requested that Ms Sundar provide a copy of her most recent statement of advice.
Email correspondence in early March 2021 indicates that Anderson was still setting up the relevant accounts for the Sundars.
The evidence is not sufficient to establish that Anderson used Elston’s confidential information to obtain the Sundars as clients of Wilsons.

Susan O'Connor (S.M.P Holdings Pty Ltd (SOC 37.02))

Communications on a messaging app between Anderson and Susan O’Connor show that he was in touch with her from an early stage. On 5 January Anderson thanked her for her message and said “I’ll be in touch”. On 21 January Anderson asked for her email address and said he was going to “send you some stuff now”. She provided her email address. He responded “Thanks Susie. It’s on your email now. … Tom Mclaughlin [sic] will call you and try amd [sic] talk you out of it. He has been very pushy with some of my other clients. Stand firm. I will look after you come 1 February”.
On 23 January the two exchanged messages as follows:

Anderson: Hi Susie, did you get a response? Anderson: From your email? Ms O’Connor: Yes. Have form to fill out. So will call Anderson: Ok. Give me a call Monday and I’ll help you fill it out.

On Wednesday 27 January 2021 Ms O’Connor emailed a termination letter which was dated 22 January 2021 to Blumson. The format of the letter is consistent with it having been pre-filled out by somebody at Elston and that is supported by the reference to an earlier email from Blumson on 22 January 2021.
On 18 February 2021 Anderson exchanged further messages with Ms O’Connor.
S.M.P Holdings Pty Ltd did not become a client of Wilsons.
The messaging app communications indicated that Anderson solicited Ms O’Connor and encouraged her to resist any attempts by Elston to retain her as a client from 5 January. It is not clear how Ms O’Connor came to get in contact with him or leave him the message to which he responded on 5 January.

Ferdinando and Lucia Lumbaca (Aggso Investments Pty Ltd (SOC 37.03) and Aggso Super Pty Ltd (SOC 37.04))

On 14 January 2021 Lucia Lumbaca wrote an email indicating that she and Ferdinando Lumbaca were aware that Anderson was no longer an employee of Elston and sought to have activity on all accounts suspended immediately. One minute after sending the email to Elston she forwarded a copy to Anderson saying “as discussed, please see below”, indicating that they had discussed the matter previously.
On 15 January 2021 an email was sent from Ferdinando Lumbaca confirming the instruction to suspend the accounts. On 15 January 2021 Anderson responded to a request from Lucia Lumbaca about a query from her accountant relevant to their self-managed superannuation fund.
McLaughlan responded by email on 20 January 2021 indicating a trading halt had been put on the account with Elston and indicating that they needed to either continue or terminate their Elston service. This was immediately forwarded to Anderson. On 21 January 2021 Anderson provided precise advice as to and how to terminate the relationship with Elston and asked them for a copy of the most recent comprehensive statement of advice. 20 minutes later Lucia Lumbaca emailed Anderson a draft of her letter to Elston and Anderson approved its contents.
On 25 January 2021 Blumson sent letters to initiate the termination of the investments with Elston that needed to be completed and returned. This email was sent following the conversation between one of the clients and McLaughlan.
On 27 January 2021 the letters were returned to Elston. Also on that day, Ferdinando Lumbaca emailed a query arising from his change of jobs to Anderson and Anderson responded the next day.
In March 2021 Anderson asked Lucia Lumbaca to follow up with McLaughlan as to whether or not there was a hold-up with transferring certain accounts to Wilsons.
By the end of April 2021, Anderson provided a summary of the clients’ financial position including some confidential information redacted from the exhibit. That evidence is consistent with the transfer process having been completed by that time.
Having regard to the terms of the communications on 14 January, although he did not initiate the contact, I infer that Anderson had a discussion with Ferdinando or Lucia Lumbaca. It is clear that he was assisting and thereby encouraging them to terminate their relationship with Elston and move to Wilsons.

Lara Hall (Lah Investments Pty Ltd (SOC 37.05) and Laras Super Pty Ltd (SOC 37.34))

On 7 January 2021 Anderson contacted the lawyer acting for Lara Hall in relation to a difficulty that had arisen because Papandrea (who had been charged by police) was the appointor of her trust. Anderson provided information as to who to contact at Elston to address the issue. This appears to have occurred because Anderson was a trusted point of contact for Ms Hall and was prepared to assist to the extent that he did by pointing Ms Hall’s lawyer in the right direction.
It is clear that McLaughlan had emailed Ms Hall giving her notice of Anderson’s resignation. She then consulted Anderson. Anderson advised her on 15 January 2021 to send an email to Elston asking them to suspend trading on her portfolios in terms that he had drafted. The email commences: “Hey Lara, Next step re Elston. Can you please copy and paste the below and send it in an email to Tim Mclaughlan (but delete my email, that is don’t forward it on). I’m uncomfortable with them trading on your account while I am not there”. The draft letter included as part of the email was addressed to McLaughlan and commenced: “Hi Tim [McLaughlan], Thanks for the update about Tim’s resignation…” These aspects of the email suggest that McLaughlan contacted Ms Hall advising of Anderson’s resignation. Either she contacted Anderson or Anderson contacted her subsequent to that. That led to Anderson encouraging her to transfer her business to Wilsons.
On 25 January 2021 Anderson sent an email to Lara Hall saying that “you can email Elston now and let them know you will be changing providers and request they send you a termination letter to complete”. He warned her that McLaughlan would try to talk her out of it and may be pushy. He advised her to be firm and told her that she did not need to disclose where she was going.
On 27 January 2021 Ms Hall emailed McLaughlan saying “As you know I have been considering my options with relation to my portfolios that are currently with Elston.” She said that she had made a decision “to move my portfolios to a different provider” and sought that a letter of termination be sent to her. McLaughlan responded with an email querying why she was moving and expressing concern “that someone may be encouraging you to be dishonest on their behalf”. He requested an opportunity to talk about alternatives that she was considering. He nevertheless indicated that he had arranged to have the termination letters prepared and sent to her. The same day, Blumson prepared the termination letter and sent them to Ms Hall for completion.
On 28 January 2021 Ms Hall emailed the termination documents to McLaughlan.
On 26 February 2021 Ms Hall met Anderson at his new office to sign documents to enable Wilsons to take over her accounts. A document in evidence recorded: “The decision to follow Tim was of my own initiation” and “This decision was purely mine and I sought Tim’s advice on how to lead me through this process. I was not coerced in any way.”

Lesley and Stephen De Lorenzo (De Lorenzo Super Pty Ltd (SOC 37.06))

On 28 January 2021 Stephen De Lorenzo emailed McLaughlan indicating that he and Lesley de Lorenzo wished to terminate the services of Elston as they would be using another provider and asking for a termination letter. McLaughlan replied in similar terms to the way in which he had replied to Ms Hall, expressing concern, asking who they were moving to and expressing sorrow that they had been put in this position “as a result of the conduct of others”.
On 29 January 2021 Ms De Lorenzo sent an email to Anderson forwarding McLaughlan’s email of 28 January. Anderson forwarded the email to Wilsons and stated that he “[had] been very cautious” when speaking to clients (see the quote at [167] above).
Later that day Anderson forwarded another email sent by McLaughlan to Ms De Lorenzo at 3.30pm which was a standard form email suggesting “some questions you can ask your new investment advice firm”. Anderson said:

This is what Elston are sending out to clients as they terminate. It’s not even official yet that I’m coming to Wilsons and it appears Elston are being somewhat presumptuous. This email got sent to a close family friend terminating Elston services. Just thought I would send it on for your comment.

This evidence does not indicate who initiated the contact with Anderson. It does not indicate the use of any confidential information. The terms of Anderson’s email forwarding McLaughlan’s email to Wilsons does indicate that the De Lorenzos fall into the category of “family and friends” referred to.

Joan Elsley (Lajc Pty Ltd (SOC 37.07), Inverness Securities Pty Ltd (SOC 37.08), Jelsley Pty Ltd (SOC 37.09) and Colly Blue Pastoral Co Pty Ltd (37.10))

On Wednesday, 6 January 2021 McLaughlan telephoned Joan Elsley and said that Anderson had resigned from Elston. Ms Elsley said that Anderson had been in touch with her “sometime last week” (the week of 28 December to 1 January). McLaughlan spoke to her about the transition to other senior investment advisers.
On Tuesday, 12 January 2021 McLaughlan sent an email to senior managers of Elston because Ms Elsley was the largest client of the business. It is clear from the terms of the email that he had delivered news of Anderson’s departure “last week” (i.e. the week of 4-8 January) and that she indicated that she was going to stay with Anderson. She said that Anderson told her that he was “still in limbo” and that he was going to call her next week to discuss. McLaughlan wished her all the best and indicated that if she needed anything she could call him.
On 15 January 2021 Anderson drafted an email for Ms Elsley to send to Elston for the purposes of making a withdrawal.
On 29 January 2021 Ms Elsley sent an email to Elston requesting termination letters be sent for all of her four portfolios as soon as possible.
On 1 February 2021 termination letters for each of the relevant entities were sent out to Ms Elsley.
On Tuesday 2 February 2021 Ms Elsley returned the signed termination letters.
On 10 February 2021 Anderson had dinner with Ms Elsley and her son. In an email exchange with Taylor and Lye later that evening, Anderson recorded that McLaughlan had made Ms Elsley “feel very uncomfortable” by referring to lawyers looking at Anderson’s behaviour and legal obligations. He also referred to McLaughlan making reference to Anderson having provided Ms Elsley with an Elston letter in circumstances which involved some breach of obligation.
Anderson had breakfast with Ms Elsley the next morning before travelling to Port Macquarie. He sent an email to her giving her an overview of the transition process including Elston finalising reports for her and Anderson preparing a statement of advice before opening an account and transferring the portfolios from Elston. Later that day Anderson, in an email to Taylor and Lye, referred to Ms Elsley’s support for the three of them and to the fact that these clients were “our foundation clients”. He suggested that they buy a “unique gift” for them when they are “onboarded”.
On 2 March 2021 Anderson visited Ms Elsley in northern New South Wales and obtained signatures on all account documents over breakfast.
On 8 March 2021 Ms Elsley sent a chatty email to Anderson which included “Can’t wait to do some trading!!”.
Ms Elsley (and the entities for which she was responsible) was Elston’s largest client. It is clear that Anderson spoke to her just before or at the time of his resignation. There is no evidence as to what he told her. It is, however, clear that Anderson took steps to facilitate Ms Elsley following him to Wilsons. Given Ms Elsley appears to be elderly, wealthy and to have had an excellent relationship with Anderson, it is not clear that he would need to do any soliciting having notified her that he was leaving Elston. Further, it has not been established that he used any confidential information to contact her.

Michael and Michelle Held (6-Pack Super Pty Ltd (SOC 37.11))

On 2 February 2021 at 6:00pm McLaughlan sent a standard form email with the subject “An important message for Canberra Clients” to Michael Held. At 8:50pm, as a result of this email, Mr Held called Anderson and had a conversation as follows:

Mr Held: Hi Mate, what the fuck is happening? Anderson: Hi Heldie, well effectively I have agreed to leave Elstons. Mr Held: Why, what happened? Anderson: Long story, but these things happen as you well know in business Mr Held: I hate to cut to the chase, but who’s going to look after me now? I don’t have any contact with anyone at Elstons other than you … Tim Mac was meant to call me back in July for some investment advice … and I’m still waiting. Then I receive a video message from to [sic] old fat guys sitting around a campfire trying to tell me why I should allow my financial planning to be left to just one consultant … when, over the 4yrs that’s exactly what Elstons did … leave me to just deal with you. Anderson: Mate, I can’t advise you either way Mr Held: Well, I’m moving my business mate, I am only at Elstons because we’re friends … no other reason. Not one person at Elston knows me, other than Natalie Luckner who coordinated my insurance … I could walk into the office in Canberra and not a sole [sic] would care who the hell I am. Sorry, but I am not leaving my hard-earned Super to unknown muppets. Anderson: I can’t advise you either way. It’s your Money and you need to do what you believe is best. Mr Held: So how do I leave them? What do I need to do? Anderson: If you have made the decision to leave, and that’s something you should take time to consider, then you will need to email Elstons and request termination of your SuperFund. Mr Held: OK, that’s easy then. Have you got a new gig yet? Where am I heading? Anderson: Yes mate, send me your personal email address and when it’s all set-up I can send you the paperwork you need to complete. Mr Held: OK Ando, how long does this all take? Anderson: Once you email them it shouldn’t take any longer than 4 weeks maximum. Mr Held: OK Mate, I gotta go. Hang Tough mate … looking forward to working with you again when this is all settled. Anderson: Yes, you too Heldie … look out form [sic] my email once I’m all organise [sic] and we can go from there. Mr Held: OK mate, seeya Anderson: Bye.

At 8:36pm Mr Held replied to McLaughlan saying: “Can you please send me a Termination letter immediately”.
Later that evening at 8:59pm Mr Held emailed Anderson saying: “Here we go mate – sign me up! Heldie”. At 9:01pm Anderson wrote to Mr Held saying: “Hi Mate, Here are my details!” His contact details were contained in the Wilsons signature block.
Late in the evening of 4 February 2021 Mr Held sent a follow-up email to McLaughlan noting that he had not had a response to his earlier email and that this “is precisely why I would like to Terminate my arrangements with Elston”. He requested again the termination document that he requested the day before. McLaughlan replied a few minutes later providing the termination document.
It may be inferred that it was completed and signed by Mr Held because on 29 March 2021 he emailed McLaughlan seeking to be updated on the status of his termination request, writing: “It has been almost 2 months and I am yet to receive any notification from you or Elstons.”
McLaughlan replied by email indicating that Elston was awaiting the redemption of a particular managed fund and that when a final report was ready it would be emailed to Mr Held.
It is very clear that Mr Held’s move to Wilsons was prompted by notification that Anderson had departed. Anderson merely responded to Mr Held’s communication and did not solicit his move from Elston to Wilsons.

Jackie Hansel (SOC 37.12)

On 5 February 2021 Jackie Hansel called Anderson. She did so because she had been called by a staff member from Elston informing her that Anderson no longer worked for the company. She called “to find out if he had retired, [was] creating his own company or employed with [a] new company”.
On 8 February 2021 Blumson responded to a request from Ms Hansel and emailed her the letter required to terminate her personal investment account.
Ms Hansel called Anderson again on 10 February enquiring about the letter of termination from Elston because she could not understand some of the questions and therefore asked for clarification.
She posted the letter to Elston sometime in mid-February.
On 22 March 2021 Ms Hansel sent another copy of the termination letter by post. At this stage she appears to have been served with a subpoena issued on behalf of Elston and complained about Elston involving clients in its internal disputes and conflicts. She requested no further correspondence from the company.
In April Ms Hansel was communicating again with Elston. On 14 April she asked for a termination letter to be printed off. The evidence does not disclose why this was necessary having regard to the form provided earlier. Blumson emailed her in response. She emailed back the completed termination form the same day.
It is apparent that Anderson did not initiate contact with her. Rather, Ms Hansel initiated contact with Anderson following a call from a staff member at Elston.

Peter Woodhouse and Angela Sallecchia (Woodsal Pty Ltd (SOC 37.13))

On 12 January 2021 Rosetta sent an email to Peter Woodhouse and Angela Sallecchia informing them that Anderson resigned from Elston about a week ago. He indicates that “myself and the team will be here to assist you both moving forward with any investment or strategic financial matters”. He suggested that it would be great to catch up for a coffee soon.
On 4 February 2021 Mr Woodhouse and Anderson exchanged the following text messages:

Woodhouse: Timmy. Where you go? You set up your own shop yet? You restrained from taking my smsf? Very pretty picture on the Facebook. [emoji] Anderson: hello my little Petey! Nope, you contacted me, you’re a close friend so I can look after u! I’ll email my new work address now Woodhouse: Fantastic. Send me over whatever i need to do to send it over.

On 5 February 2021, Anderson sent an email to Mr Woodhouse thanking him for getting in touch and indicating that he just needed to let Elston know that he would like to terminate their services and that they would email him a termination letter. Mr Woodhouse responded by sending a copy of what he had sent to Elston to Anderson. There is also a reference to “Mootorscooter stuff” to which Anderson responds shortly afterwards.
On 5 February 2021 Mr Woodhouse wrote to Rosetta letting him know that he would be terminating Elston’s services and asking him for a termination letter. The email indicates that “our relationship with Elston was because of Tim.” Mr Woodhouse wrote “You a nice guy - I like you - and you’re certainly more handsome than Tim… anyway”.
Rosetta responded to the message about termination saying “Devastated that you’re leaving. But I understand. You know, bromance and all”. He attached the termination request for signing.
Later that day Anderson sent to Mr Woodhouse a PDF document instructing him as follows:

Print this, you and Angela need to sign it and then scan it back to Andrew. In your email back to Elston let them know you want a CGT report in CSV file format too. Give me a shout if you have any qs.

On 8 February 2021 Mr Woodhouse sent Rosetta the signed termination letter. He also requested a capital gains tax (CGT) report in CSV file format.
On 9 February 2021 Rosetta emailed Mr Woodhouse asking about the registered address for the holdings and also attached a CGT report in CSV file format.
Mr Woodhouse then sent an email seeking advice from Anderson about Rosetta’s address query and Anderson responded the same day. Mr Woodhouse then forwarded Anderson the CGT documents sent to him by Rosetta.
On 13 February 2021 Anderson sent an email to Mr Woodhouse requesting that he tell Stuart Littlemore what he (Woodhouse) was doing and to ask him to contact Anderson if he would also like to move his portfolio across or “explore his options”.
On 19 March 2021 there was an exchange of emails between Mr Woodhouse and Anderson in relation to Anderson’s prospects of being able to keep looking after Mr Woodhouse’s superannuation fund having regard to the court proceedings. Anderson indicated that he was able to look after the clients that terminated before 5 March 2021, which included Mr Woodhouse, but not accept any more clients after that date for the time being.
Mr Woodhouse initiated the contact with Anderson. Following the initiation of contact and the request by Mr Woodhouse to bring the management of his superannuation fund across, Anderson gave instructions as to how that might occur.

Domenic and Mary Ann Alvaro (Dama Superannuation Pty Ltd (SOC 37.14))

On 15 January 2021 Domenic Alvaro emailed McLaughlan saying that he had “recently been made aware that Tim Anderson is no longer working at Elston”. He said “I’ll be reassessing my investment requirements with Elston in light of this as Tim is a family member”.
On 29 January 2021 McLaughlan sent the standard form email titled “Making an informed decision” which proposed questions that should be asked of a new investment advice firm.
On 7 February 2021 Mr Alvaro replied to the “Making an informed decision” email saying that he wanted to terminate Elston services and asking McLaughlan to prepare the relevant documents.
McLaughlan reported this to senior management of Elston (Bunge-Krueger, McNamara and McKie) the next day with the comment “Termination. This is a large account, but relatives of Ando.”
Anderson noted that he was meeting “the Alvaros” at 9am on 15 February 2021.
On 9 February 2021 at 10:31am termination letters were sent to Mr and Mary Ann Alvaro by Blumson.
On 15 February 2021 Mr Alvaro forwarded a scanned copy of the termination letter back to Blumson.
On 16 February 2021 Blumson enquired whether the account’s current registered address (which was at Elston) should be changed before she actioned the form. On 17 February 2021 Domenic Alvaro identified an alternative address.
On 17 February 2021 Anderson sent an email from his Wilsons account to the Alvaros telling them it was his new email address.
On 25 March 2021 Domenic Alvaro emailed Blumson seeking the revocation of Elston’s limited power of attorney in relation to a particular account. Blumson replied the same day saying that request had been actioned immediately.
The evidence does not disclose how the Alvaros became aware of Anderson’s departure. It does not establish that Anderson used any confidential information to contact them. They were understood by McLaughlan to fall into the category of relatives of Anderson.

Anthony Alvaro (AFPA Super Pty Ltd (SOC 37.29))

On 16 February 2021 Anderson sent separate emails to Anthony and Terri Alvaro in similar terms. The body of the email to Anthony Alvaro provided:

Thank you so much for reaching out to me. It was lovely to chat to you just now. I am still duty-bound to honour the terms of my post-employment restraints within my Elston contract so I’ve been encouraging my former clients to explore the full depth and relevance of Elston’s services prior to making a decision to change.

On 18 February 2021 Mr Alvaro emailed McLaughlan saying “I’ve come to the decision that I no longer wish to use Elston’s services. Can you please arrange termination as soon as possible.”
McLaughlan replied the same day, saying “I imagine you have sent this through in connection with Tim Anderson’s recent resignation. I am so sorry I haven’t called you in person to pass on this information and give you the confidence you obviously needed to continue to work with me.” The email seeks feedback on the decision to move and indicates that if things did not work out, that McLaughlan would be happy to help him again. McLaughlan indicated that he would send through the formal letters very soon.
Mr Alvaro responded in cordial terms saying that his intention was to explore other options and that if he is not satisfied with his next choice then he would be happy to discuss options with McLaughlan again.
Frino provided the termination letters later on 18 February 2021. A follow-up email was sent on 25 February 2021 asking Mr Alvaro to sign the document and fill in those parts of the form that were necessary and send it back. Anthony Alvaro returned a scanned copy of the completed letter that day.
On 30 March 2021 Mr Alvaro sent a follow-up email asking how the process was going. Frino responded the next day saying that Elston was still finalising the last step of the termination and that the termination report should be sent out to him shortly.
So far as the evidence discloses, Mr Alvaro made contact with Anderson. He fell under the category of persons who had a family connection with Anderson. There is no indication that Anderson misused any Elston confidential information.

Leyla Roberts (SOC 37.15)

On about 9 December 2020 there was a text message exchange between Anderson and Leyla Roberts as follows:

Anderson: Hi Leyla, I’ll give you a call tomorrow. Sorry just been sorting some stuff out with Mum. Tim. xx Ms Roberts: Okay thanks Tim. Leyla

On 31 December 2021 Anderson sent a text message saying: “Hi Leyla, give me a call when you get a sec”.
On 14 January 2021 Rosetta called Ms Roberts to inform her of Anderson’s resignation. She said Anderson had already told her about his resignation. She said that following her conversation with Anderson she was likely to terminate her engagement of Elston. Rosetta recorded:

She explained that Tim had been very helpful not only to her but to her mother who he looked after before Leyla. I asked if she had any questions or concerns she wanted me to address and Leyla pointedly asked what was going on here at Elston as if she had already been told some sort of story. I explained that nothing had changed from my perspective and that the business was operating as it always has. … I asked Leyla whether Tim had asked her to leave and Leyla denied this and said she was considering it on her own and Tim had not prompted this.… Leyla explained she would consider her options and let me know.”

On 15 January 2021 Rosetta sent a follow-up email thanking her for her time on the phone the day before, providing his contact details and reassuring her that it was business as usual at Elston and that Elston would like the opportunity to address any concerns she might have.
On 5 February 2021 at 2:42pm Ms Roberts sent a text message to Anderson saying: “Hi Tim. I forgot to ask for your new email address.” He responded by text message providing his Wilsons email address. This exchange is consistent with him having spoken to her sometime prior to her text message.
The same day Ms Roberts at 3:16pm wrote to Rosetta saying she had decided to terminate her agreement with Elston, thanking Elston for its ongoing services to herself and her mother and in particular the personal attention provided by Anderson. It requested a notice of termination and updated report. She immediately forwarded a copy of that letter to Anderson, who replied “Nice one! I’ll give you a call and let you know when I am up seeing Mum.”
Rosetta reported the termination to Bunge-Krueger without comment.
Blumson provided Ms Roberts with the termination letter by email on 8 February 2021.
On the evening of 9 February 2021 Ms Roberts sent a text message to Anderson seeking his assistance with filling out the termination documentation from Rosetta. Anderson indicated that he would call her in the morning. On 14 February 2021 he arranged to meet her in person at her house on 22 February 2021 when he was “coming up to see Mum”. On 17 February 2021 as part of a text message exchange she said:

Thanks Tim. Best thing I ever did financially was meeting up with you. You explain everything so well. Also, I really meant what I said to Andrew in my email a few weeks ago.

Anderson asked Ms Roberts to speak to him just before he resigned. It is likely that he explained some of the reasons for his resignation. It is not clear what else was said. It is likely that she received some advice from Anderson about the form of her 5 February email terminating the agreement with Elston. There is no evidence of active solicitation. It is clear, however, that the relationship between the two was a good one. There is no evidence that Anderson misused any Elston confidential information.

Dennis and Garie Greenwood (DG Greenwood Holdings Pty Ltd (SOC 37.16))

On 4 February 2021, Anderson sent an email to Dennis and Garie Greenwood which contained a draft email to Elston terminating their services. The email provided:

Hi Dennis and Garie, Thanks for getting in contact. I really appreciate your support. Here is what to send to Elston; [draft email set out along with McLaughlan’s email address]

On 8 February Frino sent the termination letters to the Greenwoods. Ms Greenwood then emailed Anderson asking for advice on which boxes should be ticked on the forms. The same afternoon, Anderson said he would call in the morning to assist with filling out the form. On 9 February he sent an email describing which boxes should be ticked and indicating that he would “get working on some paperwork at my end”.
On 14 February Anderson wrote to the Greenwoods, thanking them for their support and describing the transition process “now that Elston are preparing their final report”. He confirmed that the investment management fees would be less than they were previously.
So long as there is no basis for discounting the indication in the email of 4 February that the Greenwoods had initiated contact with Anderson, then it must be concluded that the Greenwoods contacted Anderson rather than the other way round. There is no evidence of any misuse of confidential information. Given that there is no evidence of the content of the conversation prior to 4 February, it cannot be said that Anderson solicited the Greenwoods as clients although he did facilitate their departure from Elston once they indicated an intention to leave. Judi and Peter Burleigh ((SOC 37.18) and Burleigh & Hanlon Pty Ltd (SOC 37.17))
On 7 January McLaughlan had a phone call with Judi Burleigh. She thought the call was from Anderson and McLaughlan concluded from her tone of voice and what she said that Anderson had spoken with her that day. He also drew the conclusion that Anderson had asked her not to tell McLaughlan that he had spoken to her. He passed on the news that Anderson had left Elston.
On 3 February 2021 at 5pm McLaughlan had sent the email entitled “An important message for our Canberra clients”. This was the email which specifically addressed Anderson’s departure and included some short videos from McKie and Williams. Ms Burleigh forwarded the email to Anderson at 9:32pm with the comment: “Fyi. They are sounding worried”.
On 4 February 2021 Ms Burleigh replied to McLaughlan’s email saying as follows:

Thank you for this update. Peter and I have considered our situation and we have decided to terminate our relationship with Elston. We came to Elston because of our association with Tim Anderson and in these changed circumstances, we will make a change. In doing so, we would like you to know that we have appreciated your services to us and we wish you and your family well in the future. This decision is final and we would appreciate you sending the termination letter so we can finalise these arrangements?

She forwarded a copy of her email to Anderson who responded saying “Brilliant Judi. Give me a shout when you are ready”.
On 5 February 2021 McLaughlan replied saying that he was sad to receive the news and wished he had a chance to give her a second perspective. He asked for any feedback as to why she made the decision. He attached some questions that she could ask Anderson. He indicated that if things did not work out then he would be more than happy to help. He indicated that the termination letters would be sent through soon.
On 8 February 2021 Frino sent out the termination letters for completion.
On 15 February 2021 the signed termination letters were returned. By email on 17 February 2021 Frino indicated they would be actioned.
On 25 March 2021 Ms Burleigh wrote seeking the revocation of Elston’s authority on two particular accounts with Macquarie Bank. That request was actioned the same day.
Anderson probably spoke to her before 7 January. There is no evidence as to what he said. There is no evidence about use of any confidential information. Rather, as indicated in the email of 4 February 2021, the Burleighs appear to have had some pre-Elston connection with Anderson.

Betty Maddern and Barry Maddern (SOC 37.19 and 37.40)

Judy Purbrick had the power of attorney in relation to the management of the Maddern assets. McLaughlan had a telephone conversation with her on 4 February 2021. He explained that Anderson had resigned and that Anderson had not disclosed where he was going to. He said that he wished to introduce them to a new investment adviser. She said that she would need to discuss that with her husband and confirm. He also indicated that he would be travelling to Melbourne and it would be good to arrange a meeting.
The same day he sent a follow-up email indicating that Anderson had left quite suddenly and that he wanted to be there to continue to help. He reiterated that he wished to introduce her to a new investment adviser who could continue to ensure that the two portfolios were looked after. He indicated that he was going to Melbourne from 22 to 24 February and sought to arrange a time when he could travel to see her.
On 6 February 2021 Ms Purbrick responded to an email from McLaughlan thanking him for his email and indicating that she had decided to move “Betty’s portfolio” across to Anderson. She requested the documents that she had to sign.
At 9:15am on 8 February 2021 McLaughlan forwarded the email of 6 February to McNamara, Bunge-Krueger and McKie.
McLaughlan replied to Ms Purbrick. He said he was sorry that Elston could not continue to assist her. He provided some questions to ask Anderson. He indicated that if things did not work out with Anderson then he would be happy to help her. He said he would send through the termination letter soon.
Blumson at Elston sent through the termination letter on 9 February 2021.
Barry Maddern returned the termination letter signed by himself and Ms Purbrick on 16 February 2021.
There is no evidence that Anderson contacted these clients prior to them being contacted by McLaughlan. Given the lack of evidence that they were told where he was going to, it is likely that they had some communication with Anderson sufficient to indicate that he was remaining in business with another entity. However, there is no information as to who initiated that contact or what was said. There is no evidence of any use of any confidential information.

Shawn Sheridan (T & S Sheridan Pty Ltd (SOC 37.20))

On 9 January 2020 Shawn Sheridan sent a message to Anderson saying that she had heard from McLaughlan that he had left Elston. The message also asked after his family, in particular his mother.
On about 9 February 2021 Anderson and Taylor met with Ms Sheridan in person.
On 9 February 2021 Anderson emailed Ms Sheridan providing his Wilsons contact details. Taylor emailed Ms Sheridan on 10 February 2021 thanking her for her hospitality and also providing his contact details.
On 9 February 2021 at 6:39pm Ms Sheridan emailed McLaughlan asking to have certain units sold in order to complete the purchase of an investment property.
On 10 February 2021 at 8:32am Ms Sheridan sent through an email which provided:

Please find attached a notice of termination of our account with Elston; thank you for your assistance over the past two years.

The document attached did not have the account number or name printed on it as would have been the case had the document been prepared by Elston and sent out.
On 10 February 2021 McLaughlan called Ms Sheridan and asked her what was going on. He asked her where the request for termination had come from. He referred to the fact that he had evidence of other clients who Anderson had contacted in breach of his contractual employment obligations and asked to be dishonest about the contact they had received from him. He described Ms Sheridan as having “dodged answering” whether she had heard from Anderson. He quizzed her about the request to sell down specific investments. He also raised the fact that the termination letter was “an internal Elston document”. He asked who had given it to her. She declined to tell him.
It is more likely than not that the document was provided by one of the staff at the new Wilsons office.
The evidence is that Ms Sheridan initiated the contact with Anderson after having learned that he was departing Elston. Apart from that, it was only in February that steps were taken to terminate the relationship with Elston. If the termination form is confidential information, then it is likely that someone in the Canberra office of Wilsons obtained it without permission from Elston and provided it to Ms Sheridan.

Loral, Susan and Juanita Hamparsum (SOC 37.23, SOC 37.42 and Valvesty Pty Ltd (SOC 37.24))

Loral and Susan Hamparsum are sisters. Juanita is Loral Hamparsum’s daughter. Valvesty Pty Ltd is Juanita’s personal self-managed superannuation fund.
On 14 January 2021 McLaughlan spoke to Juanita Hamparsum. He told her that Anderson had resigned. She told him that she had spoken to Anderson about her displeasure with Elston in early December. She asked whether Taylor was still at Elston. She was told he was still on leave. She asked whether Lye was still there and was told that she was on maternity leave but due to come back soon. The conversation appeared to take a turn for the worse when each accused the other of not telling them everything. McLaughlan said that he had plenty of evidence that Anderson had been in direct contact with clients. She said she had not heard from him since early January. McLaughlan said that he wished to introduce her to a new investment adviser, Castellaro. McLaughlan described Juanita’s tone in the phone call as “very assertive and a little suspicious”.
On 28 January 2021 Anderson sent some Wilsons research to Juanita Hamparsum and commented: “Some interesting investment ideas outside the large cap stuff which is th refreshing” and “See you on the 9 ”.
On 1 and 2 February 2021 Anderson spoke to Susan Hamparsum. She emailed him on 2 February 2021 seeking a proposal on how he thought her funds would be best managed to grow, what services he offered and the fees charged. She set out some details of her current and future portfolio.
On 3 February 2021 Anderson emailed Susan Hamparsum thanking her for “reaching out” and suggesting that he email a client profile form to her and discuss it over the phone.
On 8 February 2021 Anderson, who was on the road in western New South Wales, emailed Susan Hamparsum saying that he would send her an email with an overview of his services. On 10 February he emailed her again whilst on the road saying that he would get that for her the next day. She replied thanking him and saying “hope you had a successful sales trip to meet old and new clients”.
On 9 February 2021 Anderson met with Juanita Hamparsum in person. She said she would be moving “all the Hamparsum family stuff” across to Wilsons.
On 11 February 2021 at 2:46pm Anderson emailed Juanita and Loral Hamparsum. His email provided: “Thank you so much for your time and your support this week Juanita. Here is the process to transition the portfolios.” It then set out a series of dot points which included advising Elston that they were ceasing their relationship and requesting that Elston email termination letters. It also described the balance of the transition process. He said he would love to look after “Sarah” and “Ben” as well.
At 3:03pm he sent another email which warned Loral and Juanita Hamparsum to expect a call from Elston. He said he had been hearing that Elston was trying to unsettle clients by being aggressive and trying to discuss his restraint obligations. He said he had sought advice from Clayton Utz and “sat out” his notice period in accordance with the obligations in his contract. He reminded them that there were no termination fees to make the change or any fees to transfer the portfolios. He also told them there were no lock-in arrangements with Wilsons.

As I’ve not heard from you since our meeting on 5 February, I can only assume you have no interest in continuing as my financial advisor. I shall be moving my business to another provider. I was horrified to receive an email (providing Elston Fee Disclosure Statement paid in 2020) this week (26 February), still stating Tim Anderson was my adviser considering he left Elston’s service at the end of last year/beginning of this year. I appreciate it’s an automatic email, but it’s illegal to list Tim as your authorised representative after he has left the company.

On 1 March 2020 Castellaro acknowledged her letter. He apologised for the disruption over the past few weeks saying “As I hope you can appreciate we are dealing with this disruption as best we can and getting to as many clients as possible in a short period of time.” He said that a termination letter will be forwarded in due course.
On 5 March 2021 Anderson emailed Susan Hamparsum asking whether she had notified Elston about her intention.
On 11 March 2021 Susan Hamparsum followed up with Anderson on the forms necessary to change her adviser to Wilsons.
On 17 March 2021 Lye sent a series of application documents to Susan Hamparsum.
On 17 March 2021 Susan Hamparsum sent to Anderson a copy of her letter to Elston on 28 February 2021.
On 23 March 2021 there was further email communication from Wilsons to Susan Hamparsum in relation to the transfer of accounts.
There was some contact between Anderson and Juanita Hamparsum in early January 2021. The nature of that contact is not clear. The terms of the conversation on 14 January do not indicate that she was aware of Anderson’s departure prior to McLaughlan’s call. I infer that Loral and Susan Hamparsum were informed of Anderson’s departure by Juanita Hamparsum after McLaughlan’s phone call. The evidence does not establish any use of Elston confidential information by Anderson to contact the Hamparsums.

Dianne and Warren Walker (D & W Walker Super Pty Ltd (SOC 37.26)

On 15 February 2021 Anderson had an event in his calendar described as “Di and Warren Walker Sign Up”. It is not clear whether this was a physical meeting, but it was scheduled for one hour with attendees being Anderson, Taylor and Lye.
On 16 February 2021 Dianne Walker emailed Rosetta and said that she and Warren Walker had decided to contact Anderson and transfer their self-managed superannuation fund to him. She asked Rosetta to advise what was needed.
On 17 February 2021 Blumson sent through the required termination letter for completion.
On 29 March 2021 Blumson emailed Ms Walker saying that Elston had not yet received the completed termination letter. On 31 March 2021 Ms Walker sent through another copy of the termination document. Blumson responded checking whether she wished to add a new address on the form that she had completed. Ms Walker responded shortly afterwards.
It is not clear what transactions occurred on 15 February. However, at this stage the clients are likely to have been well aware that Anderson had left because of the notification from Elston. The email of 16 February is in terms which suggest they had not yet had contact with Anderson. This might have been true or it might have been something said in order to hide the true position. It is simply not clear. It is not clear who initiated the contact. There is no evidence that any confidential information was used in obtaining the Walkers as clients for Wilsons.

Jeff and Trish Carolan (Narolac Superannuation Pty Ltd (SOC 37.28))

Anderson met with Trish Carolan at some stage in the week of 8-12 February 2021. He sent her a message which said:

Hi Trish it was nice to see [you] this week. I arrived home late Friday and have been spending the weekend with Tina and the kids. I’ll email you tonight with some info to digest before I give you and Jeff a call tomorrow at 3pm. Tim.

On 14 February 2021 Anderson sent to Ms Carolan an outline of Wilsons services. He provided some suggestions as to the approach that might be taken in relation to managing the portfolio. He identified the things that they may wish to do in terminating Elston’s services and identified that they should say if they did not want to receive a call from Elston “as they have been exceptionally aggressive and pushy with some of my clients upon termination”. The email sought the opportunity to provide services to them. He indicated that he would talk to them again at 3pm on 15 February, a Monday.
On 16 February 2021 Anderson sent an email to Ms Carolan outlining the fees that would be charged on the portfolio. She replied later that day suggesting that Wilsons should accept a lower figure given the size of the portfolio. Anderson emailed Taylor saying “I think we can do this for Trish and Jeff”. Taylor responded supporting agreement to that fee level.
On 17 February 2021 Anderson agreed to her pricing proposal and provided her instructions to email Elston and request a termination form. He also encouraged her to request Elston not contact her, saying “otherwise you will receive an aggressive call as is their strategy”.
On 18 February 2021 Ms Carolan emailed McLaughlan and Castellaro saying that they no longer required Elston services. The email indicated that they were transferring to Wilsons and asked Elston to send the appropriate termination letter. The email indicated that they did not wish to be contacted in relation to their decision and also cancelled an appointment that had been scheduled for 2 March 2021.
Frino responded by email that afternoon providing the termination letters for completion. In a subsequent email she also provided the latest statement of advice. Ms Carolan then forwarded that on to Anderson.
On 22 February 2021 Ms Carolan returned the signed letter of termination, apologising for the delay because she had been away for a few days. Frino indicated she would then process the termination.
On 2 March 2021 Anderson had a calendar entry for lunch in Narrabri with the Carolans.
The earliest evidence of contact between the Carolans and Anderson is early February 2021. This is well after the clients are likely to have been made aware by Elston of Anderson’s departure. There is no evidence as to who initiated the contact, however, Anderson clearly made an effort to meet Ms Carolan on his client visiting trip around New South Wales. During that trip, he also met with Ms Sheridan, Ms Elsley and Juanita Hamparsum. The evidence does not establish any misuse of confidential information. It does provide evidence that he was soliciting the clients even if he did not initiate the contact after his resignation.

Roy and Christine Lustri (Addajamani Pty Ltd (SOC 37.31))

On 19 February 2021 Anderson had a calendar entry for a meeting with Roy and Christine Lustri in the suburb in which they lived. Having regard to the email described below, it is likely that this meeting did occur.
On 21 February 2021 the Lustris emailed Rosetta saying:

We have made contact with Tim Anderson trying to understand what has happened. We initially joined Elston many years ago under the guidance of Tim and were very comfortable with that arrangement. At our stage of life we do not need disruption and uncertainty. We have thought long and hard and made a decision but please understand this is not personal. Therefore we wish to advise we would like to terminate the services with Elston, EP Financial Services Pty Ltd, effective immediately.

On 22 February 2021, Anderson emailed the Lustris saying “Thanks for making contact. It was great to catch up.” He provided his email address, indicated that his mobile number was the same and asked whether 5 March was an appropriate time to come and see them both again.
On 23 February 2021 the Lustris indicated that 5 March would be suitable.
On 23 February 2021 Blumson provided the Lustris with a letter of termination for completion.
On 24 February 2021 Anderson indicated that at the meeting on 5 March he would bring some documents out for them to sign.
On 26 February 2021 Ms Lustri chased up a summary of the schedule of fees that he had promised them. Later that day Anderson emailed Ms Lustri a document outlining those fees.
On 7 March 2021 Ms Lustri sent back the signed letter of termination to Elston.
The evidence in the emails of 21 and 22 February 2021 suggests that the Lustris contacted Anderson after they became aware that he had left Elston. They appear to have been elderly and keen to maintain a relationship with Anderson. There is no evidence of use of confidential information by Anderson. While he seems to have solicited their business, the evidence indicates that this was at their instigation.

Clive and Lynlea Rodger (Padze Directors Super Pty Ltd (SOC 37.30), Capital Consulting Services Pty Ltd (SOC 37.32) and Clynrod Foundation Pty Ltd (SOC 37,33))

On 22 December 2020 Anderson emailed Mr Rodger from his personal email address forwarding an extract from the Eureka Report but also reporting on his meeting with Gale. He said:

Fantastic meeting with Brad Gale yesterday. Lots of capability within the firm and under Brad’s conservative leadership the strategic direction of the business is impressive. They are a private business and there is no pressure to push a corporate agenda. They just simply want to provide infrastructure for advisers to provide interesting investment solutions for clients, with some flexibility and autonomy. They will allow me to own the business via a Corporate Authorised Representative model, which is something Elston would never entertain. The [sic] has created friction within the existing business for established advisers, as Elston have continued to remove control from advisers and have wanted to push their own in house investment solutions on to clients. Wilsons also have a fantastic research team and investment committee headed up by David Cassidy (ex-head of UBS).

He provided dummy login details for the Wilsons site and suggested that Mr Rodger take a look. He concluded by saying “I’ll be in touch”.
Anderson sent another email the same day noting that Wilsons had “the ability for clients to purchase direct international shares too. Might be something to consider when things are up and running.”
In January 2021 Anderson asked Bryant to meet with the Rogders. In doing so he described them as “friends and former clients” and said to Bryant that they wanted to meet with someone from Wilsons to understand more about Wilsons before deciding if they wanted to become clients.
On 6 January 2021 McLaughlan spoke to Mr Rodger and told him that Anderson had resigned. Rodger said that “he had heard rumours”. McLaughlan told him that there would be a transition to a new investment adviser within Elston. They then discussed the issue involving Papandrea. Mr Rodger said that he would need a meeting with Elston to discuss the change resulting from the departure of Anderson. They agreed to have a meeting the following week.
On 19 January 2021 Anderson emailed Gale and Bryant asking if it was possible for them to have a conference call with the Rodgers. Anderson indicated that he also looked after their children’s portfolios as well as a number of referred friends and family. He said that they had moved from JBWere, another financial advice service in Canberra, to Macquarie before finally moving to Anderson at Elston.
It is apparent that Gale agreed and on 20 January 2021 a conference call was booked in for 29 January 2021. However, on 28 January 2021 Anderson postponed the meeting on instruction from Shelbourne. This was to ensure that it was undertaken once Wilsons Canberra was officially up and running. Anderson said “Just want to make sure I’m doing the right thing, so it’s best we wait until next week sometime.” The meeting was then booked in for 2 February 2021.
On 2 February Anderson arranged to introduce the Rogders to Bryant and then to leave them to discuss matters with Bryant. He said of them: “They are lovely people and I have looked after them for many years. They are now family friends. They are both retired.” Bryant met with the Rodgers and discussed the Wilsons ownership structure and investment approach. There was no substantive discussion of Elston at that meeting and no discussion of the Rodgers finances or portfolio.
On 16 February 2016 Mr Rogder emailed McLaughlan instructing him to make a particular transfer of funds.
The same day, Anderson sent an email providing some background information to Gale for a meeting with the Rodgers on 18 February 2021.
On 17 February 2021 Anderson made further arrangements for the meeting between the Rodgers and Gale at the Sydney office for the purposes of soliciting their business.

The reasons included considerably better performance, the quality of the research/analysis team, the strategic advice of David Cassidy, the competence of Paul Bryant and his advisory team, and your own leadership and management of the company. We were impressed with what Wilson could offer, including access to judiciously chosen IPO’s.

Gale sought Shelbourne’s advice about this request and suggested that Bryant call the Rodgers.
On 25 March 2021 Mr Rodger wrote to Castellaro in relation to the removal of powers of attorney on particular accounts. Castellaro responded, updating Mr Rodger on the progress of winding up the investments managed by Elston and attaching the final reports.
It is clear that Anderson was in communication with the Rodgers, raising the possibility of a move to Wilsons prior to his departure from Elston. This appears to be a breach of his fiduciary duty. Subsequently, the Rodgers appear to have made a decision on their own to move away from Elston. That was contributed to by Anderson’s departure but also by their own assessment of the benefits of moving to Wilsons. Giuseppe Lumbaca (37.35), Tanya Lumbaca (37.36)
On 14 January 2021 Giuseppe Lumbaca emailed Rosetta saying “I’m aware Tim Anderson has left the business. Please suspend all activities on my account until further notice while I assess my options”.
On 15 January Anderson asked via text if Giuseppe Lumbaca had got an email back from Elston. Text correspondence continued on 25 January and 28 January in relation to the termination of Elston’s services.
On 4 February Anderson provided Giuseppe and Tanya Lumbaca with his Wilsons email address.
On 10 February 2021 Giuseppe Lumbaca requested information from Anderson to finalise the transfer of accounts to Wilsons.
For reasons which are not clear, these former Elston clients were not referred to in the plaintiffs’ submissions. The evidence does not disclose any use of confidential information by Anderson in contacting them.

Peter Chamberlain and Tate Harris (37.43 Wolf Pact Investments Pty Ltd)

On 3 February 2021 Peter Chamberlain forwarded Rosetta’s email with the subject: “An important message for Canberra clients” to Anderson, saying “Were you the only employee to resign? LOL”.
On 26 February Mr Chamberlain emailed Elston requesting to cancel their service immediately. The email provided:

Whilst Tim Anderson leaving your organisation and the extremely limited communication or attempt to form a relationship with myself and Tate Harris was a concern, we were willing to continue for the foreseeable future in the hope this would change. The recent dealings with Elston Partners regarding Tim Anderson and Richard Taylor’s professional indemnity requirements for their new entity have left any potential future relationship with Elston partners and Wolf PACT Investments untenable. … Please send over a copy of our Statement of Advice and any required termination documentation.

Blumson sent the termination letter to Mr Chamberlain and to Tate Harris the same day. The signed letter was returned to Elston on 9 March. Mr Harris followed up on 19 March 2021 and 9 April 2021 about the status of the termination process.
On 9 April 2021 Rosetta replied to inform Mr Harris that the services had been terminated. In response, Mr Chamberlain requested a termination report and suggested that Rosetta “advise [Elston’s] compliance team of [his] complaint”. The complaint was acknowledged by the compliance team on 12 April 2021.
After having sent an intemperate email to Rosetta complaining about the termination process, Chamberlain forwarded the email chain to Anderson on 9 April with the comment “Just cant help myself [wink emoji]”. Their complaint about Elston was being dealt with until at least June 2021.
The evidence does not disclose the nature of the relationship between these clients and Anderson. They appeared to have relished the opportunity to make a complaint about Elston’s performance. The evidence does not disclose any misuse of confidential information by Anderson.

David Padgham (SOC 37.44)

Between 10 and 25 December 2020 there were text messages between Anderson and David Padgham unsuccessfully attempting to organise a meeting. On 25 December 2020 Anderson sent a text message wishing him and his family a happy Christmas and thanking him for his support in 2020.
Sometime prior to 13 January 2021 Anderson texted Mr Padgham saying that he had sent an email to Taylor, who was at that stage still at Elston, “about your reports”. It is not clear what these “reports” were.
On 13 January 2021 Anderson texted Mr Padgham saying that he had spoken to “Susie” st and “I’ll sort it all out. 1 of February is my start date. Pencil it in your diary.” Mr Padgham replied saying that no one had called him from Elston yet.
On 28 January 2021 Blumson apologised for the delay in getting back to Mr Padgham and provided a portfolio valuation for certain accounts. She also referred to an enquiry that he had made in relation to “QFF” (which, I infer, is a reference to Qantas Frequent Flyer points). On 29 January she indicated that she would have further information about the frequent flyer points in about a week’s time.
On 1 February 2021 Mr Padgham wrote saying that it appeared from his frequent flyer account that no frequent flyer points had accrued since that time that Elston announced “the program”.
On 10 February 2021 Blumson wrote saying that Elston was still processing the frequent flyer points and would let him know as soon as they received the amount allocated to his account.
On 11 February 2021 McLaughlan wrote saying that he had approved the frequent flyer points backdated to the start of the program “when Tim Anderson should have initially registered you”. He also referred some cheques that were waiting for collection and indicated that he would give Mr Padgham a call the next day “to discuss if I can continue to look after you and your investments here at Elston”.
A conversation occurred between McLaughlan and Mr Padgham on 11 February 2022. That led to McLaughlan sending an email apologising for something that he had implied in the conversation. McLaughlan assured Mr Padgham that the frequent flyer points under the Elston program were available to him whether or not he continued with his Elston’s services.
Anderson and Mr Padgham met on 21 February 2021 at a shopping centre in Brisbane.
On 22 February Mr Padgham sent Anderson a photograph of his driver licence and referred to a meeting between them that had occurred the day before. There were subsequently messages about the drug that Anderson’s mother was being given.
On 1 March 2021 Anderson texted Mr Padgham asking whether he had got a response from Elston. Mr Padgham said he would forward the emails to Anderson.

Conclusion about the acquisition of Elston clients

This examination of the evidence indicates that in relation to most clients, it is not clear how the departure of Anderson came to their attention. It is also not clear that Anderson used the contact details acquired during the course of his employment to get in touch with them and discuss the possibility of moving the business to Wilsons.

The allegations against Anderson

As explained below, the claim against Wilsons is one of knowing assistance in the breach by Anderson of his fiduciary obligations to Elston. Because of this, an essential ingredient in the claim against Wilsons are the allegations of breach of equitable duty against Anderson. If the claim against Anderson cannot, on the evidence in the case, be proven, then the claim against Wilsons will fall away. It is therefore essential to understand the claim against Anderson, at least insofar as it alleges breach of fiduciary duty and misuse of confidential information.
The pleadings have been referred to earlier in these reasons. In closing written submissions, the plaintiffs submitted that Anderson had a plan and described it as follows:

22.1. Anderson plainly planned to transfer to a competing business as many of his clients of the Canberra Office as he could without paying for any of that the business and in breach of his fiduciary duties. 22.2. That plan is evident from: 22.2.1. Anderson’s pretentions to Elston that he was a potential purchaser of the Canberra Office, without an offer ever being put (which gave him access to highly confidential information prepared by Elston for the sale) 22.2.2. Anderson’s email correspondence with Bryant, wherein he states, for example, that certain clients ‘would come over automatically’; 22.2.3. the correspondence exchanged between Richard Taylor and Anderson on 29 November 2020, which foreshadows ‘Elston receiving $0’ 22.2.4. Anderson’s retention of confidential documents for the purposes of giving them and/or the information in them to Wilsons and preparing his Wilsons business plan document from Elston’s Information Memorandum. 22.2.5. Anderson’s correspondence with clients (i.e. Clive Rodger) prior to his departure, in which Anderson stated that he would be able to provide certain services ‘when things are up and running’. 22.2.6. Anderson being given access to Wilsons’ client portal.

The plaintiffs claim certain conduct involving breaches of Anderson’s contract in relation to dealing with and soliciting clients also included him breaching his fiduciary duty. That appears to be because it involved the implementation of the plan alleged.
The plaintiffs also allege breaches by Anderson of his duty of confidence. The plaintiffs allege that the following matters involved breach of that equitable duty:

(a) On 7 January 2021 Anderson gave to Wilsons:

(i) a completed due diligence questionnaire containing FUM information;

(ii) an Adviser Compliance Audit Report;

(iii) an Elston fee disclosure statement and opt in notice;

(iv) Elston client file notes;

(v) an Elston statement of advice; and

(vi) an Elston risk assessment document.

(b) On 10 January 2021 Anderson sent to Bryant the completed version of the table previously provided to him by Bryant. That was the document which included an estimate for the first year of precisely 41 clients and precisely $44,919,000 of FUM.

Given that all of these events occurred after the end of Anderson’s employment, any confidential Elston information in them must have been retained by Anderson beyond that termination.

The claim against Wilsons

The claim against Wilsons is that it provided knowing assistance to “Anderson’s enactment of his plan in breach of his fiduciary duties”. The plaintiffs submitted that the situation was analogous to that in Foresters because Wilsons was not merely the passive recipient of the benefits of the success of Anderson’s strategy but rather Wilsons provided the commercial vehicle and licence necessary to exploit the clients appropriated from Elston and made use itself of confidential information provided by Anderson.
So far as the categories of knowledge identified in Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; 230 CLR 89 (Farah) at [174]-[177], Elston submitted that Wilsons was willfully blind to Anderson’s plan.
So far as the claim against Wilsons is concerned, any breaches by Anderson of his contractual obligations are not directly relevant because the claim is not one for knowing assistance in the breach of his contract but rather knowing assistance in his breach of fiduciary duty. However, the conduct which might constitute those breaches could be relevant to the claim of knowing assistance in a breach of fiduciary duty if that conduct was the implementation of a plan developed in breach of fiduciary duty.

Findings in relation to Anderson’s plan

As just explained, central to Elston’s case is that, while still employed by Elston, Anderson formulated a plan to move to a competing business and to improperly acquire the clients that had been clients of Elston.
The facts summarised earlier in these reasons present a more complicated picture than that.
It is not clear whether Anderson’s contact with Bryant in June 2020 was because of knowledge that Elston was going to attempt to sell the Canberra office. Bryant had the understanding that this would involve buying the client base off Elston: see [32].
As at 8 July 2020 there was the positive meeting with Bryant. There is nothing to suggest that Anderson at that stage was intending to act contrary to his obligations to Elston: see [33].
By September 2020 it is clear that Anderson was aware of the potential sale of the Canberra office and other “strategic options” outlined by McKie. An adviser purchase of the Canberra office was one of those options: see [38]. An adviser purchase was not necessarily inconsistent with operating under the brand of another financial services business such as Wilsons. In those circumstances, it cannot be said that the contemplation by Anderson of purchase of the business or the clients constituted a breach of his fiduciary obligations.
The continuing contact in October between Bryant and Anderson was obviously consistent with Anderson contemplating joining Wilsons but not inconsistent with an acquisition of the Canberra office. That is consistent with his expression of interest in purchasing the office on 20 October 2020: see [46].
The further discussions about a potential CAR agreement were also not inconsistent with either acquisition of the Canberra office as a whole, or payments to Elston so as to permit Anderson to take clients to Wilsons. Whether or not that occurred, there was discussion between Anderson and Bryant on 5 November 2020 about the need to get legal advice and follow his obligations. Bryant understood that Anderson was developing a plan to purchase clients from Elston (see [53]-[54]), although the discussions between Bryant and Anderson were not dependent upon that.
Anderson clearly behaved inappropriately at the Parker Financial meeting in November 2020. Further, he appears to have been behaving oddly more generally. It is for that reason that the issue was addressed at the Elston board meeting on 24 November 2020 and directors attempted to meet with Anderson on 26 November 2020. Anderson stormed out of the meeting. The evidence is not sufficient to explain why he behaved in this unusual and inappropriate manner at the meeting or more generally. It is certainly not sufficient to establish that the reason he behaved in this manner was in order to sabotage any sale of the business to a third party because of an existing plan to move to Wilsons and take Elston’s clients without payment for them. The next day Anderson conveyed to the board that he was considering purchasing the Canberra office.

Breach of fiduciary duty

As a general proposition “a person will be in a fiduciary relationship with another when and insofar as that person has undertaken to perform such a function for, or has assumed such a responsibility to, another as would thereby reasonably entitle that other to expect that he or she will act in that other’s interests to the exclusion of his or her own or a third party’s interest”: Grimaldi v Chameleon Mining NL (No 2) [2012] FCAFC 6; 200 FCR 296 (Grimaldi) at [177].
In Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 (Hospital Products) at 96-97, Mason J held:

The accepted fiduciary relationships are sometimes referred to as relationships of trust and confidence or confidential relations (cf. Phipps v. Boardman (1967) 2 AC 46, at p. 127), viz., trustee and beneficiary, agent and principal, solicitor and client, employee and employer, director and company, and partners. The critical feature of these relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense. The relationship between the parties is therefore one which gives the fiduciary a special opportunity to exercise the power or discretion to the detriment of that other person who is accordingly vulnerable to abuse by the fiduciary of his position. … That contractual and fiduciary relationships may co-exist between the same parties has never been doubted. Indeed, the existence of a basic contractual relationship has in many situations provided a foundation for the erection of a fiduciary relationship. In these situations, it is the contractual foundation which is all important because it is the contract that regulates the basic rights and liabilities of the parties. The fiduciary relationship, if it is to exist at all, must accommodate itself to the terms of the contract so that it is consistent with and conforms to them. The fiduciary relationship cannot be superimposed upon the contract in such a way as to alter the operation which the contract was intended to have according to its true construction.

In Foresters at [67]-[70], Gageler J summarised the relevant fiduciary principles applicable to the employer/employee relationship as follows:

67 The fiduciary duty that an employee has to an employer within the scope of the relationship of employment, no less than the fiduciary duty that any other person in a fiduciary position has to any other person to whom the fiduciary duty is owed within the scope of the venture or undertaking in respect of which the person in the fiduciary position has undertaken or assumed a responsibility to act in the exclusive interests of that other person, is a duty of “absolute and disinterested loyalty”. That duty of loyalty is imposed in equity by means of two overlapping “proscriptive obligations”. Each proscriptive obligation, or “theme”, is “descriptive of circumstances in which equity will regard conduct of a particular kind as unconscionable and consequently attracting equitable remedies”. 68 “The first”, often referred to as the “conflict rule”, “is that which appropriates for the benefit of the person to whom the fiduciary duty is owed any benefit or gain obtained or received by the fiduciary in circumstances where there existed a conflict of personal interest and fiduciary duty or a significant possibility of such conflict: the objective is to preclude the fiduciary from being swayed by considerations of personal interest.” The unconscionability which attracts equitable remedies in circumstances where the conflict rule alone is invoked lies not so much in receipt by the fiduciary of the benefit or gain (over which the fiduciary need not have control) as in retention by the fiduciary of the benefit or gain which in conscience ought to be disgorged to the principal. 69 “The second”, often referred to as the “profit rule”, “is that which requires the fiduciary to account for any benefit or gain obtained or received by reason of or by use of [the] fiduciary position or of opportunity or knowledge resulting from it: the objective is to preclude the fiduciary from actually misusing [the fiduciary's] position for [the fiduciary's] personal advantage.” The unconscionability which attracts equitable remedies in such circumstances lies in pursuit by the fiduciary of self-interest, or, more precisely, in pursuit of an interest other than the exclusive interest of the principal. 70 Consistently with the objective of imposing each obligation, in neither case does the benefit or gain to the fiduciary need to be at the expense of the principal, though it may be. And in neither case does the fiduciary need to act dishonestly or fraudulently, or otherwise than in good faith, though again the fiduciary may do so. Where a fiduciary does act dishonestly and fraudulently, however, the dishonest and fraudulent character of the breach of fiduciary duty is not without consequence for the intensity of the equitable remedies available against the defaulting fiduciary. More important for present purposes is that the dishonest and fraudulent character of the conduct of the fiduciary gives rise to the potential for similar remedies to be available in equity against another person who might knowingly participate in the fiduciary's breach. (Footnotes omitted.)

For the purposes of determining whether or not a fiduciary has acted fraudulently or dishonestly in their breach of duty, the enquiry will be whether or not the fiduciary has acted in a way which amounts to a transgression of ordinary standards of honest behaviour: Hasler v Singtel Optus Pty Ltd [2014] NSWCA 266; 87 NSWLR 609 (Hasler) at [124]; Zibara v Ultra Management (Sports) Pty Ltd [2021] FCAFC 4; 283 FCR 18 (Zibara) at [106].

Breach of fiduciary duty upon leaving employment

Southern Real Estate Pty Ltd v Dellow [2003] SASC 318; 87 SASR 1 (Dellow) involved a director resigning from a real estate business, Southern Real Estate (SRE). She had formed the firm intention to resign on 8 January 2001 and in fact resigned on 30 January 2001: [10], [27]. She had received legal advice, the content of which was not disclosed. She had prepared a list of names and addresses of 58 clients (about half the rent roll) while she was an employee and director of SRE. She did not directly use confidential information of the business to prepare the list. She relied on her memory and open-source searches to compile the list. Her memory was aided by her daily work for SRE and her access to its records during the time that she worked on the lists: [12], [13]. Prior to resignation, she had cooperated with a Mr Arnold to register two business names for the new business. Stationery was printed, a bank account was established, an additional telephone line was installed, a mobile phone was acquired and a computer was purchased for the business: [27].
Ms Dellow was found to have breached her duty to act bona fide and in the best interests of the company by preparing the list of customers whilst a director of SRE with the intention of using it once she had resigned as a director: [26].
From at least 8 January 2001 she was acting to her own advantage and that of Mr Arnold, to the detriment of SRE. There was a manifest conflict between her duty to the company and her personal interest: [27].
She had breached her duty of good faith by failing to disclose her intentions: [29].
Her course of conduct was a “pre-emptive strike” giving SRE very little time to respond. It was “a carefully orchestrated plan to place [SRE] in a position where it would face real difficulty in competing with her”: [30].
These breaches were summarised as a breach of her duties to act in good faith and in the best interests of SRE: [31]. They were identified as breaches of both the fiduciary and statutory duties: [32].
The judgment recognised that the question of whether a director may resign and compete with the company is not settled: [33]. The discussion seems to indicate that after “a reasonable period” it would have been open to Ms Dellow to make a list of customers from her memory and then actively solicit their custom: [36]. However, what constituted a reasonable period did not need to be discussed because she had taken steps while still a director to put everything in place so that she would be in a position to compete immediately upon her resignation: [38].
The judgment then contains a discussion of equitable damages or equitable compensation and assesses these remedies based upon the value of that part of the rent roll.
Consolidated Paper Industries Pty Ltd v Matthews [2004] WASC 161 involved an application for an interlocutory injunction restraining the defendant from soliciting, on his own behalf, certain customers and suppliers of the plaintiff and from using certain information which the plaintiff said was confidential to it. The defendant was an employee of a company which was bought by the plaintiff. His employment had been terminated by the receiver of the company prior to its acquisition by the plaintiff. In addressing the claim for an interlocutory injunction, Master Newnes set out at [60] a general summary of the position of an employee as follows:

An employee during the period of his employment must act in the employer's best interest and not in pursuit of his own interests: Wessex Dairies Ltd v Smith [1935] 2 KB 80, Faccenda Chicken Ltd v Fowler & Ors [1986] 1 All ER 617. Except in special circumstances, however, there is no general restriction on an ex-employee canvassing or doing business with customers of his former employer: Faccenda at 625, Wessex Dairies at 89. But during the term of his employment an employee must not solicit customers for a future time when the employment has ceased and the employee has established his own business: Wessex Dairies Ltd v Smith (supra), Independent Corporate Services Ltd v Stevens [2002] WASC 280. An employee is not, however, prohibited during his employment from making preparations for setting up a business when the employment ends. What steps by the employee will be permissible will depend upon the circumstances, but such activities may extend to the issue of circulars, finding business premises and hiring employees: Robb v Green [1895] 2 QB 1; Independent Management Resources Pty Ltd v Brown [1987] VR 605. But the duty of loyalty of an employee will be breached if the employee engages in unfair or wrongful acts detrimental to the employer's business, such as deferring fulfilment of orders in anticipation of filling them himself, or developing the capacity to copy his employers products with a view to appropriating for himself his employer's market, or recruiting the employer's staff for the new business, or taking copies of or memorising customer lists or other confidential information of the employer, or engaging in significant work to set up the business in his employer's time: Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, McPherson's Ltd v Tate (1993) 35 AILR 225, Blythe Chemicals Ltd v Bushnell (1933) 49 CLR 66, WA Fork Truck Distributors Pty Ltd v Jones & Ors [2003] WASC 102.

His Honour then turned to describe the claim made as based on the “head start” or “springboard” principle. That related to cases in which an employee had spent the employer’s time taking steps to establish a new business and the potential for that new business to be restrained for the period of the head start that had been gained by misuse of the employer’s time which would involve a breach of contract and breach of fiduciary duty.
The court also summarised the position in relation to restraint of use of confidential information at [76]-[79] as follows:

76 The duties of an employee extend to an obligation not to disclose confidential information other than for the purpose for which it was intended to be used: Coco v AN Clark (Engineers) Ltd (1969) RPC No 241 at 46, NP Generations Pty Ltd v Feneley [2001] SASR 151 at 157. The information concerned must be able to be identified with specificity and not merely in global terms and it must be demonstrated that the information has the necessary quality of confidentiality and was received by the defendant in circumstances such as to import an obligation of confidence. Whether the information has that necessary quality depends on all the circumstances and is a question of fact in each case. In Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317 at 334, Kirby P said that considerations which the Court had found relevant in that respect are: (a) The fact that skill and effort was expended to acquire the information; (b) The fact that the information is jealously guarded by the employer, it is not readily made available to employees and could not, without considerable effort and/or risk, be acquired by others; (c) The fact that it was plainly made known to the employee that the material was regarded by the employer as confidential; (d) The fact that the usages and practices of the industry support the assertion of confidentiality; (e) The fact that the employee in question has been permitted to share the information only by reason of his or her seniority or high responsibility within the employer's organisation. 77 A distinction exists between information which forms part of the employee's stock of general knowledge, skill and experience and that which can be fairly regarded as a separate part of the employee's stock of knowledge which a person of ordinary intelligence and honesty would regard as the property of the former employer: Printer & Finishes Ltd v Holloway [1964] 3 All ER 731 at 735, Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37 at 40 and Faccenda Chicken v Fowler & Ors (supra). In Faccenda Chicken, at 623 - 624, the Court of Appeal quoted with approval the following formulation by Goulding J: " … second, there is information which the servant must treat as confidential (either because he is expressly told it is confidential, or because from its character it obviously is so) but which once learned necessarily remains in the servant's head and becomes part of his own skill and knowledge applied in the course of his master's business. So long as the employment continues, he cannot otherwise use or disclose such information without infidelity and therefore breach of contract. But when he is no longer in the same service, the law allows him to use his full skill and knowledge for his own benefit in competition with his former master … Thirdly, however, there are, to my mind, specific trade secrets so confidential that, even though they may necessarily have been learned by heart and even though the servant may have left the service, they cannot lawfully be used for anyone's benefit but the master's. An example is a trade secret … and other information which is of a sufficiently high degree of confidentiality as to amount to a trade secret." 78 The Court of Appeal went on to say (at 625): "The obligation does not extend, however, to cover all information which is given to or acquired by the employee while in his employment, and in particular may not cover information which is only 'confidential' in the sense that an unauthorised disclosure of such information to a third party while the employment subsisted would be a clear breach of the duty of good faith. This distinction is clearly set out in the judgment of Cross J in Printer & Finishers Ltd v Holloway [1964] 3 All ER 731 … : 'In this connexion one must bear in mind that not all information which is given to a servant in confidence and which it would be a breach of his duty for him to disclose to another person during his employment is a trade secret which he can be prevented from using for his own advantage after the employment is over, even though he has entered into no express covenant with regard to the matter in hand. For example, the printing instructions were handed to [the first defendant] to be used by him during his employment exclusively for the plaintiffs' benefit. It would have been a breach of duty on his part of divulge any of the contents to a stranger while he was employed, but many of these instructions are not really 'trade secrets' at all. [The first defendant] was not, indeed, entitled to take a copy of the instructions away with him; but insofar as the instructions cannot be called 'trade secrets' and he carried them in his head, he is entitled to use them for his own benefit or the benefit of any future employer.' The same distinction is to be found in Worsley & Co Ltd v Cooper [1939] 1 All ER 290, where it was held that the defendant was entitled, after he had ceased to be employed, to make use of the source of the paper supplied to his previous employer. In our view it is quite plain that his knowledge was nevertheless confidential in the sense it would have been a breach of the duty of good faith for the employee, while the employment subsisted, to have used it for his own purposes or to have disclosed it to a competitor of his employer" 79 Thus, in Printer & Finishers Ltd v Holloway (supra), printing instructions available during the employment and not memorised could be used by the employee after the employment terminated. In Worsley & Co Ltd v Cooper [1939] 1 All ER 292, the employee was entitled to use his recollection of the source of paper supplied to his previous employer. In Faccenda Chicken (supra), sales and price information not copied or deliberately memorised was able to be used by the former employee.

Advanced Fuels Technology v Blythe [2018] VSC 286 involved a director (Mr Blythe) and an employee (Mr Wilson) who had left the company (AFT) following disagreements with the other director (Mrs Thompson) who was the wife of a former director who had died. The claim was that a new and competing business had been set up as part of a dishonest and fraudulent design to take the opportunities available to the company. The trial judge rejected these claims. There was also a claim of misuse of confidential information including contact details that had been stored on mobile phones used by the director and employee.
As to the test to be applied in relation to the existence of contact details, the judge accepted that in some cases a customer list may be confidential but to answer the question in any particular case requires a consideration of the circumstances of its development and treatment. He set out (at [178]) a summary of the factors to be taken into account from Del Casale & Ors v Artedomus (Aust) Pty Ltd [2007] NSWCA 172; 73 IPR 326 at [40]. He described (at [179]) the contact files retained by the former employee:

The contact data simply comprises the names, email addresses and telephone numbers of persons outside of the [plaintiff] organisation – some relevant to its business, some irrelevant to its business. The list included information available through public sources and was intermixed with personal contacts. There is no evidence [one of the defendants] was instructed to guard or preserve any secrecy surrounding the list of people with whom he dealt while working at [the plaintiff]. The contact details for those people, I infer, could be readily acquired or duplicated by others. The information does not have the character of a trade secret. In short, although some attributes of this contact data and the manner of its creation may point to it having the character of confidential information, on balance it seems to me that it lacks that quality. (Footnotes omitted.)

In relation to the allegation of a dishonest and fraudulent design as between the director, the employee and another person who participated in the establishment of the new company, his Honour undertook a careful examination of the facts and concluded that there was no such dishonest and fraudulent design. Of particular significance were the ongoing attempts by the director to acquire the balance of the company: [314]-[315]. His Honour later recorded these as “a genuine, respectful and sustained effort on his part to try and work out a solution with Mrs Thompson”: [331(h)]. He said it was unsurprising that the director would have had a “plan B” but that did not cause him to alter his conclusion: [316]. He concluded: “In short, there is no cogent reason to infer that dishonest and fraudulent preparations were being discussed when there are plentiful plausible and innocent explanations available”: at [319].
In relation to the position of the director and the employee in dealing with opportunities with eight identified other businesses, his Honour indicated that even without a dishonest and fraudulent design there were allegations of breach of fiduciary and statutory duties in relation to the conduct after each resigned. He noted that in relation to the employee, only the obligation in s 183 of the Corporations Act relating to the use of confidential information remained. His Honour continued at [326]-[329]:

326 But, in Mr Blythe’s case, the potential for liability for breach of fiduciary duty for post-resignation conduct remained, although it is somewhat narrowed. For example, the scope for establishing a breach of the ‘conflict rule’ is narrowed because, in principle, that rule is attracted by actual or potential conflict between personal interest and the duty of fiduciary office, yet the office ceases when the fiduciary resigns. Despite such narrowing, Mr Blythe was nonetheless restrained by his fiduciary duty, for a time, from diverting and then converting for himself or a company with which he was related, specific business opportunities for AFT that had matured to the requisite degree before he resigned. The time period over which that restraint operated; the required specificity of those opportunities; and the required degree of maturity of the opportunities, are all ingredients which combine to determine the effective scope or shape of the fiduciary duty applicable in the factual context of this particular relationship. I will state my views on those ingredients shortly. 327 I have concluded that Mr Wilson held no fiduciary office with AFT nor was he subject to the statutory duty of good faith (not being an ‘officer’ of the company). It follows that the residual scope for any liability as fiduciary essentially turns on the allegations that Mr Blythe impermissibly pursued business opportunities that had been maturing for AFT while he was still in employment. 328 In Courtenay Polymers v Deang, Whelan J summarised the relevant principles emerging from the South Australian Full Court decision of Southern Real Estate on the subject of former directors or employees of a corporation usurping an opportunity, ripe for that corporation, after their resignation: 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. 329 Regarding the ‘uncertainty’ as to when a former director might properly begin to compete with the company, in Southern Real Estate Debelle J (with whom Nyland and Lander JJ agreed) remarked on the ‘obvious tension’ between the length of any period during which a former director remains subject to his or her fiduciary duties not to compete, on the one hand, and the freedom of competition on the other. (Footnotes omitted, italics in original.)

His Honour then set out a series of contextual factors which led to the conclusion that any restraint to be justly imposed upon the director from competing with the company after his resignation should be relatively limited. At [332] he concluded that it should operate to prohibit him in the relatively short term from using information obtained while at the company “to compete for clearly established customers of AFT’s or for very specific opportunities that were so well developed that they were imminently close to being secured by AFT on its own.” He concluded that none of the opportunities presented by the eight businesses fell into that category. He dismissed the plaintiff’s claim.
Digital Pulse Pty Ltd v Harris [2002] NSWSC 33; 166 FLR 421 (Digital Pulse) is best known for the appeal decision which reversed one aspect of the primary judgment that related to the award of exemplary damages: Harris v Digital Pulse Pty Ltd [2003] NSWCA 10; 56 NSWLR 298. The case involved the misappropriation of confidential information by employees and the diversion of projects and business opportunities intended for their employer to a company they controlled. Palmer J noted that, but for the issue of exemplary damages, the case would have been unremarkable: Digital Pulse at [1]. He set out a summary of the general law duty of loyalty of an employee to their employer and the relevant statutory obligations arising under the Corporations Act. At [20]-[26] his Honour outlined the principles relevant to the general law duty of loyalty as follows:

20 An employee has a duty to act in the interests of the employer with good faith and fidelity. That duty is implied in every contract of employment if it is not otherwise imposed by an express term. In addition, the duty is imposed upon every employee by the law of fiduciaries, the relationship of employer and employee being recognised as a paradigmatic fiduciary relationship. 21 The obligations imposed by the duty are not coterminous with the employee’s normal working hours: they govern all the activities of the employee, whenever undertaken, which are within the sphere of the employer’s business operations and which could materially affect the employer’s business interests. Whether a particular activity could materially affect the employer’s business interests is a question of fact and degree. 22 The duty of loyalty requires that an employee not place himself or herself in a position in which the employee’s own interest in a transaction within the sphere of the employer’s business operations conflicts with the employee’s duty to act solely in the employer’s interest in relation to that transaction. A fortiori, an employee may not take for himself or herself an opportunity within the sphere of the employee’s business operations without the employer’s fully informed consent. 23 When the employment ceases, the employee is free to compete with the employer unless subject to a valid contractual restraint on competition. The employee may take away and utilise the benefit of personal relationships built up with particular customers of the former employer and may solicit any customer whom the employee can recall without the aid of a list taken from the former employer and without deliberate memorisation of a customer list. The employee may not, however, use for his or her own benefit confidential information of the former employer, whether to solicit business from the former employer’s customers or to carry out work for such customers even if unsolicited. 24 The remedy for breach of the contractual duty of loyalty is damages. The remedy for breach of the fiduciary duty of loyalty is either an account of the profits derived by the employee from the breach or equitable compensation. The employer need not elect between these remedies until the time at which judgment is to be entered. 25 Where the employee who is in breach of the fiduciary duty of loyalty incorporates a company in order to take the benefits of the breach, then the company itself will be held to have participated in the breach so that it will be liable to the employer to the same extent as the employee. 26 These familiar principles are established by cases such as: Robb v Green [1895] 2 QB 315; Wessex Dairies Ltd v Green [1935] 2 KB 80; Hivac Ltd v Park Royal Scientific Instruments Ltd [1946] 1 Ch 169; Phipps v Boardman [1967] 2 AC 46; Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, at 96; Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373, at 397; Warman International Ltd v Dwyer (1995) 182 CLR 544; ASC v AS Nominees Ltd (1995) 62 FCR 504, at 523; Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 488, at 495; Forkserv Pty Ltd v Pacchiarotta [2000] NSWSC 979.

In Nexgen Sydney Pty Ltd v Barakat [2022] NSWSC 312, a claim was made relating to the taking and use of a prospective client list from a previous employer. Ultimately, only nominal damages of $1 were awarded for breach of the employee’s employment contract. Consideration was given to claims alleging breach of contract and fiduciary duty in relation to confidential information. Ward CJ in Eq referred to the test identified by Gummow J in Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 14 FCR 434 at 443 (Corrs): [349]. Her Honour referred to authorities which indicated that the compilation of contact details in a client contact or prospects list is something that has been recognised as capable of carrying with it the necessary quality of confidentiality: [350]. Her Honour found that, although much of the information considered in isolation would not be confidential, the compilation of the information gave the relevant spreadsheet the necessary quality of confidentiality: at [352].
Her Honour found that there was a breach of contract as a result of one of the defendants taking with her the spreadsheet that included the compilation data in relation to prospective leads: [362]. The format or structure of the spreadsheet was, however, something that formed part of her acquired knowledge which she would be free to use to set up a similar spreadsheet in her new employment.
In relation to breach of fiduciary duty, the court found that it will not always be the case that an employee will owe fiduciary obligations to his or her employer: [372]. But for the admissions made in the case, she would not have found fiduciary duties to have existed: [380]. The general position was that the more senior an employee, the more likely the employee’s duty will be fiduciary in nature: [379]. The question of the existence of fiduciary duties on the part of an employee remains one of degree: [379].

Application of principles to Anderson

The position in the present case is:

(a) Anderson was a senior employee. (b) He was in charge of the Canberra office.

(c) He was sufficiently senior and the relationship between him and his employer was such that he owed to the employer fiduciary obligations.

(d) He was under a duty not to pursue opportunities in conflict with the interests of his employer without its consent during his period of employment.

(e) Those fiduciary obligations came to an end at the end of his employment except in relation to precluding immediate exploitation of matured proposals (not relevant in the present case).

(f) At the point of cessation of employment, his fiduciary duty precluded him taking the confidential information of his employer. He was not entitled to take with him client lists. However, so long as he did not engage in a memorisation exercise whilst employed, he was entitled upon ceasing employment to make use of knowledge acquired during his period of employment.

(g) Subject to any contractual restraint, he was therefore entitled to compete with his old employer at or shortly after the end of his employment.

As the findings at [421]-[436] demonstrate, there was no single coherent plan on Anderson’s part. Rather, he had contemplated moving to Wilsons and doing so in a way that allowed him to “run his own show” under the Wilsons banner. When that occurred and the basis upon which clients of that new business were acquired were evolving issues. He contemplated paying Elston for its clients or a subset of them at various times. There was never an overall plan formulated during the course of his employment to achieve the wholesale taking of Elston’s clients without payment. Rather, as it became apparent that a generalised acquisition of clients could not occur, it also became clear that the new business under the Wilsons banner would have to acquire them through competition, no doubt assisted substantially by Anderson’s long-standing and close association with many of the clients. However, even at the point of resignation, Anderson was still contemplating the acquisition of clients that had been referred to him by Papandrea. Thus, the case is one which is distinguishable from the “clear plan” cases such as Foresters, Dellow and Steadfast ICT Security Pty Ltd v Peak [2021] ACTSC 199 (Steadfast).
Notwithstanding that the evidence does not establish a clear plan formulated during the period of employment, there were some specific breaches.
In relation to the retention and use of his employer’s confidential information, Anderson breached his fiduciary duty by retaining contact information on his mobile phone and the miscellaneous information about clients of the business and his own work that was handed over to Wilsons on 7, 10 and 18 January and 1 February 2021.

(a) So far as contacts on his mobile phone are concerned, there is no evidence that he deleted those contact details and, having regard to the nature of mobile phone contacts and his subsequent dealings with the Known Clients, I infer that he did not. The evidence is insufficient to establish which of those contacts fell into the category of “family and friends” that either predated Anderson’s employment by Elston or alternatively were contact details which Anderson would inevitably have had by reason of his association with those persons other than through Elston. (b) As to the miscellaneous information provided to Wilsons on 7 10 and 18 January and 1 February 2021, the position is as follows:

(i) I am not satisfied that the retention of the details of FUM and fees which were disclosed on 7 January 2021 amounted to a breach of fiduciary duty. This information is at a level of approximation and generality which is likely to have been essentially accumulated knowledge for a person in his position.

(ii) Although Anderson’s knowledge of the clients whose circumstances were disclosed on 18 January 2021 appeared to have been drawn from his memory rather than from retained records, that information was confidential information obtained during the course of his employment which ought not to have been disclosed for his own benefit rather than for the benefit of his former employer.

(iii) The other information disclosed on 7 and 10 January and 1 February was, in each case, at a level of detail and specificity that it must have arisen as a consequence of having retained, in breach of his fiduciary duty, confidential financial details of his employer’s business.

Further, so far as Anderson’s conduct during his employment was concerned, his contact with Mr Rodger on 22 December 2020 was a breach of his fiduciary duty because it involved a conflict between his duty to Elston and his interest in obtaining, in the future, the Rodgers as clients of his Wilsons business.
These are individually and collectively relatively confined breaches of duty.

Relationship to breach of confidence

Although not well-recognised in the authorities, the principles in relation to third party liability for knowing involvement in a breach of confidence are substantially the same as in relation to knowing involvement in a breach of fiduciary duty: Vestergaard Frandsen A/S v Bestnet Europe Ltd [2013] 1 WLR 1556; Farm Transparency International Ltd v New South Wales [2022] HCA 23; 403 ALR 1 at [238]; R Meagher, D Heydon and M Leeming, Meagher, Gummow and Lehane’s Equity Doctrines & Remedies (LexisNexis th Butterworths, 4 ed, 2002) at [41-110]; J D Heydon, M J Leeming and P G Turner, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (LexisNexis th Butterworths, 5 ed, 2015) at [42-155].
In this case, what is alleged is the retention of material which is confidential to Elston and its subsequent deployment by Anderson. The information has the necessary quality of confidentiality and was imparted in circumstances importing an obligation of confidence. If it was used by Anderson that was unauthorised and to the detriment of Elston.
It is not necessary to separately address the cause of action for knowing assistance in a breach of confidence because the relevant breach of fiduciary duty is the retention of such material after resignation for the purpose of using it other than for the purposes of Elston and the cause of action for breach of confidence involves the same conduct.
Therefore, it has been unnecessary in the present case to distinguish between the breach of fiduciary duty and the breach of confidence. In what follows, the references to breach of fiduciary duty should be read, if necessary, to include the allegation of breach of confidence. Knowing assistance in a breach of fiduciary duty
The plaintiffs rely upon the wilful blindness or “wilfully shutting one’s eyes to the obvious” category of knowledge for the purposes of the second limb of Barnes v Addy (1874) LR 9 Ch App 244 outlined by the High Court in Farah at [174].
The plaintiffs submit that the element of dishonesty is required on the part of the defaulting fiduciary not the third party. That is consistent with what is said in Farah at [160]:

As conventionally understood in Australia, the second limb makes a defendant liable if that defendant assists a trustee or fiduciary with knowledge of a dishonest and fraudulent design on the part of the trustee or fiduciary.

The element of dishonesty and fraud on the part of the fiduciary is met where the conduct breaches ordinary standards of honest behaviour. In Hasler at [124], Leeming JA explained the meaning of “dishonest and fraudulent design” as requiring proof of dishonesty and concluded:

Dishonesty amounts to a transgression of ordinary standards of honest behaviour. It is not necessary to say anything else by way of elaboration, save to confirm that it is not necessary to demonstrate that the person thought about what those standards were.

In Foresters (at [71]) Gageler J adopted the formulation in Hasler:

Knowing participation by a non-fiduciary in a dishonest and fraudulent breach of fiduciary duty is conduct which is regarded in equity as itself unconscionable and as attracting equitable remedies against the knowing participant of the same kind as those available against the errant fiduciary: Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 at 397-398; [Farah] at 164 [179]. Knowing participation in a dishonest and fraudulent breach of fiduciary duty includes knowingly assisting the fiduciary in the execution of a "dishonest and fraudulent design" on the part of the fiduciary to engage in the conduct that is in breach of fiduciary duty: [Farah] at 159 [160]. The requisite element of dishonesty and fraud on the part of the fiduciary is met where the conduct which constitutes the breach transgresses ordinary standards of honest behaviour: [Hasler] at 636 [124]. Correspondingly, the requisite element of knowledge on the part of the participant is met where the participant has knowledge of circumstances which would indicate the fact of the dishonesty on the part of the fiduciary to an honest and reasonable person: [Farah] at 163-164 [174]-[177]. (Footnotes incorporated as text.)

The formulation in Hasler as adopted by Gageler J in Foresters was adopted by a Full Court of the Federal Court in Zibara at [106]. As Hasler itself recognises (at [125]), in borderline cases the application of the test for dishonesty in this context will present difficulty. That, however, is not an uncommon feature of legal tests and does not deny its utility. It is therefore necessary to consider the state of Wilsons’ knowledge.

What did Wilsons know?

Chronology of knowledge

The plaintiffs are required to prove that Wilsons knew of Anderson’s “dishonest and fraudulent design” in the sense described in Hasler. The extent of knowledge on Wilsons’ part largely corresponds to the knowledge of Bryant who was the principal point of contact during the period up until the execution of the CAR. The extent of his knowledge changed over time. The key points at which Wilsons, acting through Bryant, obtained knowledge of Anderson’s conduct and plans and the dates when that occurred are as follows: (a) He knew that Anderson was employed by Elston from at least June 2016: [29].

(b) From June 2016 he assumed that Anderson would be likely to be subject to some form of contractual restraint.

(c) Between July and December 2020 he knew that both Anderson and Taylor were contemplating leaving Elston in order to establish a CAR arrangement with Wilsons (see [33], [48]) although he contemplated that Anderson would be investigating arrangements with other Australian Financial Services licence holders.

(d) As at 20 December 2020 he was aware that Anderson at that point intended to resign from Elston and call clients from 4 January 2021 as set out in the email of that date: [80].

(e) As at 20 December he knew that Anderson had obtained legal advice and understood that Anderson would be guided by that advice: [81].

(f) As at 21 December he knew that Anderson now intended to resign on 1 January 2021 but had a four-week notice period and was therefore able to start with Wilsons on 1 February.

(g) As at 21 December Bryant knew that Anderson considered he was restrained from contacting customers during the notice period but was not restrained from dealing with them if they contacted him: [84].

(h) Bryant knew on 7 January 2021 that Anderson had retained some of Elston’s documents which were provided as part of the due diligence process: [97]-[102]. The breakdown of the client information was at a level of generality which is likely to have been understood by Bryant as reflecting the general state of knowledge of Anderson rather than the wrongful retention of Elston documents. The Adviser Compliance Audit Report (see [100]) was plainly an Elston document but relevant only to the adequacy of the performance of Anderson as an adviser. The other documents were each Elston documents but redacted in an (inadequate) attempt to render them anonymous.

(i) On 9 January Bryant took steps to arrange the promotion of Anderson’s move which was based upon the assumption that Anderson would not be contacting clients: [107].

(j) He knew from the week commencing 18 January 2021 that Elston was hostile to Anderson's move to Wilsons: [119].

(k) On 29 January 2021 the information provided to him by Anderson was that the only clients that had sent Elston a termination request were his friends and family: [131].

(l) On 1 February 2021 after the execution of the CAR, the Business Plan was sent to Ross as part of the “onboarding” process. Bryant did not read the Business Plan at this time and hence could not have been aware that some of the information in it was confidential Elston information which was retained and used by Anderson without Elston’s permission.

(m) He knew on 22 February 2021 or shortly thereafter that Elston asserted breach of contract and equitable, fiduciary and statutory obligations.

It is necessary to say something more about the Business Plan. Bryant did not read it at the time and was unaware of its contents. There is no direct evidence as to what the members of the MDA Committee (see [141] above) read or understood about the content of the Business Plan. However, it is likely that Shelbourne, who was a member of the committee, read the document and recognised that some of the information in the document, including the account codes and specific sums held under management in relation to those accounts, involved the use of confidential Elston information.

Knowledge of a plan prior to resignation

I am not satisfied on the balance of probabilities that Bryant (and hence Wilsons) knew that Anderson had, while at Elston, developed a plan to take Elston clients in breach of his equitable or legal obligations. Prior to his resignation, there had been discussion of the possibility of Anderson paying Elston for his former clients upon departure. It was only after Anderson was placed on leave on 18 December 2020 that he communicated to Bryant the unlikelihood of a purchase because of Elston’s expectation of a “ridiculous” price. There remained, as at 31 December 2020, the possible purchase of some of them: see [86]. So far as other clients were concerned, there is no doubt that Bryant contemplated that a number of Elston clients would, as a result of their desire to continue to deal with Anderson, move their business to Wilsons. However, knowledge of that likelihood did not involve knowledge on Bryant’s part of a dishonest plan.
The only concrete step proved to have been taken by Anderson prior to his departure from Elston in relation to an existing client was the communication with Mr Rodger and there is no evidence that Bryant was aware of that contact even though he became aware of the existence of the Rodgers following Anderson’s resignation and prior to the CAR.

Knowledge after resignation of breach of fiduciary duty

Bryant was not aware of any dishonest retention of contact information by Anderson. Further, by the time of Anderson’s resignation, Bryant was not aware of any intentional or actual misuse of such information. As it was explained to him, Anderson’s advice prevented him soliciting clients by contacting them (using Elston information) but did not prevent him from responding to contacts by the clients if his new business was sufficiently advertised. Further, Bryant was told on 29 January 2021 that it was only friends and family (in relation to whom it can be inferred that Anderson would not need to rely upon Elston information in order to be in contact with) who had sent termination notices to Elston.
Bryant clearly contemplated that, at some point after 9 January when he raised this issue with Clement-Meehan, Wilsons would make efforts to raise the awareness amongst former Anderson clients of his move to Wilsons in the hope that this would encourage them to become clients of Wilsons. That did not involve knowledge on Bryant’s part of a dishonest plan on the part of Anderson, in breach of his duties to Elston.
In relation to the Elston documents or information retained by Anderson and provided in the email of 7 January 2021, they were the documents provided for the purposes of Wilsons’ due diligence process. Bryant clearly knew that Anderson had retained some documents which were confidential to Elston. They were the documents described at [98]-[102] above. While it may be understandable that a person leaving a job would retain some documentation about the performance of the job in order to be able to prove it to a prospective employer (or similar), it should also be apparent that to do so involved improper retention of those documents other than in the unlikely circumstance that consent had been obtained from the former employer. However, the knowledge acquired by Bryant was only that some documents had been retained for the purposes of the due diligence process of Wilsons.
In relation to the information in the table provided on 10 January (see [111] above), I am not satisfied that the contents of this table was sufficient to give Bryant knowledge of the wrongful retention of Elston information. The evidence does not disclose how the numbers in column one of this table were derived. The specificity of the figures is not sufficient to establish that they must have been derived from Elston information rather than the general pool of Anderson’s knowledge about his client base and the likelihood of those clients becoming clients of Wilsons.
In relation to the information provided in the email on 18 January 2021, it would be clear that this disclosure involved information acquired about those clients during the course of Anderson’s employment which was confidential information of both the clients and his former employer.
Finally, in relation to the Business Plan material provided on 1 February 2021, Bryant did not know that some of the figures contained in the Business Plan corresponded to material in the Business Brief or Information Memorandum prepared by Neill, or that it came from confidential Elston documents because he did not read the Business Plan at the time. Shelbourne or another member of the MDA Committee is likely to have read the Business Plan and recognised that some of the information in the document was confidential Elston information. The specific account information (in the Appendix of the Business Plan) may have been provided for the purposes of providing some additional impression of reliability about the projections in the document. However, for the purposes of the MDA Committee, having regard to the other material provided in relation to Anderson, the significance of the specific figures or account codes in the Business Plan was likely to have been low.

Conclusion on knowing assistance

In final submissions, the plaintiffs framed their claim against the second defendant by reference to what was said by the plurality in Foresters at [10]. The plaintiffs submitted that Wilsons’ participation was not merely that of passive recipient of the benefits of the success of Anderson’s strategy. Wilsons provided the commercial vehicle/Australian Financial Services Licence which would acquire and exploit the clients to be appropriated from Elston. That vehicle was necessary to enable Anderson to implement the strategy of despoilation he had devised. Wilsons provided all things essential to Anderson’s plan other than the clients. The plaintiffs submitted that Wilsons was wilfully blind to Anderson’s plan because the correspondence that passed between Anderson and Bryant was enough to indicate to a reasonable person that:

(a) Anderson was subject to a contractual restraint following the termination of his employment;

(b) Anderson was subject to equitable duties both of confidence and as a fiduciary;

(d) Anderson had retained and used confidential information.

It is really (b) and (d) that are of direct significance for the claim of knowing assistance. The existence of contractual restraints is not of direct relevance because the claim is not for assistance in a breach of contractual duty but rather in a breach of fiduciary duty. Further, an intention to compete for the business of former clients is not of significance unless doing so involves or is the consequence of a breach of fiduciary obligation.
I have concluded above that the plaintiffs have not established that there was any formulated plan prior to resignation developed in breach of Anderson’s fiduciary obligations. In that sense, as pointed out earlier (see [462] above) the case is distinguishable from Foresters, Dellow and Steadfast. Anderson did however, in breach of his fiduciary duty, retain and deploy certain Elston information. He retained and deployed some contact information although Wilsons was not aware of that. The area in which both breach and knowledge are established is in relation to the due diligence process prior to the entry of the CAR and in the Business Plan for the purposes of his Authorised Investment Manager application after entry into the CAR.
Bryant had knowledge of the use of some of that information and it is likely that someone in Wilsons had knowledge of the use of the balance of that information. However, the knowledge of that use was not such as to draw their attention to any generalised breach of fiduciary obligation as opposed to discrete breaches of duty in relation to the particular documents being used for particular, relatively narrow, purposes.
The issue is whether or not this is sufficient to make Wilsons a knowing assistant in his breach of fiduciary duty in a way that exposes Wilsons to pay compensation for the loss of the business of the Known Clients.
In other words, does the knowledge on the part of Wilsons of the retention and use of some Elston information and documents disclosed during the due diligence process and for the purposes of Anderson’s application to become an Authorised Investment Manager mean that it is liable to compensate Elston for all losses flowing from Anderson operating under the CAR? Or are the breaches of fiduciary duty discrete enough that Wilsons’ use of that information does not expose it in the same way that it would have been exposed if it had knowledge of a broader scheme on Anderson’s part to take Elston’s clients in breach of his fiduciary obligations.
This first requires consideration of the question of causation. In Foresters (at [9]) the plurality affirmed that it was “sufficient to show that the profit would not have been made but for dishonest wrongdoing”. Gageler J (at [88]) also endorsed the “but for” test, although his Honour contemplated that a material contribution to the benefit or gain of the fiduciary or knowing participant may be sufficient even in circumstances where it could not be concluded that the benefit or gain would not have been obtained but for the breach. The plurality did not accept this “revision of principle”: at [1].

No precise test has been prescribed for determining when it will be inequitable to account for a benefit on the basis that it has no reasonable connection with wrongdoing. Nor is there any need for such a test. All of the circumstances must be considered, including the nature of the conduct.

In the present case, I do not consider that the losses to Elston are within the scope of liability that ought be imposed. Notwithstanding that the “but for” test is satisfied because of the chain of steps taken, it would in my view be unjust to impose upon Wilsons liability for all of the consequences of Elston’s loss of customers when the only relevant wrongdoing of which it had knowledge was the use of some Elston material for the purposes of proving the nature of Anderson’s earlier work as part of its due diligence process. While it should be accepted that significant weight must be given to the prophylactic effect of the liability imposed upon those who knowingly assist a breach of fiduciary duty, that does not justify the imposition of liability which happens to satisfy the but for requirement but would be wholly disproportionate to the involvement in and significance of the breach of fiduciary duty. The situation is plainly distinguishable from that in Foresters itself, because in that case there was an overall plan to wrongly take the business of Lifeplan and Foresters knew of and actively participated in the implementation of that plan. Here there was no overall plan, discrete breaches of fiduciary duty, no loss to Elston arising directly from the retention or use of the information and no broader knowledge on the part of Wilsons which would make the imposition of liability appropriate. For this reason, the claim for equitable compensation will be dismissed.

Matters not necessary to deal with

In these circumstances, it is strictly not necessary to address the quantum of equitable compensation. However, given the detailed evidence in relation to the amount of the loss suffered by Elston by reason of Anderson’s conduct, it is appropriate, in case I am wrong about my conclusion on liability, to record my findings on matters going to quantum.

Valuation

The experts

Two experts gave evidence as to the value of Elston’s business on 30 June 2020 and on 30 June 2021. It was by this means that the plaintiffs contended that the loss in value of the plaintiffs’ business arising from Anderson’s conduct could be captured.
The two experts were Jason Phillips of JNP Advisory Pty Ltd and Andrew Clifford of RSM Australia Pty Ltd. Both were very well-qualified. Mr Phillips appeared to have greater valuation experience focused on financial services and financial advisory businesses such as Elston. He estimated that he had carried out approximately 75 valuations of financial planning advisory businesses over the past three years. Mr Clifford had somewhat more general valuation experience. His company was on a number of valuation panels of major banks. He valued financial services businesses of a similar size to Elston’s Canberra office for banks in relation to funding transactions involving those businesses. He estimated that he undertook around five such valuations per year. It was not possible to differentiate their opinions simply on the basis of the differences in their respective qualifications or experience. Both gave what appeared to be honest and fair expert opinion evidence.

Different methods of valuation

The experts adopted differing methods of valuing the future earnings and cash flows of the business. Mr Phillips adopted the discounted cash flow (DCF) method which involved making a forecast of revenue for a number of years into the future and then discounting those numbers back to the date of the valuation.
Mr Clifford, on the other hand, adopted the future maintainable earnings (FME) method. That takes earnings at a particular point in time and assumes that they will be the earnings going forward. Then a capitalisation rate is applied to determine the value of the entity. In determining the capitalisation rate, thought is given to issues such as future growth, the underlying characteristics of the business, strength of the revenue streams and any other relevant factors. In that way, there is some attempt to address the issues that would be addressed in the discounted cash flow method by the estimates of future revenue. As a secondary valuation method, Mr Clifford used a capitalisation of ongoing revenue method. That involved applying benchmark revenue multiples for earnings of financial planning businesses to income from clients with particular demographic or financial characteristics in order to arrive at a value of the business.
Both experts agreed that the FME method would be more suitable in a case where revenue and earnings will be stable in the future. That was because it involved taking an historical figure as a marker for revenue and earnings in future years. On the other hand, the DCF method took better account of the possibility of variations to future earnings from one year to the next and exposed for consideration the assumptions about what those future earnings would be.
However, the experts differed as to which method was suitable in the circumstances of the present case. Mr Phillips asserted that the variability of future earnings and the exposure of assumptions made the DCF method more suitable. He drew particular attention to what he described as “arbitrary management allocations/adjustments” in the accounts which he considered would not accurately reflect the expenses of the business on an ongoing basis and for which he had made adjustments. Mr Clifford accepted that the DCF method had a strong theoretical basis but considered that the FME method with a secondary use of capitalisation of ongoing revenue methodology were more appropriate because they are the most common methodologies that market participants would adopt. He accepted that he had proceeded on the basis of the accuracy of the financial accounts and that the scope of his work did not involve undertaking any verification procedures. He accepted that if the financial information provided to him was not accurate, then he would need to amend his valuations.
During the course of evidence, both experts were asked about “rule of thumb” methodologies involving the application of multiples to revenue. These produced figures which were reasonably consistent with the figures that each expert had arrived at using more sophisticated methodologies. That was a product of the fact that the rules of thumb were very dependent upon the multiple of revenue adopted. The basis for selecting one multiple rather than another was not fully explored.

Paper loss only?

Wilsons submitted that the valuations represented only a “paper loss” because the loss had not been crystallised by the sale of the business and there was no claim of a loss of opportunity to make a particular sale. Wilsons did not then go on to explain the consequences of that submission. Because both methods of valuation are dependent upon an assessment of the future earnings of the business, it is clear that a substantial loss has been suffered by Elston as a consequence of the deprivation of income from the Known Clients. The annual income earned by Elston from these clients was $531,000. This provided the basis for the calculations by the valuers. Further, as discussed below, there was a degree of disruption caused to the Elston business as a result of the departure of these clients and the potential loss of other clients. The difference in valuations of the business as at 30 June 2020 and 30 June 2021 provides a basis to capture the value of the income stream lost as well as the disruption caused to Elston’s business. In the absence of any alternative method of valuing the loss being identified by the parties, it provided a means by which that could occur.

Valuations arrived at

The different valuations arrived at by the experts are summarised in the following table.

2020 2021 Difference

Phillips report $7,688,866 $3,164,548 $4,524,318

Phillips method $5,598,459 $2,728,931 $2,869,528 adjusted

Phillips rule of $6.78 million $3.46 million $3.32 million thumb method

Clifford report $5.4 million $3.8 million $1.6 million

Clifford rule of $4.75 million $3.11 million $1.64 million thumb method Clifford adjusts Phillips report to $6.4 million $2.8 million $3.6 million include $375,000 bonus

The sources of these figures require some explanation.

(a) The “Phillips report” and the “Clifford report” are the expert reports initially produced by each using the DCF and FME methods respectively.

(b) The “Phillips method adjusted” involves:

(i) using the DCF methodology adopted by Mr Phillips but including, as expenses of the business, amounts for the payment of staff incentives sufficient to bring overall staff costs (wages, superannuation and incentives) up to 37.1% of revenue; and

(ii) calculating revenue growth in future years at 11 percent rather than 13 percent as had been done in his initial report.

(b) The entries involving “rule of thumb method” involve the estimates based upon multiples of revenue but with each expert adopting different multiples. The rule of thumb method was not seen by the experts as an appropriate method of valuing the business because it was usually used to value smaller parcels of clients rather than the business as a whole.

(c) Mr Phillips adopted a multiple of 3 in 2020 and 2 in 2021. The lower multiple in 2021 was because of the key person risk arising from the possibility that Anderson would take more clients. Mr Clifford, on the other hand would have adopted multipliers of 2.1 and 1.8.

(d) The final entry in the table is the figure that would be arrived at if an amount of $375,000 was included for staff incentives within Mr Phillips’ original calculations. The figure of $375,000 was derived from the Elston management figures and included the combined cost of staff incentives (including both short-term bonuses and the DEEP) in 2020.

The DCF method involved construction of estimates of future revenue for a number of years in advance. This allowed, and readily exposed for scrutiny, adjustments made for future years from the historically available figures. Because of the potential across a wide range of inputs for adjustments to be made from historical figures, it provided a range of ways in which the cash flows for future years and hence the valuation may be affected. Those assumptions were, however, directly stated.
The FME method allowed “normalisation” of earnings, that is the exclusion of abnormal expenses or income so as to determine what the earnings would be in a normal year in the future. After that was done, the key element of the process was the selection of the multiple to be applied to those normalised earnings. This was done by reference to those of comparable companies and adjustments to make the figures for comparable companies applicable to the company in question. This exercise involves a great degree of professional judgment as to how to treat the range of multiples indicated by comparable companies and the extent of adjustment that needed to be made to take account of the differences between the comparable companies and the subject company. It is within those adjustments that all uncertainties as to the future are contained. While those uncertainties may be described in general terms, the consequences of any particular uncertainty are not exposed and a single figure must ultimately be chosen which is simply an exercise of professional judgment.

Principal areas of contention

In addition to preparation of initial reports, the experts prepared a joint statement which identified areas of agreement and disagreement. They also gave oral evidence which further elaborated upon their areas of disagreement. Some of the significant areas of disagreement are described below.
Relevance of valuation methods: The experts disagreed on what market participants use in the valuation of companies. Mr Clifford said that he had never valued such a business using the DCF method as part of a bank’s credit procedures, nor had he received such a valuation from a prospective purchaser. Mr Phillips said that it was used. In this case, the Parker Financial offer made to Elston was based upon a multiple of earnings before income and tax (EBIT), more consistent with the approach of Mr Clifford than Mr Phillips. In the absence of further evidence, it is not possible to reach a conclusion about which methodology is more used in the marketplace. The FME methodology has the benefit of simplicity. The DCF methodology appears better able to accommodate future uncertainties and the potential for a business to be run differently under its new owners.
Annual revenue growth and the inclusion of staff incentives: In relation to Mr Phillips’ DCF methodology, one of the components of his projections for future year earnings was the growth of Elston’s revenue at 13 percent.
In arriving at a figure in relation to projected revenue growth, one issue was the consequence of the acquisition of Dragonfly Financial Services in 2018 resulting in an increase in adviser fee revenue in 2019. Another was how to deal with abnormally high referral payments in the 2018 financial year. In his revised calculations, Mr Phillips adopted a year-on-year revenue growth rate of 11 percent. Mr Clifford was of the opinion that if the consequences of the referral payment and the Dragonfly acquisition were removed (and hence the revenue figures normalised) the revenue growth was approximately 8.5 percent.
Another significant component of Mr Phillips’ DCF methodology was the exclusion of the cost of bonuses and DEEP incentives from the expenses of the business. He did this because he considered that these were discretionary payments. Mr Clifford thought it was appropriate to include them because they had been paid in the past and were common in the financial services industry. In the event that they were to be included, Mr Phillips pointed to their variability and thought that if they were to be included, they should be done in a way that resulted in the total adviser costs being equivalent to those paid by other businesses.
During the course of his evidence, Mr Phillips had prepared alternative valuations which were based upon revenue growth of 11 percent and the payment of bonuses at 37.1 percent of the adviser wages and superannuation costs. These two figures were averages taken from six different financial advisory firms that he had valued in 2021. For staff bonuses, the combination of wages, superannuation and bonuses was on average 37.1 percent of the revenue of such businesses. It was for that reason that in preparing an alternative calculation, he included an adjustment to the adviser costs that resulted in them being 37.1 percent of revenue rather than a figure based on that which had been paid by Elston in any particular year. With these adjustments to staff costs and revenue, the difference in value between 2020 and 2021 was substantially reduced (from $4.5 million to $2.9 million).

Conclusions on valuation

In my view, the downward adjustments contained in Mr Phillips’ revised figures were clearly appropriate. They were the adjustments to reduce the anticipated growth rate from 13 percent to 11 percent and to allow a mechanism for taking into account bonuses and incentive schemes. As far as the change from 13 percent to 11 percent is concerned, that was in order to remove the effect of the Dragonfly acquisition and the anomalously large referral payment made in 2018.
So far as the staff incentives were concerned, it was appropriate to include as a business expense the ongoing need to make incentive payments in order to retain staff and continue generating the revenue of the business. Mr Phillips’ method of adjustment had a reasonable basis having regard to the overall employee expenses of other businesses. While the method of adjustment did not specifically give effect to the incentive structure adopted by Elston or any differences between its adviser model and the model to be adopted by an acquirer of the business, it provided a reasonable basis for addressing this issue having regard to the fact that an acquirer may not continue all of Elston’s practices.
The incorporation of these amendments reduced the difference between the value of the business in 2020 and 2021 from $4.5 million to $2.9 million. The downward adjustment of the projected growth left the difference between Mr Phillips and Mr Clifford as 11 percent versus 8.5 percent. The consequences of applying Mr Clifford’s 8.5 percent to the valuation exercise undertaken by Mr Phillips were not the subject of evidence. It is not possible, having regard to the complexity of the valuation exercise, for the court to assess the consequences for itself.
Each of those valuations incorporates within it exposed or unexposed contestable assumptions. As just noted, the nature of Mr Phillips’ valuation is such that it is not readily possible for the court to test the sensitivity of the valuation to different inputs. On the other hand, given the dependence of Mr Clifford’s valuation upon the selection of a multiplier, it is readily apparent how sensitive his valuations are to minor adjustments in the multiplier or to the ongoing EBIT figure to which they are applied.
Ultimately, the matter is to be resolved on the basis that Wilsons bears the onus of proof on this issue. There are some uncertainties surrounding the inputs to the valuation exercise undertaken by Mr Phillips. There are clear difficulties with the lack of transparency in the assessment of the EBIT multiples adopted by Mr Clifford. I cannot say on the balance of probabilities that the $2.9 million assessed in Mr Phillips’ revised calculations represents the difference in value between 2020 and 2021. In those circumstances, the assessed difference in value of $1.6 million arrived at by Mr Clifford represents a floor on the assessed difference. In my view, that needs to be adjusted so as to better reflect the actual revenue figures from 2021. The adoption of the 2020 revenue figures would be appropriate if the sole aim of the exercise was to assess the drop in value arising from the loss of $531,000 of revenue from the clients who left Elston and went to Wilsons. However, in the present case, the consequences of Anderson’s conduct are more likely than not to have extended beyond the mere loss of revenue. The evidence discloses substantial disruption to the activities of the remaining staff arising from the loss of or threat of loss of clients. No other explanation is provided for the reduction in revenue. However, given the lack of analysis of the reasons for the 2020 decline, it is not possible to say that the whole of the difference is attributable to longer-term factors that should be reflected in the assessment of FME.

(a) start with the 2021 EBIT figure arrived at by Mr Phillips of $713,296;

(b) determine the difference between that and the EBIT figure of $915,000 that Mr Clifford used to arrive at the FME figure of $900,000, namely, (in round terms) $200,000;

(c) attribute half of that difference to short-term factors which should not be reflected in the FME and half of that to longer-term factors which should be reflected in the FME; and

(d) therefore, calculate the FME based on a figure of $806,000 rather than the $900,000 used by Mr Clifford.

That gives a 2021 value of approximately $3.4 million ($815,000 x 4.25) and a difference between the 2020 and 2021 value of $2.0 million ($5.4 million - $3.4 million) Given the uncertainties in the inputs into the various methods adopted by the valuers, I cannot be satisfied on the balance of probabilities that the difference in value of the business was greater than $2.0 million.
Had it been necessary to do so, Elston's loss would have been assessed at $2.0 million.

Proportionate liability

Wilsons submitted that the plaintiffs’ claim was an apportionable claim for the purposes of s 107B of the Civil Law (Wrongs) Act 2002 (ACT). This is an issue which it would only be necessary to determine if an award of equitable compensation was to be made. However, as part of the contingent assessment of that issue, it is appropriate to address that submission. Section 107B defines apportionable claim as including “a claim for economic loss or damage to property in an action for damages (whether in tort, under contract or otherwise) arising from a failure to take reasonable care”. Wilsons accepted that no case has recognised an accessory’s liability as apportionable under State or Territory legislation. Despite this, it submitted that if the court found that, upon the receipt of the due diligence material which was inadequately redacted, Wilsons had “failed to take reasonable care in responding to the breach” then Wilsons’ liability should be proportionally limited to the loss or damage flowing from that failure to take reasonable care and not every other breach by Anderson.
I do not consider that the loss suffered by Elston arose from a failure on the part of Wilsons take reasonable care. Rather, it was caused by Anderson’s breach of fiduciary duty in relation to which Wilsons knowingly assisted. It is not open, in order to attempt to make the statute apply, to recharacterise the knowing assistance as a failure to take reasonable care. If that were permissible, then the source of liability in almost any claim could be recharacterised in that way and the terms of the definition, limiting the category of cases in which apportionment is available, would be largely defeated by that recharacterisation process. This conclusion appears to be consistent with the approach taken in George v Webb [2011] NSWSC 1608 at [325] and Cassegrain v Cassegrain [2016] NSWCA 71 at [84]. See also Alison Gurr, ‘Accessory Liability and Contribution, Release and Apportionment’ (2010) 34 Melbourne University Law Review 481 at 514.
Having said that, the substantive point made by Wilsons, that Wilsons’ liability should be limited to any loss or damage flowing from the use of the due diligence material and not every other breach by Anderson, is a good one and forms the basis for my conclusion above that no order for compensation should be made.

Joint or several liability

Wilsons made a submission that the liability of a knowing assistant in Wilsons’ position was several and not joint and several with the liability of Anderson. It referred to the useful summary of the authorities by Stevenson J in Edgewater Homes Pty Ltd v Donohoe [2019] NSWSC 44. No submissions were made as to the consequences for any orders that might have been made in this case of several or joint and several liability of Wilsons with Anderson in light of the judgment against him. Having regard to the conclusion that I have reached, it is not necessary to pursue this issue further. Order
Having regard to the conclusion above at [499] that Elston’s claim must be dismissed, the orders of the Court are:
The plaintiffs’ claim against the second defendant is dismissed.
The plaintiffs are to pay the second defendant’s costs of the proceedings.
Order 2 does not take effect for 14 days and if any party notifies the associate to Mossop J by email (copied to each other party) that it wishes to be further heard in relation to costs, order 2 does not take effect until further order of the Court.

I certify that the preceding five hundred and thirty-seven [537] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Mossop

Associate:

Date: 2 September 2022 Amendments

2 September Replace “I Meagher” with “J Moffett” Page 2, “Representation: 2022 Counsel”

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