The Plaintiffs are companies associated with individual partners constituting the accounting, financial planning and advisory service partnership now known as Focus Partners. The First and Second Defendants are nominee companies of the Third Defendant, Ms Dianne Bainbridge. Ms Bainbridge was a former partner and employee of Focus Partners. She ultimately left the employ of Focus Partners on 16 March 2012, commencing with the Fifth Defendant, Huon Financial Planning Pty Ltd (hereinafter "HFP"), as an employee on 20 March 2012. She remained there until 15 March 2014 when her employment was terminated by HFP. [1]
After Ms Bainbridge left the Plaintiffs, 43 entities constituting 31 Focus Partners clients left that practice to go to HFP and the Fourth Defendant's accounting practice known as Huon Partners (hereinafter "Huon Partners"). [2] The circumstances in which they did so and whether it was in violation of certain restraints to which Ms Bainbridge were matters in issue. The clients are referred to in this judgment as the "schedule A" clients being a reference to the schedule annexed to the Plaintiffs' Further Amended Statement of Claim. Subsequent to Ms Bainbridge's employment with HFP ceasing, 26 of the 31 clients referred to earlier left HFP. [3] Requests were made by clients to transfer to Ms Bainbridge's new practice Gold Financial Planning. [4]
Proceedings against Huon Partners were brought but resolved by consent orders on 30 January 2014 dismissing the proceedings with no order as to costs.
Proceedings against the First to Third Defendants alleging breaches of contract on the part of Ms Bainbridge were brought but resolved by consent orders on 28 April 2015 specifying:-
1. Judgment for the Plaintiffs against the First, Second and Third Defendants in the sum of $66,000.00; and
2. No order as to costs (with the intent and effect that the Plaintiffs and each of the First, Second and Third Defendants pay their own costs of the proceedings).
Proceedings against HFP continued, asserting:-
1. A claim based on knowingly assisting in the breach of fiduciary duty or knowingly profiting by breach of the duty in accordance with the principles in Barnes v Addy; [5]
2. Procuring or inducing breach of contractual relations. [6]
HFP denied the Plaintiffs' claim on both bases. It also contended, that the extent of the contractual obligations owed by the First to Third Defendants through Ms Bainbridge, were in breach of the Restraints of Trade Act (1976) (NSW) and/or unreasonable or excessive at law. [7]
HFP further pleaded that if it is found to be liable for any part of the Plaintiffs' claim then liability is limited in such proportion of the loss or damage as the Court considers just, having regard to the extent of relative responsibility pursuant to the proportionate liability provisions of Part IV of the Civil Liability Act (2002) (NSW). [8] However no submissions were ultimately made to this end.
Three witnesses gave oral evidence in the liability component of the Plaintiffs' case. These were Ms Christensen (on behalf of the Plaintiffs who was a Director of the Third and Fourth Plaintiffs), Ms Ann Marie Humphries (sole director and shareholder of HFP) and Ms Diane Sibbald (a former employee of Focus Partners and friend of Ms Bainbridge). Affidavits were read from a limited number of clients without requirement for cross examination.
Despite Ms Christensen verifying an affidavit in support of the allegations in the pleadings it became clear that many of the allegations were based on assumptions. In oral evidence she acknowledged as much. She conceded that she took Ms Bainbridge's resignation very personally and she was upset as she felt that Ms Bainbridge had lied to her. [9] Nevertheless I did not regard Ms Christensen's substantive evidence in the proceedings as generally unreliable. The Plaintiffs' case however was essentially a circumstantial one resting on a rejection of Ms Humphries' evidence and inferential reasoning to the contrary. As these reasons will elaborate I have had cause to carefully scrutinise the evidence of Ms Humphries who at times I found unreliable. Neither Ms Bainbridge nor any of the representatives of Huon Partners were called in the proceedings. As these reasons will further elaborate, inferences were sought to be advanced (in part) on the basis of that failure.
[2]
Principles of Inferential Reasoning
The principles relevant to inferential reasoning were canvassed in Seltsam Pty Ltd v McGuiness, [10] where Spigelman CJ stated:-
"[84] It is often difficult to distinguish between permissible inference andconjecture. Characterisation of a reasoning process as one or the other occurs on a continuum in which there is no bright line division. Nevertheless, the distinction exists.
[85] Lord Macmillan in Jones v Great Western Railway Co (1930) 144 LT 194, in the context of stating that a possibility that a negligent act caused injury was not enough, said (at 202):
"The dividing line between conjecture and inference is often a verydifficult one to draw. A conjecture may be plausible, but is of no legal value, for its essence is that it is a mere guess. An inference in the legal sense, on the other hand, is a deduction from the evidence, and if it is a reasonable deduction it may have the validity of legal proof. The attribution of an occurrence to a cause is, I take it, always a matter of inference."
[86] After referring to this passage, Sir Frederick Jordan in Carr v Baker (1936) 36 SR (NSW) 301 at 306 said:
"The existence of a fact may be inferred from other facts when those facts make it reasonably probable that it exists; if they go no further than to show that it is possible that it may exist, then its existence does not go beyond mere conjecture. Conjecture may range from the barely possible to the quite possible."
[87] As Lord Wright put it in a frequently cited passage in Caswell v PowellDuffryn Associated Collieries Ltd [1940] AC 152 at 169-170:
"Inference must be carefully distinguished from conjecture or speculation. There can be no inference unless there are objective facts from which to infer the other facts which it is sought to establish. In some case the other facts can be inferred with as much practical certainty as if they had been actually observed. In other cases the inference does not go beyond reasonable probability. But if there are no positive proved facts from which the inference can be made, the method of inference fails and what is left is mere speculation or conjecture."
[88] The test is whether, on the basis of the primary facts, it is reasonable to draw the inference: see, eg, Luxton v Vines (1952) 85 CLR 352 at 358."
More recently this decision was favourably cited in State of New South Wales v Fuller-Lyons. [11] Although the factual findings in that case were reversed on appeal by the High Court, the principles relating to the application of inferential fact-finding were not. [12]
In Henderson v Queensland [2014] HCA 53, Gageler J referred to the principles for drawing inferences and stated:-
"[89] Generally speaking, and subject always to statutory modification, a party who bears the legal burden of proving the happening of an event or the existence of a state of affairs on the balance of probabilities can discharge that burden by adducing evidence of some fact the existence of which, in the absence of further evidence, is sufficient to justify the drawing of an inference that it is more likely than not that the event occurred or that the state of affairs exists. The threshold requirement for the party bearing the burden of proof to adduce evidence at least to establish some fact which provides the basis for such a further inference was explained by Kitto J in Jones v Dunkel [94]:
"One does not pass from the realm of conjecture into the realm of inference until some fact is found which positively suggests, that is to say provides a reason, special to the particular case under consideration, for thinking it likely that in that actual case a specific event happened or a specific state of affairs existed."
[90] That description of the ordinary operation of the civil standard of proof applies equally to a case in which the legal burden of a party is to prove the non-happening of an event or the non-existence of a particular state of affairs as to a case in which a party's legal burden is to prove the happening of an event or the existence of a particular state of affairs. As Davidson J earlier explained in the Supreme Court of New South Wales in Ex parte Ferguson; Re Alexander [95]:
"In all legal proceedings the basic principle at common law is that in civil cases a plaintiff must prove the essential elements of his case even if that course involves establishing the assertion of a negative ... He must establish what is really the affirmative in substance, not what is merely affirmative in form ... But if the party bearing the onus furnishes some evidence which gives rise to a presumption or inference of fact in his favor or that presumption already exists, the onus shifts to the other party".
His Honour's reference to evidence adduced by the party bearing the legal burden of proof giving rise to a "presumption or inference of fact" was to nothing more than an inference of fact drawn, in accordance with ordinary processes of inferential reasoning, in the absence of further evidence[96]. His Honour's reference to an "onus" then shifting to the other party was to nothing more than the practical need (sometimes referred to as a "tactical burden") for an opposing party to adduce further evidence if that party wants to prevent such an inference of fact actually being drawn in the circumstances of the case[97]."
Although His Honour's decision was a dissenting one, neither party submitted that it inaccurately referred to the relevant principles.
The principles relevant to the drawing of inferences where witnesses were not called and other evidence in relied on were discussed in Manly Council v Byrne. [13] In that case, Campbell J (with whom Beazley JA and Pearlman AJA agreed) referred to the decision of the High Court of Australia in RPS v R [14] and stated:-
"[57] In RPS v R [2000] HCA 3; (2000) 199 CLR 620 a majority of the High Court (Gaudron A-CJ, Gummow, Kirby and Hayne JJ), dealing with a case where a complainant gave direct evidence of sexual misconduct by the accused towards her, and the accused failed to give evidence, set out at [23] a passage from the judgment of Abbott CJ in R v Burdett (1820) 4 B & Ald 95 at 161-162; (1820) 106 ER 873 at 898:
"It is useful to start by referring to the well-known cases of R v Burdett and Jones v Dunkel. Burdett arose from a prosecution for criminal libel.
Abbott CJ said:
"A presumption of any fact is, properly, an inferring of that fact from other facts that are known; it is an act of reasoning; and much of human knowledge on all subjects is derived from this source. A fact must not be inferred without premises that will warrant the inference; but if no fact could thus be ascertained, by inference in a court of law, very few offenders could be brought to punishment. In a great portion of trials, as they occur in practice, no direct proof that the party accused actually committed the crime, is or can be given; the man who is charged with theft, is rarely seen to break the house or take the goods; and, in cases of murder, it rarely happens that the eye of any witness sees the fatal blow struck or the poisonous ingredients poured into the cup. In drawing an inference or conclusion from facts proved, regard must always be had to the nature of the particular case, and the facility that appears to be afforded, either of explanation or contradiction. No person is to be required to explain or contradict, until enough has been proved to warrant a reasonable and just conclusion against him, in the absence of explanation or contradiction; but when such proof has been given, and the nature of the case is such as to admit of explanation or contradiction, if the conclusion to which the proof tends be untrue, and the accused offers no explanation or contradiction; can human reason do otherwise than adopt the conclusion to which the proof tends? The premises may lead more or less strongly to the conclusion, and care must be taken not to draw the conclusion hastily; but in matters that regard the conduct of men, the certainty of mathematical demonstration cannot be required or expected; and it is one of the peculiar advantages of our jurisprudence, that the conclusion is to be drawn by the unanimous judgment and conscience of twelve men, conversant with the affairs and business of life, and who know, that, where reasonable doubt is entertained, it is their duty to acquit; and not of one or more lawyers, whose habits might be suspected of leading them to the indulgence of too much subtlety and refinement."
Their Honours continued at [23]:
"This mode of reasoning was described by Windeyer J in Jones v Dunkel as "plain commonsense", and so it is. But it is essential to note its limits. It relates to the drawing of inferences or conclusions from other facts. It is not a mode of reasoning that is concerned, for example, with whether the direct evidence of an eyewitness should be accepted."
[58] I do not take that passage as deciding that inference from failure to call a witness never has a role to play in deciding whether evidence of an eyewitness should be accepted. Rather, the passage is directed to the particular type of reasoning set out by Abbott CJ, where an ultimate fact is being proved by inference, and a witness who could cast light on whether that ultimate fact is really true fails to give evidence. Manifestly, deciding whether an eyewitness should be accepted is not reasoning of that type.
[59] In RPS, their Honours also said, at [26]:
"In a civil trial there will very often be a reasonable expectation that a party would give or call relevant evidence. It will, therefore, be open in such a case to conclude that the failure of a party (or someone in that party's camp) to give evidence leads rationally to an inference that the evidence of that party or witness would not help the party's case and that:
"where an inference is open from facts proved by direct evidence and the question is whether it should be drawn, the circumstance that the defendant disputing it might have proved the contrary had he chosen to give evidence is properly to be taken into account as a circumstance in favour of drawing the inference.""
The two Jones v Dunkel inferences are ones which, if drawn, can sometimes be taken into account in deciding whether to accept evidence of an eyewitness. If a party called an eyewitness, but the judge had some doubts about the credibility of that witness, the story of that witness did not mesh well with other established facts, and there was a basis in the evidence for concluding that the eyewitness's evidence was incorrect, a trial judge could sometimes be justified in using the failure of a party to call other available eyewitnesses as part of the reasons for not accepting the evidence of the eyewitness who was called. Further, whether the light was on is not itself an ultimate question in the case, but just one matter which needs to be decided as part of a complex of facts which are evaluated to decide whether the Council took reasonable care. For these reasons, I would not regard the fact that the question of whether the light was on depended partly on evidence of eyewitnesses as in itself meaning that no inference of a type licensed by Jones v Dunkel could be drawn."
With these principles in mind I turn to consider the issues.
[3]
Facts
Dianne Bainbridge commenced working for Howard and Christensen (as Focus Partners was previously known) in superannuation administration on 10 November 2004. Although she had no formal educational qualifications, it was not in issue that she had acquired significant experience in this area. [15]
In 2006 Howard and Christensen purchased a financial planning practice from Colin Trinnick. Ms Bainbridge was then provided with external financial planning training by Howard and Christensen and subsequently was involved in the work which flowed from this practice. Ms Bainbridge was provided with a portfolio of approximately 160 clients, none of whom were existing clients of Howard and Christensen.
During the period that Ms Bainbridge undertook this financial work, she befriended, Ms Anne-Marie Humphries. This friendship commenced in 2006. At that time Ms Humphries was an authorised representative of Lonsdale Finance Group Limited (hereinafter referred to as Lonsdale) and Ms Bainbridge joined the Group. They would regularly speak at Lonsdale professional development events. The evidence was that Ms Bainbridge would telephone Ms Humphries and ask questions in relation to technical issues when she first moved into financial planning. [16]
HFP was incorporated on 27 May 2010 with Ms Humphries as the sole director and shareholder. [17] The incorporation occurred before Ms Humphries changed dealer groups from Lonsdale to Securitor Financial Group Ltd (hereinafter referred to as Securitor).
On 16 February 2010 Howard and Christensen made an offer to Ms Bainbridge to become a partner. Negotiations then followed. Ms Humphries' evidence was that Ms Bainbridge sought advice from her when she was considering this offer. She stated that:-
"She (Ms Bainbridge) had some misgivings at the time about the proposed arrangements with Focus Partners and the people and personalities involved." [18]
On 8 June 2010 Ms Bainbridge signed an option deed which enabled her to acquire a 5% interest in the partnership on 1 July 2010 and an option to acquire a further 5% on 1 July 2011 by signing a deed of accession, under which she would be bound by the partnership upon delivering a signed option notice.
On 1 July 2010 Ms Bainbridge exercised the first option by signing the deed of accession on behalf of her nominee companies, the First and Second Defendant, by which she agreed to be bound by the partnership deed dated 8 June 2010, signing and delivering an option notice. [19]
Whatever misgivings Ms Bainbridge may have had, on 2 July 2010 Ms Christensen advised her "now you really are a partner, congratulations" to which Ms Bainbridge responded in positive terms. [20]
Ms Bainbridge's involvement in the partnership did not last long. Shortly before the second option was to expire, Ms Bainbridge resigned as a partner giving six months' notice. The notice cited an inability to participate effectively in the ongoing management of the business, needless stress and impact on health. Ms Bainbridge indicated a willingness to continue as an employee. [21]
On 30 November 2011, Ms Bainbridge and her nominee companies formally resigned as partners of Focus Partners [22] and Ms Bainbridge entered an employee agreement which contained a restraint. [23] Ms Humphries gave evidence of meeting Ms Bainbridge around this time. The details were:-
"31. In about November 2011, I had a meeting with Di at Café Grove that included the following conversation:
Me: 'My business has been doing well. I really need to get some scale. I am looking at employing another adviser. You should give some thought to working with me if the new arrangement at Focus Partners doesn't work out.'
Di: 'Thanks. I'm still looking at some options with other Lonsdale firms in Melbourne and Sydney and I have also been approached by AMP to take over the running of a practice her in Albury-Wodonga.'
Me: 'Well if you are interested in working with me, you should know that it would be on the basis that you would be starting from scratch again. I would be prepared to cover your wage from the existing business revenue for the first 12 months while you build up a new business and help me with my clients as well as marketing. We would then need to review things to see how we are travelling after the initial 12 month period.'
32. Given my knowledge of the industry we work in, and my experience in financial planning, I expected that Di would probably be under a restraint of trade and would definitely not be able to contact any of her former clients at Focus Partners if she was to resign from her job with them." [24]
When Ms Bainbridge resigned from the partnership and a new employment contract was to be arranged, Ms Christensen recorded, in an email to Ms Suzy Salomon of Focus Partners, discussions which she had had with Ms Bainbridge about this matter. The email is dated 11 December 2011, suggesting that the employment agreement was executed afterwards but to commence from 30 November. Nevertheless the email records:
"Just a quick note about something that is concerning me a little. Everything is going well along with getting the changeover of all the partnerships organised. Meeting with Di out and Josh in from 30 November. All except one thing that is. I gave Di her employment contract on 1 December and she immediately told me that she wouldn't be signing it till everything was done, and when I asked why, she said it is because she doesn't trust Terry and Josh. The response does not add up, because clearly she means that she doesn't trust me either. I'm just not at all sure what her reason could be for holding back on this contract. I made it clear to her that there is a two year restraint of trade in there to keep it in line with the partnership deed. She wanted to know why hers was different to the rest of the staff. Then I made it clear to her that she already has a two year restraint of trade from the partnership deed anyway and that the rest of the staff would be re-evaluated with some of those having a longer period of restraint imposed when their contracts are renewed next.
I haven't gone back to her about it, as I don't want to let her think it is concerning me at all. I'm thinking maybe she just wants to blow a bit of smoke and make us feel that she has something up her sleeve? Maybe almost a bit of a tantrum? Or maybe she has got something going? I really have no idea, but I would like it signed before we pay her out. Have you any thoughts on how we should handle this one? Maybe give it some thought before you come up and we'll talk about it on Wednesday.
If we were in a position where we could have the contracts drawn up and pay her out this week so that the price is now ascertainable. I might draw them up and have them ready so that we can decide which way to go on Wednesday. May need your expertise to negotiate this without Di getting off side.
Talk soon. " [25]
Not long after recommencing as an employee, Ms Bainbridge commenced advising clients that she was leaving Focus Partners.
The two clients concerned were Norm Jessup and Lorraine Shennan. Evidence relating to them will be discussed later in these reasons.
There was evidence of Ms Bainbridge discussing her contemplating resignation with Ms Humphries in February 2012 including advising her that she had had legal advice as the restraint of trade clause in her employment contract and being advised by her solicitor that it was "overly restrictive and probably not enforceable." [26] However Ms Humphries denied discussion of any specific details of Ms Bainbridge's contracts or agreements with Focus Partners at this time. [27]
On 20 February 2012, Ms Bainbridge provided a hand-written letter to the partners at Focus Partners, giving four weeks' notice of her resignation. [28] The resignation was stated to be in accordance with the employment agreement.
The circumstances in which the resignation from Focus Partners was submitted to Ms Helen Christensen was set out (from Ms Christensen's perspective) in a file note. That file note records:-
"Just had an awful conversation with Di. I asked her to come and talk to me, and she did. Very aggressive. She said she simply cannot do it anymore. Asked her what she was going to do and she said that she had no idea, but has had job offers from Sydney, Melbourne, Geelong, Westpac and even Lonsdale approached her (so she says). She said that she cannot do it anymore, and that '…clearly there are opportunities out there' for her. She wanted to know when she would be finishing up, and I said I would have to think a bit more about that." [29]
Ms Humphries stated that Ms Bainbridge contacted her and informed her of her actions on or around 20 February 2012. [30] Specifically, Ms Bainbridge is said to have told Ms Humphries:-
"I've decided that I will stay in Wodonga as previously discussed. I would like to come and work with you. I am not interested in equity or anything like that, I just want a job. Like you, I can see some real opportunities to grow your business and I would like to be part of that."
Ms Humphries is said to have responded as follows:-
"I am pleased to hear that. We will need to catch up to work out what needs to be done. I imagine that they will cancel your AR status with Lonsdale pretty much straight away so we would need to sort out employment details, AR applications with Securitor and so forth. Let me know what happens."
On 22 February 2012, Ms Bainbridge was informed that she should serve out her notice period at home. [31] On the same day, Ms Bainbridge completed and answered a checklist. [32] In that checklist, was a broad acknowledgment and agreement by Ms Bainbridge that she had returned all originals and copies of client information, including but not limited to client lists, portfolio information, SMSF information, bank account details and data. Ms Bainbridge was specifically reminded about the existence of:-
1. Clause 28 of the partnership deed which states: "Restriction on outgoing partners which you are obliged to comply with"; and
2. The restraint of trade clause in her employment agreement. [33]
It appears that later that day on 22 February 2012, Ms Bainbridge contacted Ms Humphries. In that conversation, Ms Humphries indicated that she needed to organise Ms Bainbridge's authorised representative application with Securitor and arrangements would be made for the forms to be completed forthwith. [34]
One of the issues raised by the Plaintiffs was whether or not the circumstances of Ms Bainbridge commencing with HFP had advanced prior to the submission of the resignation. In this respect, the Plaintiffs drew attention to the fact that the application for Securitor Financial Group Ltd was submitted in respect of Ms Bainbridge on 23 February 2012. [35] That form, [36] is said to have been given by Ms Humphries to Ms Bainbridge after being notified by the telephone call of the resignation on 22 February 2012. At section 14 of the form it recorded that in transitioning to Securitor and changing from the previous license arrangement, Ms Bainbridge anticipated the cancellation of the existing license on 25 February 2012 and subject to the application being approved, she could commence with Securitor on 20 March 2012. [37] However, the form also recorded the following:-
"Unable to determine a starting date at this time, dependant on current employer reaction to lodgement on notice to terminate employment."
The above comment was crossed out. The Plaintiffs submitted that its presence indicated that the form was supplied to Ms Bainbridge before 22 February 2012. [38] In cross-examination, Ms Bainbridge indicated that she could not be fully sure that it was on or after 22 February 2012 that she obtained the forms from Securitor and gave them to Ms Bainbridge. [39] When it was then drawn to her attention that she had sworn to this effect in her affidavit, Ms Humphries stated:-
"I would think that was the case. I had been having discussions with Securitor about the possibility of Di joining me prior to that in terms of clarifying what their requirements would be should she decide to do that. So…" [40]
It was clear that the document submitted to Securitor required a number of documents to be annexed, including a compliance report and copies of proposed stationary. Ms Humphries suggested that the letterhead already existed as did the fax header sheet and the business card was also available as there was a template for her. [41] Ms Bainbridge indicated that, insofar as business cards were concerned, her printer would have a template but she did not have any copies. She stated that setting up the template was a straight forward matter involving simply putting the new name on the existing template. [42]
Ms Humphries gave evidence that the submission of the form was done very quickly. She stated in evidence:-
"It was done very quickly. I do recall that. I am aware that Di was very concerned about not having income from employment and was not wanting a break between employment because of her financial position. So I do believe that she came back with the forms very quickly." [43]
When the contents of her affidavit were drawn to Ms Humphries' attention she stated in reference to this matter:-
"If it says that in the affidavit, yes it does." [44]
Then, when it was put to Ms Humphries as to whether she was sure, she stated:-
"I can't be fully sure." [45]
Then further, it was suggested to her that the form was given to Ms Bainbridge before 22 February 2012 and Ms Humphries responded:-
"I don't believe that was the case." [46]
Following that and in response to my own question as to whether the form was given to Ms Bainbridge before her employment was terminated, Ms Humphries responded:-
"No. No, she asked me for all of those forms after she had resigned from Focus Partners." [47]
Finally, when it was suggested to her that the form was provided to Ms Bainbridge and completed by her at a time that was before her being placed on 'garden leave' by Focus Partners on 25 February, Ms Bainbridge responded:-
"I don't agree. I don't believe that was the case." [48]
Ms Humphries' evidence wavered. The contents of the form are more consistent with the form having been provided to Ms Bainbridge before 22 February 2012. In particular, the notation on the form (crossed out) and the subsequent insertion of the date upon which it was proposed that Ms Bainbridge's earlier authorisation would be cancelled (being 25 February) suggests that the form was supplied to her and first completed at a time when she was uncertain as to her commencement date. Ms Humphries' attempts, in cross-examination, to explain the entry by reference to the cancellation of Ms Bainbridge's status as an authorised representative of Lonsdale was inconsistent with the primary reading of the document. The provision of the form prior to 22 February 2012 was also more consistent with what was expressed by Ms Humphries as Ms Bainbridge's desire not wanting a break between periods of employment for financial reasons. In all the circumstances I am satisfied that the form was supplied to Ms Bainbridge prior to 22 February 2012 contrary to Ms Humphries' evidence.
[4]
What were the terms of the restraints?
It is not in issue between parties that Ms Bainbridge was bound by the terms of the partnership deed on 1 July 2010 when she signed a deed of accession, by which she agreed to be bound by its terms, and also signed and delivered an option notice. In terms of the partnership deed, the pertinent restraints were agreed between the parties as being relevantly set out in clause 28.2 of the deed which provides as follows:-
"The Outgoing Partner and its Representative agree with the Remaining Partners that during the period of 2 years after the Completion Date ("Restraint Period") they will not:
(a) solicit, canvass or in any way whatsoever seek the custom of or provide goods or services of the type provided by any of the Businesses to any person who was a client of any of the Businesses within the period of 24 months prior to the Completion Date;
…
(c) approach directly or indirectly any client of any of the Businesses to influence him or her to cease to be a client of the relevant Business or otherwise to entice him or her away from the relevant Business; or
1. …" [49]
It is not in issue that the completion date, for the purposes of this clause, was defined in clause 1.1 of the deed and was essentially 90 days after the date on which the purchase price of an outgoing partner's partnership had been determined. Ms Bainbridge resigned from the partnership on 11 May 2011 [50] and received payment for her partnership interest on or after 30 November 2011. [51] Accordingly, the "completion date" occurred on or after 30 November 2011 and the restraint in clause 28.1 commenced 90 days after that date being approximately 28 February 2012. The restraint therefore ended on or about 27 February 2014.
The restraint in the employment agreement was in these terms:-
"You shall not, directly or indirectly, except with the prior written consent of Focus Partners, at any time during the term of this Agreement and for a period of two years following termination of this Agreement:
…
Canvas or solicit business from or interfere in any manner with any client of Focus Partners with whom you had dealings with, or performed services for, during your employment with Focus Partners, whether or not you dealt with them personally;
Perform or cause to be performed in any capacity and by whatever means any business or services for any client of Focus Partners with whom you had dealings or performed services for during your employment with Focus Partners; or
..." [52]
As noted earlier, Ms Bainbridge gave notice of her termination of employment on 20 February 2012 and it was effectively brought to an end on 16 March 2012 when the notice period expired. [53] It follows that, by its terms, the restraint in the employment agreement commenced on 16 March 2012 and ended on 15 March 2014.
[5]
Enforceability of the restraints
HFP made submissions as to the enforceability of the aforesaid restraints. With the exception of the argument that the claim that the obligations were breaches of the Restraints of Trade Act 1976 and /or unreasonable or excessive at law [54] they were not pleaded in the defence and objected to by the Plaintiff. [55] However for reasons that will become apparent it is unnecessary for me to consider this point.
HFP first contended that clause 28.2(a) in the partnership deed was a hybrid restraint because it contained a non-dealing restraint and a non-solicitation restraint with the non-dealing restraint being "buried" within the non-solicitation restraint. It contended that a clause which was intended to simply restrain a Defendant from providing services should be clearly expressed. Otherwise, it was submitted that the covenant informs a restraint of one thing which he or she must do but then gives three alternatives with no mechanism for determining which of the three applies. Reference was made in this regard to the decision of Allsop P in Hanna v OAMPS Insurance Brokers Limited. [56]
The relevant restraint in that case was hybrid referring to both soliciting and dealing. It also had varying restraint periods. In upholding the clause's validity Allsop P stated:-
"[28] …….. If, on its true construction, a covenant tells a party that there is just one thing he or she must not do, but then gives three alternatives and no mechanism for determining which of the three applies, then that covenant may be uncertain. If there is no inconsistency in what is required (albeit there may be accumulation and repetition) as explained in JQAT, there is no uncertainty. The difference is one of form in drafting. Nevertheless, form in drafting is the basis of the creation of the relevant legal obligations."
The context in which those remarks were made related to the clause there in question. In my view those comments are not applicable to clauses of the nature in the instant case which have different obligations but one restraint period of two years each.
Reference was next made to the decision of White J in Planet Fitness Pty Limited v Brooke Dunlop & Ors. [57] In that case, at paragraph [3], the relevant restraint read as follows:-
"Restraint of Trade: During the term of this agreement and during the Restraint Period, the Contractor must not directly or indirectly or through any interposed entity (including a corporate vehicle, trust or partnership) without the prior written agreement of the Company, solicit, canvass or secure the custom of any person who is the Company's client. In this clause:
(a) 'Client' means a person who has been a member of the Company (or any other ' Planet Fitness ' branded gym) or otherwise attended any ' Planet Fitness ' branded gym at any time whilst the Contractor is providing the Services under this agreement; and
(b) 'Restraint Period' means a period of three months after this agreement is terminated.
This clause survives termination of this agreement." (emphasis added)
In that context, White J found that there was a strong prima facie case that a personal trainer had solicited or canvassed persons for whom she had provided personal training services and was contracted to the Plaintiff. An issue arose as to whether an injunction could be granted to restrain the trainer from providing ongoing personal training services to clients as so attracted. The Plaintiff submitted that, as the restraint included a restraint against securing the custom of any person, it would be breached on an ongoing basis by the continuing provision of personal training services to such persons. The Plaintiff submitted that when the personal training services were first provided to the clients in the Second and Third Defendant's gymnasiums, the First Defendant had secured their custom and that there would be continuing acts of "securing the custom" by the continued provision of the services. Accordingly, the act of providing services to such persons was said to be continuing breaches of the restraint clause. White J disagreed with this construction and stated at [18] and [19]:-
"[18] I do not think that that is the proper construction of clause 3.5. I agree with the submission of counsel for the second and third defendants that the words "solicit, canvas or secure the custom of" have to be read as a whole phrase and that each word in it gives sense to what is restrained. I agree that, considered as a whole, the clause is a restraint against endeavouring to attract, or achieving the attraction of, custom of the former clients of the first defendant, after her contract with the plaintiff had been terminated.
[19] A clause which was intended simply to restrain the first defendant from providing services to former clients would need to be clearly so expressed. Different questions might then arise as to the enforceability of such a clause. I think the clause is one directed against soliciting and was not intended to deal, for example, with the case where a former client of his or her own volition wished to continue to use the first defendant as his or her personal trainer."
HFP's contention was that, as in Planet Fitness, a construction of the hybrid restraint involves reading the phrases as a whole and giving sense to each word to indicate that the clause is a restraint against attracting former clients. I do not accept this analogy.
Clause 28.2(a) clearly covers both solicitation and dealing as did the clause in Hanna v OAMPS Insurance Brokers Limited. [58] I do not believe that it can be reasonably contended that uncertainty arises in its scope. This is particularly so when one bears in mind the contents of the clause as a whole. Clauses 28.1 and 28.3 make provision for circumstances in which an outgoing partner may be able to service a former client subject to meeting the requirements therein. Ms Christensen acknowledged that the purpose of clause 28.2(a) was to include a restraint on providing services and that the partnership deed was constructed by the parties including Ms Bainbridge. According to Ms Christensen's evidence, the partners "looked at those clauses intently." [59]
HFP further contends that, even if the second "or" in clause 28.2(a) of the partnership deed is construed as operating disjunctively, ambiguity persists because two terms applied to the same conduct, that is, a former client switching to a new firm, the non-solicitation clause is superfluous because the non-dealing restraint would encompass all transactions caught by the non-solicitation restraint. HFP contends that the non-solicitation restraint was inserted for a reason and the solution is to resolve the ambiguity in favour of the employees (nee outgoing partner) by giving the clause its narrowest operation which is as a non-solicitation clause. I do not accept this contention.
Solicitation may ultimately involve the provision of goods or services but it does not necessarily encompass it. Clearly the clause was designed to protect the interests of the partnership by restraining both forms of conduct. In this sense, I do not regard the non-solicitation restraint as superfluous.
HFP next contends that, if its arguments as to the hybrid restraint are rejected, the non-dealing aspect of the restraint and the duration of the restraint are captured by the Restraints of Trade Act 1976 which requires the parties to be kept to their agreements only to the extent compatible with public interest in the freedom of trade and legitimate competition.
HFP contended that the employer is entitled to protect its customer connection but adequate protection is provided by the non-solicitation clause in circumstances where the non-dealing restraints are generally reserved for cases where the gravitational pull of an employee is significant. Reference in this respect was made to the decision in Pearson v HRX Holdings Pty Ltd. [60] In that case a two year non-compete clause (being a restraint more restrictive than a non-dealing restraint) was upheld as reasonable in circumstances where:-
1. The employee was the company's primary presenter to prospective clients;
2. The employee was "the human face of the business";
3. The particular restraint was the subject of specific negotiation; and
4. It was the subject of separate consideration in the form of payments during the majority of the restraint period.
HFP contended that Ms Bainbridge was not the face of the business, was not a threat to the business in the sense of being good at attracting new clients and, accordingly, a non-dealing restraint was not reasonably necessary to protect the Plaintiff's interests in this customer connection. It was further contended that a 24 month restraint was not reasonably necessary, having regard to Ms Christensen's evidence as to the time it would take to re-establish relationships with accounting clients (meaning "no time at all"). [61] For those clients who were exclusively involved in financial planning, the process took a bit longer "probably a couple of months." [62]
The Plaintiff submitted, the restraint in the partnership deed was reasonable and should upheld for the following reasons:-
1. The partnership was entitled to have the goodwill of the entire firm protected in the form of a restraint: Bridge v Deacons. [63]
2. Focus Partners in 2006 had paid valuable consideration to acquire the financial planning practice of Colin Trinnick, and most of the clients that were allocated to Ms Bainbridge had been obtained as a result of that purchase. Focus Partners were entitled to have their investment protected. Focus Partners' investment also included the fact that it had arranged and paid for Ms Bainbridge to be trained up and qualified as a financial planner, and had invested considerable time and effort in the process.
3. The terms of the partnership deed, including the restraint were the product of intensive negotiations over many months. Ms Bainbridge was actively involved in those negotiations. I accept that the partners should be treated as being in the best position to assess what is reasonable and in their own interests for the protection of the goodwill of the partnership.
4. The restraint clause is, of its kind, relatively narrow. It does not prevent Ms Bainbridge from going into practice as a financial planner, or from competing with Focus Partners. Instead, it is limited to preventing Ms Bainbridge from providing services to or soliciting clients of Focus Partners.
5. Each partner was subject to a restraint in the same terms, so it cannot be said that Ms Bainbridge was singled out for any special or unfair treatment.
6. The reasonableness of the restraints was further supported by the need to protect the goodwill of the partnership in so far as it related to clients that had been serviced by Ms Bainbridge, and the confidential information of the partnership.
The Plaintiff further submitted that the restraints in the employment agreement were also reasonable and should be upheld for the following reasons:-
1. It was substantially modelled on the terms of the partnership deed, which was itself reasonable for the reasons set out in the preceding paragraph. Ms Bainbridge, as a former partner, continued to be bound by the restraints in the partnership deed and the restraints in the employment agreement were no further than those restraints (and in one respect were narrower - see (3) below). The end dates of the restraints were approximately the same.
2. After resigning as a partner, Ms Bainbridge chose to remain as an employee and entered into the employment agreement, including the restraint, of her own free will and volition. This was claimed to be an important factor supporting the reasonableness of the restraint.
3. The restraint was narrower than the restraint in the partnership deed, in that the restriction on providing services to former clients of Focus Partners was limited to those clients with whom Ms Bainbridge had had dealings or performed services during her employment with Focus Partners (cf. the partnership deed, in which the restriction applied to all clients of Focus Partners).
4. The restraint did not prevent Ms Bainbridge from going into practice as a financial planner, or from competing with Focus Partners. Instead, it was limited to preventing Ms Bainbridge from providing services to or soliciting clients of Focus Partners.
5. Focus Partners was entitled to be protected from the customer connection which Ms Bainbridge had been able to establish with clients of the practice. Ms Bainbridge was given the vast majority of her clients by Focus Partners and became the face of the business to certain clients. Whilst at Focus Partners, Ms Bainbridge was extremely good at cultivating and nurturing strong, comfortable relationships with clients. Ms Humphries said the same was true of Ms Bainbridge at HFP. [64] Ms Humphries also accepted that, in financial planning, it can take a long time to build relationships with clients. [65] In these circumstances, two years is not an unreasonable estimate of the length of time it would take Ms Bainbridge's replacement at Focus Partners to build up a relationship of trust and rapport with Ms Bainbridge's former clients.
6. The reasonableness of the restraints was also supported by the confidential information which they protected. Confidential information was defined in the employment agreement to include client information, to which Ms Bainbridge had access. Ms Humphries accepted that client information is confidential and that the employment agreements used by HFP likewise protect as confidential information relating to clients. [66]
In Brown v Cunich (1994) ATPR 46-117 at [53 550], Bryson J stated:-
"The situation in relation to a restraint accepted in a partnership deed, and still more on the occasion of dissolution of a partnership and in return for tangible benefits, is in my opinion quite different to the situation where restraints are imposed in contracts of employment. The situations are significantly different in that the situations of the parties are far more equal and if the parties are far more likely to be in a position to decide for themselves in an informed way and free of inappropriate operations of economic advantages and disadvantages."
Both parties, in their submissions, acknowledged a fundamental distinction between restraints in a partnership deed and in an employment agreement, being that in the former the partnership is entitled to gain the protection of the goodwill of the entire firm and not merely that associated with the former employee's clientele. [67] References were made to the decision in Bridge v Deacons [68] and JD Heydon, The Restraint of Trade Doctrine (3rd Ed) pp 216-217.
HFP did not contend that the restraints were not required to protect the legitimate interests of Focus Partners. Rather specifically in relation to the employment agreement (not being the subject of the complaint about certainty), the contention was that the relevant restraint was unreasonable by reason of its length of 24 months. In this respect, the Defendant drew attention to the average duration of restraints in Focus Partners' employment agreements as being 12 months. [69] Although Mr Terry Howard had a 24 month restraint it was contended that this was because he was the face of the Focus Partners business. [70]
HFP drew attention to the fact that Ms Bainbridge's first employment agreement had a 12 month restraint but in the second employment agreement the duration was increased to 24 months and the addition of the non-dealing restraint. [71] This was justified by Ms Christensen on the basis that the restraint should be consistent with the partnership deed. [72] Ms Christensen acknowledged the differences between the partnership deed and the employment agreement. [73] She accepted that Ms Bainbridge had only added a few clients of her own to the firm [74] and that, while she was good at servicing existing clients, she was less skilled at bringing in new clients. [75] Ms Christensen accepted that the purpose of the restraints was to protect Focus Partners' business interests. [76]
In Miles v Genesys Wealth Advisors Ltd, [77] Hodgson JA stated at [36]-[38]:-
"[36] In my opinion, there is no precise rule on the basis of which the period for which an employer is legitimately entitled to protection can be determined. I would not endorse the statement by Young J in DalySmith at 13 that "a restraint that endures after the time taken for a reasonably competent new employee to master the job and be able to demonstrate to the customer that he or she is effective and efficient will be too long".
[37] I would respectfully adopt the general statement of principle by the Privy Council in Stenhouse at 400:
The accepted proposition that an employer is not entitled to protection from mere competition by a former employee means that the employee is entitled to use to the full any personal skill or experience even if this has been acquired in the service of his employer: it is this freedom to use to the full a man's improving ability and talents which lies at the root of the policy of the law regarding this type of restraint. Leaving aside the case of misuse of trade secrets or confidential information (which is separately dealt with by clause 3 of the agreement and which does not arise here), the employer's claim for protection must be based upon the identification of some advantage or asset inherent in the business which can properly be regarded as, in a general sense, his property, and which it would be unjust to allow the employee to appropriate for his own purposes, even though he, the employee may have contributed to its creation. For while it may be true that an employee is entitled - and is to be encouraged - to build up his own qualities of skill and experience, it is equally his duty to develop and improve his employer's business for the benefit of his employer. These two obligations interlock during his employment: after its termination they diverge and mark the boundary between what the employee may take with him and what he may legitimately be asked to leave behind to his employers.
[38] Where, as in this case, a senior officer of an employer company has on behalf of that employer fostered close and productive relationships with customers, having dealings on behalf of the employer with principals of those customers and being to them the human face of the employer, there may be a relationship of the employee with the customers that "can properly be regarded as, in a general sense, [the employer's] property". Of course, insofar as the employee's own qualities of skill and experience recommend him or her to the customer, the employee should be free to employ that, but subject to considerations of the unfairness of the employee being able to exploit relationships that are properly regarded as the employer's property."
Basten JA and Handley AJA did not disagree with these statements of principle.
In Birdanco Nominees Pty Ltd v Money (2012) 36 VR 341, Robson AJA (with whom Redlich JA agreed) stated:-
"[81] In those circumstances, was the three year "restraint" unreasonable? The Privy Council in Stenhouse Australia Ltd v Phillips put the test as follows:
… The question is not how long the employee could be expected to enjoy, by virtue of his employment, a competitive edge over others seeking the clients' business. It is rather, what is a reasonable time during which the employer is entitled to protection against solicitation of clients with whom the employee had contact and influence during employment and who were not bound to the employer by contract or by stability of association. This question, secondly, their Lordships do not consider can advantageously form the subject of direct evidence. It is for the judge, after informing himself as fully as he can of the facts and circumstances relating to the employer's business, the nature of the employer's interest to be protected, and the likely effect on this of solicitation, to decide whether the contractual period is reasonable or not. An opinion as to the reasonableness of elements of it, particularly of the time during which it is to run, can seldom be precise, and can only be formed on a broad and common sense view.
[82] Justice Heydon suggests a test that has particular relevance in this case: "how soon the hold of the old employee over customers will weaken: that is, what is the time that would have to elapse before a branch manager who has quit the territory would no longer be able to return and acquire his business?""
Maxwell J stated at [9]:-
"[9] The duration of such a restraint is usually an important factor in determining whether the restraint is reasonable. The assessment of duration will depend, in particular, on the nature of the employer's interest which is being protected and on "the field in which [the restraint] was designed to operate".10 When the clause in question is (as here) directed at preventing the solicitation of clients, it is relevant to consider the risk of such solicitation occurring."
I have noted HFP's references to comparable restraints in other employment agreements and circumstances. The pertinent restraints however were accepted voluntarily by Ms Bainbridge following a period of negotiation. Furthermore, I accept the evidence of Ms Christensen as set out in paragraphs [16] and [17] of her affidavit of 1 July 2014 where she stated:-
"The restraint clause contained in the Partnership Deed and agreed to by Ms Bainbridge and other partners, provided for the protection of the Focus Partners partnership. Financial planning and accounting services required detailed knowledge of clients' financial needs and history, and having regular contact is therefore necessary. Because of this specialised need the Focus Partners partnership partners and senior employees are encouraged to have regular close contact with the clients to service this requirement. Without the restraint clause or restriction on outgoing partners, the Focus Partners partnership was at risk of solicitation of clients, loss of fees, reputational damage and goodwill damage.
I have been a practising accountant for 28 years. From my experience it is common practice that partners and senior employees have post-employment restraints of the type contained in the Partnership Deed."
This statement found some support from Ms Humphries in the following exchange:-
"Q. Did it therefore come as a great surprise to you when a large number of, approximately 28, clients from Focus Partners came across with Ms Bainbridge and asked to become clients of Huon Partners?
A. It didn't surprise me based on what I observed with Dianne when she was in meetings with - with my clients. It also didn't surprise me because when clients, former clients of Focus Partners, would come in I would be introduced to them as the practice principal and they would speak to me very positively about the value that they placed on their relationship with Dianne in many cases pointing out to me that she was the only advisor or person that they knew at Focus Partners. But, also, you refer to the 28 clients that came across. I'm aware that 24 of those clients are retirees, Mr Harding. In those cases, as a financial planner, we're dealing with these peoples life-savings. There's a tremendous amount of trust that they place in us to - to look after their interest. That's why, from my perspective, I was very, you know, focused on making sure I continued to do a good job for my clients but that I wanted some backup there to insure that that could be done if I wasn't there." [78]
It is clear that Ms Bainbridge came to service a significant part of the clientele of Focus Partners in relation to questions of financial planning. The restraint which was imposed on her after she resigned the partnership was narrower than the restraint in the partnership deed in that the restriction of providing services to former clients of Focus Partners was limited to those clients with whom Ms Bainbridge had dealings or performed services during her employment with Focus Partners, as compared to the Partnership Deed in respect of which the restriction applied to all clients of Focus Partners. Ms Bainbridge was not prevented from going into practice as a financial planner or from competing with Focus Partners. She was limited, however, to preventing her from providing services or soliciting clients of Focus Partners.
Ms Bainbridge was given the vast majority of her clients by Focus Partners and became the face of the business to certain clients. She developed a strong relationship with those clients. [79] Ms Humphries said the same was true of Ms Bainbridge at HFP. [80] Ms Humphries further acknowledged that in financial planning it could take a long time to build a relationship with clients. [81] The evidence satisfies me that in many respects Ms Bainbridge cultivated a personal relationship and her clients at Focus Partners such as to enable her to control the customer's business as a personal asset. [82]
The reasonableness of the restraint is also supported by the confidential information which was protected, including client information and "confidential information". [83]
In my opinion, the risk which arises in these circumstances was significant. It was the risk that a senior Focus Partner employee had the opportunity to develop a relationship with a client and to acquire a knowledge and understanding of the client's affairs which were the very things which were likely to make it attractive for the client to leave Focus Partners when the employee leaves in order to maintain that relationship and take advantage of the accumulated knowledge and understanding. When those considerations are brought to bear it does not appear to me that a 2 year restraint was unreasonable in circumstances which included Ms Bainbridge having ceased being a partner and immediately resuming employment.
I accept the submission of the HFP that restraints imposed on employees in similar positions has some relevance. However the question of the reasonableness of the restraint is to be considered at the time and circumstances it is entered into. [84] In effect its operation broadly corresponds with that in the partnership agreement. In this context I do not consider that the circumstances of others equate with the position that Ms Bainbridge. There was no suggestion that the level of her client contact and work changed between partnership and employment. The issue needs to be assessed more broadly than the time Ms Christensen and Mr Howard needed to contact and persuade some clients to remain.
Nor do I consider that the circumstances of cascading level of restraints [85] in the Lonsdale Adviser Deed [86] are instructive as to the reasonableness of the restraints in the employment agreement. Those restraints are specifically expressed to relate to the nature and extent of the benefit which the Adviser (Ms Bainbridge) obtains from the Lonsdale under the Advisor Deed. [87]
In the circumstances, there is no case for the application of s 4 of the Restraints of Trades Act 1976. Despite the fact that HFP raised issue of the potential application of s 4(3), no application has been identified.
[6]
Knowingly Assisting in Breach of Fiduciary Duties or Knowingly Profiting by Breach of Fiduciary Duties in Accordance with the Principles of Barnes v Addy
In paragraph 23 of the Further Amended Statement of Claim it was asserted that HFP received benefits by reason of the breach of fiduciary duty with knowledge that the benefits were earned in breach of those equitable and fiduciary duties. [88] In the particulars it was asserted that HFP was notified of Ms Bainbridge's duties to the Plaintiffs by the Plaintiff's solicitors' letter dated 23 March 2012. [89] In the alternative, it is asserted that HFP, knowing of Ms Bainbridge's fiduciary duties and the existence of Ms Bainbridge's dishonest design to breach those duties assisted in that design by using confidential information obtained in breach of confidence to induce the Plaintiffs clients to move their business to HFP. The particulars are said to refer back to paragraph 15.
In opening, the Plaintiffs' case under the principles of Barnes v Addy was outlined as follows:-
"It was our case against Ms Bainbridge that she, during her employment, was targeting and soliciting clients. Forget about the restraints which operate only after the employment, but during her employment she was in breach of her duties as a fiduciary enticing clients away. That claim is relevant to (d)(v) because of the Barnes v Addy principle. The Barnes v Addy principle says that where somebody has knowingly assisted in a breach of fiduciary duty or has knowingly profited or gained by a breach of fiduciary duty by another, then that party can be liable to give equitable compensation or an account of profits.
So we still maintain that case against d(v), namely that d(v) was knowingly involved in the targeting by Ms Bainbridge of clients of Focus Partners in breach of her duties as a fiduciary, although it should be said that those clients are only a small subset. We are only talking about a few client here, compared to the overall case of breach of contract which is a much larger pool of all the clients that Ms Bainbridge managed to get across to Huon Financial Planning after her employment ended." [90]
On day 3 of the hearing further details were sought from counsel for the Plaintiffs regarding how this aspect of the claim was being advanced. During the course of the hearing counsel made clear that the duties which were the subject of this component of the Plaintiffs' claim were owed between 1 July 2010 and 16 March 2012. [91] It was further made clear that the allegations of breach of those were set out in paragraph 15(a), (b), (c), (d), and (g) of the Further Amended Statement of Claim. It was further stated that, beginning from March, HFP received benefits. Those benefits were said to include "the fruit of Ms Bainbridge's unlawful activities whilst still an employee of Focus Partners". [92]
Thereafter I raised with counsel for the Plaintiffs the necessity to revise its statement of issues. [93] The amended statement of issues referred to Ms Bainbridge's breaches of fiduciary or equitable duties owed to Focus Partners and under the assumption that these were made out, proposed as an issue:-
"…did Ms Bainbridge's new employer, the Fifth Defendant: (a) know that Ms Bainbridge owed equitable and fiduciary duties to Focus Partners; (b) receive the benefits of those breaches of equitable or fiduciary duties with the knowledge that the benefits were earned in breach of those equitable and fiduciary duties; and/or (c) knowingly assist Ms Bainbridge to breach the equitable and fiduciary duties owed to Focus Partners."
Counsel for the Plaintiff stated that, in relation to the Barnes v Addy claim:-
"I can only succeed if I can establish that Huon Financial Planning took the benefit of clients who must have been induced by Ms Bainbridge at the time she was still employed to go across." [94]
In the Plaintiffs' submissions, there is only one instance referable to the claim of breach of fiduciary and/or equitable duties owed to Focus Partners. This relates to the circumstances of Mick McCormick Family Superannuation Fund. Reference is made to an email sent by Ms Humphries to Glen McGrath, a partner at Huon Partners Pty Ltd, on 8 March 2012. [95] At the time of that email, Ms Bainbridge remained employed by the Plaintiff. The email requested that Mr McGrath organise an ethical letter to be sent out to the Plaintiffs in relation to the Mick McCormick Family Superannuation Fund. The email records that the Fund was referred by Ms Dianne Bainbridge and that Mr McGrath would need to meet with him once "Di is on board."
In evidence, Ms Humphries stated that she spoke to Mr McCormick and described the circumstances in the following terms:-
"Mr McCormick had contacted Di Bainbridge of his own volition to say that he was leaving Focus Partners and Di gave him Glenn McGrath's name. The phone call was put through to me because Glenn McGrath was unavailable and because I work on the self-managed superannuation financial advice. So again, and I think I stated in my affidavits, I felt that if a client approached us - if the client approached Di rather than - if Di had rung Mr McCormick and Mr McCormick had said, "Di Bainbridge has called me and told me that I should transfer my business to Huon Partners Chartered Accountants I would have had a very different view." [96]
When questioned, Ms Humphries accepted that it was not proper or appropriate for Ms Bainbridge, while still employed by Focus Partners, to be giving a client of Focus Partners the contact details of another accounting firm. She accepted that she overlooked the fact and facilitated a meeting with an ex-client of Focus Partners and Mr McCormick. [97] She accepted that there was a realistic expectation that Huon Partners would benefit from a new client, however, she did not accept that it would potentially be of benefit to HFP. [98]
In Farah Constructions Pty Ltd v Say-Dee Pty Ltd, [99] it was clearly established that liability under the "second limb" of Barnes v Addy is confined to cases where the breach of trust or fiduciary duty amount to a "dishonest and fraudulent design". [100] The Court stated that an allegation of dishonest and fraudulent design was of a seriousness which meant that it ought to have been pleaded and particularised with the assessment required by Briginshaw v Briginshaw [101] kept in mind. Nowhere in the Plaintiff's pleadings, particulars, opening or submissions has fraud been alleged. Nevertheless, it was not in doubt that the Plaintiff was seeking to allege a breach pursuant to the second limb of Barnes v Addy and such evidence as was led relevant thereto was not objected to on the part of the Defendant. [102] In Hasler v Singtel Optus Pty Ltd [2014] 87 NSWLR 609, Leeming JA (with whom Gleeson JA agreed) stated:-
"It is perfectly clear that breaches of fiduciary duty "vary greatly in their seriousness"; some are well-intentioned and some are trivial, but others amount to serious fraud: Farah at [184]. It is perfectly clear from Farah that only breaches which answer the description of a "dishonest and fraudulent design" can engage Barnes v Addy liability (the position is different in places where the reformulation of principle in Royal Brunei applies). It is perfectly clear that the breach need not be a breach of trust, but may be some other breach of fiduciary duty: Farah at [179]. However, it is very unclear what a "dishonest and fraudulent design" means in this context in Australia at present. The reason for that is the recent decision of the Western Australian Court of Appeal in Bell, which this Court was invited not to follow." [103]
It is not entirely clear the context in which Ms Humphries, in her evidence used the term "breach of trust". [104] Nevertheless, the Plaintiff has not demonstrated any breach by Ms Bainbridge in the circumstances engaging the description of a "dishonest and fraudulent design." As was stated by Leeming JA in Hasler v Singtel Optus Pty Ltd:-
"As much is confirmed by what had been said in Farah at [170] about the need to plead and particularise fraud and establish it in accordance with Briginshaw. The language there used is consistent only with every breach which is sufficient to answer the description of conduct which is "dishonest and fraudulent" being subject to familiar strictures as to pleading and proof. That is inconsistent with the proposition that there may be breaches of duty falling short of dishonest conduct which may still engage the second limb of Barnes v Addy." [105]
Mr McCormick did not give evidence in the proceedings. Ms Christensen's evidence was that he was a client brought to Focus Partners by Ms Bainbridge who was paid for her interest in so doing when she left the partnership. [106] Ms Humphries evidence was that he was desirous of leaving Focus Partners. Ms Humphries' file note suggests that the conversation with Ms Bainbridge took place at a time when the later had already given notice of her departure from Focus Partners and was serving out a period of enforced leave. There was no evidence that the HFP benefitted from the transfer of the accounting services. There was some evidence that HFP carried out some transactional work (buying and selling shares) for Mick McCormick Family Superannuation Fund in 2012. [107] The Plaintiffs did not submit any breach arose from HFP doing so. I will address later in these reasons the file note constructed by Ms Bainbridge relevant to the Mick McCormick Family Superannuation Fund dated 22 March 2012. [108]
At this stage it suffices to state that the pleaded case in paragraphs [22]-[25] of the Further Amended Statement of Claim has not been established and nor has the second limb of Barnes v Addy been engaged. Further no claim for equitable relief was advanced.
This part of the Plaintiff's claim therefore fails.
[7]
Non-Dealing Restraints
In paragraph [15] of the First to Third Defendant's Defence which was tendered in the proceedings, [109] Ms Bainbridge admits to having provided services as an employee of HFP to the clients listed in "schedule A" of the Amended Statement of Claim and that all of those clients ceased to be clients of the Plaintiffs. Furthermore, both experts called by the parties agreed as to the identity of the clients who had left Focus Partners and substantially agreed to the total amount of fees generated by each of those clients. [110] The expert called by HFP, Mr Charlton, in his report dated 6 May 2015 was provided with a schedule which recorded his instructions as to the date on which the ex-Focus Partners clients commenced with HFP. [111]
Assuming enforceability HFP did not contest the issue.
[8]
Non-Solicitation Restraints
In Barrett v Ecco Personnel Pty Ltd, [112] Stein JA (with whom Sheller JA and Fitzgerald AJA agreed) stated as follows:-
"The appellants' submission amounts to this. One should construe 'solicit' in the agreement in a highly mechanical fashion. You simply ask, who made the first approach? If an old customer made the first approach to a former employee, then whatever the facts thereafter which might lead to business being done, there cannot be solicitation. This cannot be correct. One may acknowledge that in most instances the first approach will be made by the ex-employee to the former customer. Common sense however demands that this not be the exclusive means by which a solicitation may occur.
A simple illustration will suffice as to why this is so. Assume a customer finds out, quite accidentally, that a former employee with whom it dealt had left his principal and established a business of his own and says 'let us have a proposal'. The ex-employee then submits a proposal in very favourable terms and makes a presentation to the client which convinces it to award the contract to him. Should the fact of the first approach negative any solicitation or enticing away? I think not.
The task of the court is to interpret the words in the contract of employment in their context. In a liquor case in New Zealand (Sweeney v Astle [1923] NZLR 1198) Stout CJ noted that 'solicit' was a common English word, and in its simplified form meant 'to ask'. Its other meanings included 'to call for' 'to make request', 'to petition', 'to entreat', 'to persuade'. Like Bryson J in Ridgeway International Ltd v McCullum (unreported, Equity Division, 9 April 1998) I cannot see that to propose to do business ceases to be soliciting business simply because the recipient invited the proposal."
The Plaintiffs drew attention to the circumstances of five specific clients whose evidence was not challenged:-
1. Mr Heiner Litschke;
2. Mr Rod Kelso;
3. Mr Norman Jessup;
4. Ms Hazel Eaton; and
5. Ms Lorraine Shennan. [113]
In December 2011, Ms Bainbridge met with Lorraine Shennan. Ms Shennan and her husband Peter were clients of Focus Partners for two years and previously with Howard and Christensen for four years. Ms Shennan's evidence was:-
"In December 2011, Dianne Bainbridge met with myself and my husband at the Myrtleford office. The meeting was in regards to the half yearly report on our portfolio. At the end of the meeting, Ms Bainbridge told me that she was unhappy and that she was leaving Focus Partners. Ms Bainbridge also said that Anne-Marie Humphries of Huon Financial Planning had offered her a job. My husband and I told Ms Bainbridge that we would go with her as we had confidence in her and had a good relationship with her that we had built over the length of time that we had worked together." [114]
Mr Heiner Litschke had been a client of Focus Partners since 2002 and before then was a client of Colin Trinnick. He swore an affidavit dated 23 June 2014 in which he stated:
"The last time I was in contact with Dianne Bainbridge was in February 2012. I believe that this was either down the street or at the Focus Partners office. During this meeting Ms Bainbridge said that she was changing firms and wanted me to move with her from Focus Partners. Dianne Bainbridge said to me that she was going to Lavington but did not mention where she was moving to." [115]
Mr Litschke stated that he spoke about this conversation with Ms Christensen on 29 February 2012. Ms Christensen, in her evidence, confirmed as much. [116]
Mr Rod Kelso swore an affidavit in which he stated that he had been a client of Focus Partners since 2001/2 when the business was known as Howard and Christensen and before then was a client of Colin Trinnick. [117] It appears that Ms Bainbridge was his main point of contact up until the time when she left Focus Partners. In his affidavit he states:
"The last time I had contact with Dianne Bainbridge was when Dianne paid me a home visit to review my portfolio. I believe this was around February 2012. Dianne Bainbridge said words to the effect that she was 'finishing up' and 'won't see you [me] again.' Dianne Bainbridge did not tell me where she was going but suggested that I could take my business to her if I was 'not satisfied' with Focus Partners. I have not been in contact with Ms Dianne Bainbridge since this meeting." [118]
Mr Norman Jessup was also a client of Focus Partners and Dianne Bainbridge. He had previously been a client, both of Howard and Christensen and Colin Trinnick. His affidavit deposes that on 7 December 2011 at his home was the last occasion which he had seen Dianne Bainbridge. On that occasion, Ms Bainbridge had told him that she was leaving Focus Partners but was not able to say where she was going as she had not decided. [119]
On 2 March 2012, Mr Jessup states that Ms Bainbridge called him and left a message with his wife requesting that he return her call. As he had lost Ms Bainbridge's number, he called Focus Partners to seek it when he was told that Ms Bainbridge was no longer working at Focus Partners. Mr Jessup remained with Focus Partners as a client. [120] The Plaintiffs submit that although Mr Jessup did not return the call, the Court should infer that the purpose of the call was to solicit and encourage Mr Jessup to come with her to HFP. [121]
Ms Christensen gave evidence relating her version of events concerning Mr Jessup her which accorded to the version given by Mr Jessup. [122]
Ms Christensen stated that, later in the day on 2 March 2012 at approximately 3:15pm, she received a text message from Ms Bainbridge stating:-
"I had a garbled phone call from Norm Jessup in Beechworth earlier today about the phone call I had made to him this morning. I presume that someone there phoned him. He waffled on about what Colin Trinnick has got to do with his business now, and who the new girl was. Thought you should know." [123]
Ms Hazel Eaton had been a Focus Partners' client since 2006. She swore an affidavit in the proceedings on 24 June 2014 in which she stated:-
"The last time I was in contact with Dianne Bainbridge was early 2012 when Dianne Bainbridge called my home telephone. Ms Bainbridge told me that she had left Focus Partners under bad conditions and was upset about leaving. Dianne Bainbridge also told me that there were some 'young people coming into Focus Partners' which she was not happy about." [124]
Ms Eaton indicated that she decided to remain at Focus Partners and had not been contacted by Dianne Bainbridge since. [125] Again the Court is asked to infer that the purpose of the call was to encourage Ms Eaton to move with her although Ms Eaton declined to do so.
With each of the above clients, only Ms Shennan was listed as a "schedule A" client. HFP contended that Ms Shennan's affidavit simply indicates that Ms Bainbridge said that she was leaving because she was unhappy at Focus Partners and it was the Shennans who indicated that they would go with her. [126] However, a full reading of Ms Shennan's affidavit indicates that Ms Bainbridge informed Ms Shennan that she had been offered a position with Ms Humphries at HFP. Moreover, the conversation as to Ms Bainbridge leaving was in the context of a half yearly report on the client portfolio.
There was also some further evidence in relation to other "schedule A" clients.
On 28 February 2012 Glen McGrath, a partner at Huon Partners, sent a letter in relation to a former client of Focus partners, Yola Cox Pty Ltd ATF Kooyong Superannuation Fund (a schedule A client), advising that they had been approached by the trustees of the fund to attend to future accounting and compliance requirements of the fund. A letter dated of the same date was also forwarded on behalf of Yola Cox (also a "schedule A" client), advising that the client had been approached in relation to Huon Partners attending to her future accounting and financial income tax requirements. Both letters sought advice as to any reasons why the appointment should not be accepted. [127]
Following the commencement of Ms Bainbridge's employment at HFP on 20 March 2012, a number of clients came to see her on the first day. Records obtained from HFP revealed that on 20 March 2012 a meeting occurred in which Silvia Sultmann, an employee of HFP, recorded as follows:
"Following a call from Carolyn out of hours, Carolyn and Ray came to see me and asked that I commence the transfer of their financial planning affairs across to this office immediately. I provided them with relevant documentation required and organised to meet with them to go through our services. They were happy to sign all documents. [128]
This file note appears to relate to Carolyn and Ray Close who were "schedule A" clients.
On 20 March 2012, Ms Dianne Bainbridge is also recorded as receiving a phone call from Mr Des Gilbert; also "a schedule A" client. The record states as follows:-
"Des phoned on my mobile. After he had been speaking to Carolyn and Ray Close. He wants to transfer their business to me, and asked that they be included in a visit to Mansfield when I come down to meet with the Closes. I will call prior to heading down there." [129]
Further, on 20 March 2012, a letter was sent on behalf of the Ian and Nancy McMaster Superannuation Fund (a "schedule A" client) by Mr Glenn McGrath from Huon Partners, advising that the trustees had approached for them to attend to the future accounting and compliance requirements of the fund. It sought advice as to whether there were any professional or ethical reasons as to why the appointment should not be accepted. [130]
On 20 March 2012, Ms Bainbridge also created a file note relating to Ms Heather Mills; another "schedule A" client. That file note recorded:-
"As Heather is a close friend of mine, she has requested that I transfer her superfund to my new employer. I have organised for Heather to sign the docs and will follow up with ASoA." [131]
Valery Taylor from Bituma Pty Ltd and Oak Hill Superannuation Fund (both Schedule A clients) completed a confirmation form dated 21 March 2012 in respect of a Securitor Financial Services Guide and Credit Guide. [132]
On 21 March 2012, it is recorded that Ms Bainbridge received a phone call from Mr Greg Chalweell in relation to the Growler's Creek Bean Superannuation Fund (a "schedule A" client) The file note records:-
"Following a phone call at home from Greg Chalweell, who was extremely irate about a phone call that they had had from Helen Christensen after hours at home one night, advised me to transfer all their work to Huon Financial Planning and Huon Partners for the SMSF administration. I have completed the relevant paperwork and will organise an ethical letter to be sent ASAP." [133]
On 21 March 2012, Ms Bainbridge appears to have secured the clientele of Judith and Harry Richards through Stateline Investments Pty Ltd also trading as the Judith Richards Superannuation Fund ("schedule A" clients). [134]
The circumstances in which Ms Judith Richards and Harry Richards came to be clients of HFP were the subject of an affidavit by Ms Richards sworn 30 October 2013. [135] Ms Richard's evidence was that she was contacted by Ms Christensen on 23 February 2012 and subsequently by Mr Terry Howard, also a partner at Focus Partners. Following these conversations, Ms Richards and her husband made some effort to locate Ms Bainbridge, with a view to continuing to engage her as their financial planner. Ms Bainbridge is said to have resisted on the basis that she had a contract which restricted her from doing so. [136]
Subsequently, Ms Richards rang Focus Partners and arranged to come in and collect the paperwork. She then spoke to Ms Bainbridge who is said to have responded:-
"Well if you aren't going to get Focus Partners to look after your affairs you will need someone to do that. So I can do that for you."
The evidence of Ms Richards was that she regarded her affairs as having been established with Ms Bainbridge and was impressed with her business acumen and her husband transferred all of her affairs to her. [137]
On 21 March 2012, Ms Bainbridge also recorded a file note in relation to Bradley Combe Star which notes as follows:-
"Bradley requested I meet him at his grandmother's house after he learned of my cessation of employment at Focus Partners. He advised that he still wants me to attend to his financial planning management, so I explained that I was not equipped at that time to be able to transfer the business across but would keep him informed of what was required."
Then on 2 April 2012, it is recorded as follows:-
"I subsequently met with Bradley to complete the booklets. The transfer forms have been signed and are awaiting my new advisor number."
Then on 15 April 2012, it is recorded:-
"I have today lodged the transfer of advisor form with BT." [138]
On 26 March 2012, a transfer investor application form was signed by Dawn Madin. [139] Ms Madin was also a "schedule A" client. The form notes Dianne Bainbridge as the advisor.
I have earlier in these reasons referred to the case of the Mick McCormick Family Superannuation Fund. The Plaintiffs drew attention to the fact that whilst at Focus Partners, Ms Bainbridge referred the Mick McCormick Family Superannuation Fund (a "schedule A" client) to Huon Partners. [140] Ms Bainbridge in a file note recorded that Mr McCormick telephoned her on 22 March 2012. That file note read:-
"Mick phoned my at home re personal matters, and I advised him I was no longer at Focus Partners, and that I had started at Huon Financial Planning . He immediately asked if I would commence transferring his information across to Huon Partners for accounting and Huon Financial Planning for FP, as he does not want to remain at Focus Partners if I'm not there. I prepared the information and he call in to collect it. We will meet soon to finalise his requirements." [141]
On 8 March 2012, Ms Humphries wrote an email to Glen McGrath of Huon Partners, requesting that an ethical letter be sent to Focus Partners in relation to the Mick McCormick Family Superannuation Fund. [142] The letter specifically stated that the new client was referred by Dianne Bainbridge. The ethical letter was sent the same day. [143]
This later fact would suggest that Ms Bainbridge had already spoken to Mr McCormick by that time and given him details for Huon. [144] Ms Humphries' explanation of this was:-
"…I don't know that Dianne would necessary have known that Huon Partners had commenced that process but I believed that - I can only say that Dianne may have been misunderstood, you know, she may have misunderstood the conversation." [145]
On 27 March 2012, Ms Bainbridge appears to have spoken to Mr Andrew Roseby (a "schedule A" client). The file note records:-
"Andrew Roseby phoned on my mobile after he tried to contact me at Focus Partners. He was concerned that Focus Partners had never advised him of my leaving and his experience with other stuff in the past had been poor. He was looking to transfer to Huon for his superfund and financial planning work. He wants to leave the accounting work with Di Sibbald.
I explained that I was under a no solicitation policy and there had been some legal argy-bargy from Focus Partners solicitors, but he had advised that he was not concerned about that and that it was his prerogative to go where he wanted.
He will contact me when he is ready to proceed." [146]
On 28 March 2012, a letter was written to Mercedes Wolfenden (a "schedule A" client) by Ms Bainbridge, confirming that recommended strategies to financial investment had been implemented. [147]
Mrs Humphries evidence was that Ms Bainbridge had advised her that she received a call from Ms Wolfenden advising that she now lived in Melbourne and wanted a recommendation for a Melbourne based adviser. Ms Humphries stated Ms Bainbridge suggested to her that as she (Ms Humphries) had clients in Melbourne and travels from time to time she should meet with her [148] Ms Humphries met Ms Wolfenden in Melbourne around 12 October 2012. [149] She denies that she asked Ms Bainbridge to procure Ms Wolfenden to leave Focus Partners. [150]
It appears that, on or about 29 February 2002 , Ms Helen Christensen, along with Mr Terry Howard, reviewed the list of clients with whom Ms Bainbridge was believed to be in contact and began to personally telephone each of the clients with whom they were familiar. Ms Christensen's evidence was that she had always intended to complete this process irrespective of becoming aware of Ms Bainbridge's client contacts but when Focus Partners did become aware of this the process was completed more quickly than had otherwise been done. [151]
Ms Christensen also gave evidence that, on or about 8 March 2012, during Ms Bainbridge's notice period, she had a conversation with Dianne Sibbald During this conversation Ms Sibbald is said to have stated that she was aware of the involvement of lawyers and queried the payment of these for lost clients and that she was aware of the contact that Ms Bainbridge had had with former clients while being an employee. [152]
On 8 March 2012 Ms Christensen wrote an email relating to the conversation to her partners. Ms Christensen records referrable to Ms Sibbald as follows:-
"She said she knows Di has talked to clients, but that Di waited a few days till after she thought that we would have already contacted them. And she said that several had rung Di because her mobile number is on her card. She seemed a bit surprised at us knowing that Di had been telling clients months ago and even a bit surprised that we had been told anything by clients.
I told her Di was still under our employment and she asked what would happen if Di started working somewhere else while she is still employed here. So from that, one assumes that she might be doing so already. She then covered her tracks and said that Di hadn't decided what she was going to do yet." [153]
Ms Sibbald was adamant that she did not advise Ms Christensen that she knew that Ms Bainbridge had been contacting former clients, had waited a few days until after she thought Ms Christensen would have contacted them. [154] There was evidence given in Ms Sibbald's affidavit, sworn 26 August 2014, that she kept some personal notes of conversations and discussions relevant to this matter. She stated that she did not have all of the notes that she had made at the time of her first affidavit dated 26 December 2013, but since recently moving house had been able to locate all of the notes. [155]
It is noteworthy, however, that she did not create a notation in relation to conversation said to have occurred on 8 March 2012. Notwithstanding this, Ms Sibbald was able to provide a detailed account of the conversation said to have occurred in her affidavit, sworn 26 September 2013, at [18]. Ms Sibbald was specifically asked whether when she prepared her affidavit sworn 26 September 2013, she had any of the notes of the conversations had. Her response was that she could not recall. [156] Subsequently, she stated that at the time of the first affidavit she had 'some of the notes' and 'some I found later.' [157] Notwithstanding this Ms Sibbald was adamant that Ms Bainbridge did not inform her that she initiated contact with the clients of Focus Partners. [158]
Ms Sibbald's account of the conversation with Ms Christensen of 8 March 2012 [159] displays a considerable amount of detail. In its content, however, and the content of the file note made by Ms Christensen, there is much that is common. What is clear, in my view, is that Ms Sibbald was somewhat of an advocate at this meeting for Ms Bainbridge. Be that as it may, it does not appear to be in doubt that Ms Bainbridge was in fact contacting clients of Focus Partners prior to her last day of employment of 16 March 2012.
In a case of this nature, the evidence needs to be weighed according to the ability of the Plaintiffs to prove against the capacity of HFP who ultimately secured the clients' custom to contradict. [160] The timing of the transition of clients to HFP and Huon Partners coinciding with the departure of Ms Bainbridge from Focus Partners and commencement with HFP and the fact and timing of the calls made by Ms Christensen and Mr Howard provide some support for the Plaintiff's contentions.
The evidence submitted shows that on the first day of her employment with HFP, no less than four of Ms Bainbridge's former clients had client meetings with her and on the following day meetings were held with a further four clients. Meetings with other clients took place on 26 and 27 March 2012. Indeed Ms Humphries conceded that within 3.5 months of Ms Bainbridge's employment all but seven of the clients referred to in Attachment S to Mr Charlton's report of 6 May 2014. [161]
Even so it is still open that clients contacted Ms Bainbridge direct after finding out of her departure.
In light of the facts disclosed in relation to the matter of Mick McCormick I am cautious in relation to any reliance on the file note references from Ms Bainbridge particularly. Ms Bainbridge was not called and in my view aspects of the file notes were self-serving. Generally the evidence in relation to the Mick McCormick Family Superannuation Fund is unclear although this client was introduced to Focus Partners by Ms Bainbridge.
The evidence satisfies me that Mr Litschke and Mr Kelso were directly solicited by Ms Bainbridge. Neither were however "Schedule A clients". Ms Humphries denied that she requested Ms Bainbridge to solicit Ms Wolfenden. Based on the fact that of her discussion with Ms Bainbridge, Ms Humphries' evidence was to the effect that she was advised that Ms Wolfenden was intent on leaving Focus Partners and approached Ms Bainbridge by reason of relocation to Melbourne.
In the cases of Mr Jessup, Ms Eaton and Ms Shennan, the evidence demonstrates that Ms Bainbridge was contacting clients with a view to inform them that she was leaving Focus Partners and the reasons for the departure and consequently secured their custom. Only Ms Shennan however was a "schedule A" client. Nevertheless this evidence is consistent with the evidence of Ms Christensen's account of conversations between herself and Ms Sibbald, which I accept. The evidence in relation to Ms Richards however does not support solicitation.
HFP did not call any of the transferred clients to give evidence. At the time the HFP put on its evidence in late 2003, Ms Bainbridge was still employed with them and those clients were still clients of HFP. Whilst most of the clients commenced with HFP in 2012 some did not do so until as late as August 2013. [162]
The Plaintiffs' did not seek to engage s 97 or 98 of the Evidence Act 1995.
The failure of HFP to call evidence in relation to the transferred "schedule A" clients may provide support to the Plaintiffs' submission that Ms Bainbridge engaged in solicitation of clients to HFP particularly those that transferred their custom in the 2012. However, it is only required to do so if an inference to this effect is open. An inference is only open if there is a fact that positively suggests a specific event occurred. In my view such fact is not present as soliciting is equally consistent with the possibility of client initiation. In my view the position rises no higher than plausible conjecture.
Bearing in mind my findings below, it is unnecessary in any event to determine the extent of solicitation in the case of all of the "Schedule A" clients.
[9]
Did the Defendant commit an Actionable Interference with Contractual Relations?
In its Further Amended Statement of Claim, the Plaintiff's plead their case of interference with contract in clauses 27, 28A and 28 as follows:-
"27. Huon Financial Planning, knowing at all material times, or alternatively since 23 March 2012, that Bidalam, Amalbi and Bainbridge had executed the Partnership Deed with the Plaintiffs and that it contained the clauses referred to in paragraph 6 hereof; wrongfully and with the intent to injure the Plaintiffs sought, procured knowingly assisted and/or induced Bidalam, Amalbi and Bainbridge to breach the terms of the Partnership Deed.
Particulars
(i) Huon Financial Planning was aware of the Partnership Deed either because Bainbridge was aware of and informed Huon Finanacial Planning, and representatives and employees of Huon Financial Planning, of the same and the material terms of the same, or alternatively by reason of being notified of Bainbridge's duties to the Plaintiffs by the solicitor for the Plaintiffs in a letter dated 23 March 2012, as particularised in paragraph 23 herein. Further, Huon Financial Planning conducted a business to provide goods or services in superannuation and financial planning which services are of the type provided by the Focus Partners Partnerships. Huon Financial Planning knew that Bainbridge had or was likely to have the duties referred to in paragraph 6 hereof.
(ii) The Plaintiffs refer to and repeat the particulars subjoined to paragraphs 9-12 and 15-21 hereof.
(iii) Huon Financial Planning agreed by means of discussions with Bainbridge in or about March 2012 that Bainbridge would be employed by Huon Financial Planning for the purpose of conducting a business in direct competition with Focus Partners and seek to procure and procure` Focus Partners clients to be clients respectively of their business
Further particulars will be provided following discovery.
28A. Huon Financial Planning, knowing at all material times, or alternatively since 23 March 2012, that Bainbridge had executed the Employment Agreement with the Plaintiffs and that it contained the clauses referred to in paragraph 11A hereof; wrongfully and with the intent to injure the Plaintiffs sought, procured, knowingly assisted and/or induced Bainbridge to breach the terms of the Employment Agreement.
Particulars
(i) Huon Financial Planning was aware of the Employment Agreement either because Bainbridge was aware of and informed Huon Financial Planning, and representatives and employees of Huon Financial Planning, of the same and the material terms of the same, or alternatively by reason of being notified of Bainbridge's duties to the Plaintiffs by the solicitor for the Plaintiffs in a letter dated 23 March 2012, as particularised in paragraph 23 herein. Further, Huon Financial Planning conducted a business to provide goods or services in superannuation and financial planning which services are of the type provided by the Focus Partners Partnerships. Huon Financial Planning knew that Bainbridge had or was likely to have the duties referred to in paragraph 11A hereof.
(ii) The Plaintiffs refer to and repeat the particulars subjoined to paragraphs 9-12 and 15-21A hereof.
(iii) Huon Financial Planning agreed by means of discussions with Bainbridge in or about March 2012 that Bainbridge would be employed by Huon Financial Planning for the purpose of conducting a business in direct competition with Focus Partners and sought to procure and procured Focus Partners clients to be clients respectively of their business.
28. By reason of such procurement and inducement the First, Second and Third Defendants did breach the said contracts.
Particulars
The Plaintiffs refer to and repeat paragraphs 15-21 hereof and the particulars subjoined thereto." [163]
In its amended statement of issues, dated 1 May 2015, the Plaintiff submitted that the questions for the Court's determination included:-
"10. Did Ms Bainbridge's new employer, the Fifth Defendant, have actual knowledge of the terms of the restraints to which Ms Bainbridge was subject under the Partnership Deed and/or the Employment Agreement?
11. If yes, from what date?
12. Even if the Fifth Defendant did not have actual knowledge of the terms:
(a) was the Fifth Defendant aware of the existence of a contract between Ms Bainbridge and the plaintiffs, and
(b) did the Fifth Defendant deliberately close its eyes from enquiring whether the restraint terms existed or not [Sidameneo (No 456) Pty Ltd v Alexander [2011] NSWCA 418 at [139] per Young JA with whom Beazley and Basten JJA agreed),
such that the Fifth Defendant is taken to be aware of the terms?
13. If yes, from what date?
14. If yes to 10 or 11, did the Fifth Defendant commit an actionable interference in the contractual relations between the plaintiffs and Ms Bainbridge by procuring or inducing a breach of contract, including by:
(a) assisting Ms Bainbridge to breach restraints in the Partnership Deed and/or the Employment Agreement;
(b) permitting, facilitating and providing the environment in which the breaches were allowed to occur;
(c) having dealings with Ms Bainbridge which the Fifth Defendant knew to be inconsistent with either or both of the Partnership Deed or the Employment Agreement (Allstate Life Insurance Company v ANZ Banking Group Ltd (1995) 58 FCR 26)."
In his opening, counsel for the Plaintiff submitted the case against HFP as follows:-
"But the real gravamen of the case against d(v) is on p 17 of the pleading, and this is the interference with contractual relations. And the pleading is there set out that Huon, knowing at all material times, or alternatively since 23 March 2012, which is 3 days after Ms Bainbridge commenced employment, and the significance of that date will become clear, your Honour, when we go through the chronology. That Ms Bainbridge and her companies had executed the partnership deed, and that it contained clauses referred to earlier in the pleading, being the non-solicitation clauses. Wrongfully and with the intent to injure the plaintiffs, sought, procured, knowingly assisted and or induced Ms Bainbridge and her companies to breach the terms of the partnership deed.
I will address your Honour as to the elements of the tort of interference with contractual relations a little later, if that is convenient to your Honour, but there needs to be an element of intention. In order to ground the requisite intention there needs to be an awareness by the inducer at least of the fact of a contract, the existence of a contract between the contract breaker and the plaintiffs, and such knowledge can be inferred by the Court where the evidence demonstrates, irrespective of that the witnesses said they did or did not understand, if they wilfully turned a blind eye to the terms of the contract, or did not avail themselves of the means to ascertain the terms of the contract, then that is a basis on which the Court can infer the requisite degree of knowledge and intention.
And in para 28(a) there is a similar pleading, but in respect of the breach of the employment agreement, or the inducement of the terms of the employment agreement, and what we say is that Huon provided the environment, provided the seed bed, in which the seeds of Ms Bainbridge's breach of contract could take root and flower and flourish to the benefit of Huon. And there is no dispute on the documents that these went across and that Huon started generating fees from them." [164]
On day 4 of the trial, counsel for the Plaintiff submitted particulars of fact relied upon as to knowledge. These were supplied pursuant to UCPR 15.4. [165] The particulars were as follows:-
"1. Ms Humphries of Huon Financial Planning Pty Ltd (HFP) was aware of the existence of a contract between Ms Bainbridge and the plaintiffs.
2. Ms Humphries was aware that the contract contained a restraint.
3. Ms Humphries was aware of the terms of the restraints by reason of the matters already set out in the particulars subjoined to paragraphs 27 and 28 of the FASC.
4. Alternatively, from about 22 February 2012, Ms Humphries, with knowledge of the matters in 1 and 2 above, deliberately closed her eyes from enquiring about the terms of the restraint or restraints to which Ms Bainbridge was subject, despite having every opportunity to obtain that information.
5. Further, on and from about 16 July 2012, HFP had knowledge of the terms of the restraint in the Partnership Deed by reason of the Statement of Claim served in these proceedings which expressly pleaded those terms and referred to the existence of the Employment Agreement." [166]
[10]
Legal Principles
In submissions, the Plaintiffs contended that the relevant principles of where an actionable interference in contractual relations arises were as follows:-
"Relevant principles
63. The tort of interfering with contractual relations (or inducing a breach of contract) is, in general terms, committed when the defendant intentionally induces a third-party to breach a contract between that third party and the plaintiff: Williams v Hursey (1959) 103 CLR 30; Balkan & Davis, Law of Torts, 4th edition, [21.6].
64. The essential element of the tort is the defendant's intention to bring about a breach of the contract: Independent Oil Industries Ltd v The Shell Code of Australia Ltd (1937) 37 SR (NSW) 394 at 414-415 per Jordan CJ; Short v The City Bank of Sydney Ltd (1912) 15 CLR 148 at 160; Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (1995) 58 FCR 26 at 43.
65. In order to ground the finding that the defendant intentionally procured the breach, it is necessary to prove that the defendant had sufficient knowledge of the contract: Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR at 512 [171].
66. Knowledge of the contract may be sufficient for the purpose of grounding the necessary intention to interfere with contractual rights even though the precise term breached is not known: Allstate at 43; Sidameneo (No 456) Pty Ltd v Alexander [2011] NSWCA 418 at [139] per Young JA (with whom Beazley and Basten JJA agreed).
67. It is not enough for the third-party to claim ignorance of the existence of the contract or of its terms by reason of inadvertence or negligence; the requisite degree of intention will be found if the third-party has been recklessly indifferent or wilfully blind to the truth: Allstate at 37; Fightvision at 512 [171]. Thus:
(a) in Sidameneo (No 456) Pty Ltd v Alexander [2011] NSWCA 418, Young JA (with whom Beazley and Basten JJA agreed) held at [139] that the defendant, if aware of the existence of the contract "is liable even though he does not know the actual terms of the contract… a fortifiori… where… [the defendant] deliberately closes his eyes and refrains from enquiring whether the term existed or not"
(b) in Northern Territory of Australia v Mengel (1995) 185 CLR 305 at 342, the High Court held that "a defendant may be liable if he or she recklessly disregards the means of ascertaining the terms of the contract";
(c) in Allstate, Lindgren J, with his judgment Lockhart and Tamberlin JJ agreed, held (at 167) that an alleged tortfeasor, even if not aware of the precise terms of the contract breached, may nevertheless be found to have the requisite intention to interfere with contractual rights if they have "'a fairly good idea' that the contract benefits another in the relevant respect".
68. Where the third-party, with knowledge of the contract between the contract breaker and the plaintiff, has dealings with the contract breaker which the third-party knows to be inconsistent with the contract, he or she has committed an actionable interference: D C Thompson & Co Ltd v Deakin [1952] Ch 646 at 694, cited with approval in Allstate at 44." [167]
In Daebo Shipping Co Ltd v Ship Go Star (2012) 207 FCR 220, Keane CJ, Rares and Besanko JJ held that the tort of inducing breach of contract consists of the following elements:- [168]
1. there must be a contract between the plaintiff (or applicant) and a third party;
2. the defendant (or respondent) must know that such a contract exists;
3. the defendant must know that if the third party does, or fails to do, a particular act, that conduct of the third party would be a breach of the contract;
4. the defendant must intend to induce or procure the third party to breach the contract by doing or failing to do that particular act;
5. the breach must cause loss or damage to the plaintiff.
The question of a contract has been referred to earlier. Insofar as knowledge is concerned, the nature of that knowledge appears to be in dispute as is the question of inducing or procuring.
In Allstate Life Insurance v Australia & New Zealand Banking Group Ltd [169] Lindgren J (with whom Lockhart and Tamberlin JJ agreed), reviewed the High Court's earlier decision in Short v City Bank of Sydney [170] and Independent Oil Industries Ltd v Shell Co of Australia Ltd [171] before stating as follows at [42]:-
"From the modern progenitor of the tort, Lumley v Gye (1853) 2 El and Bl 216 (118 ER 749) to date, the alleged tortfeasor's state of mind with respect to breach has been central to this particular form of tortious liability. In early cases what was required was referred to as "malice" (Lumley v Gye, supra, at 228 (ER 754) (Crompton J), 233 (ER 756) (Erle J), 238 (ER 757) (Wightman J); Bowen v Hall (1881) 6 QBD 333 (CA) at 338 (Brett LJ)). This has yielded to references, in numerous cases, to "intention" or "knowledge" that a breach of contract or at least an interference with another's contractual rights will result. The cases include Allen v Flood [1898] AC 1 (HL) at 107 (Lord Watson - here the actual word used was "wilfully"); Quinn v Leathem [1901] AC 495 (HL) at 510 (Lord Macnaghten); Read v The Friendly Society of Operative Stonemasons of England, Ireland and Wales [1902] 2 KB 732 (CA) at 738 (Collins MR); South Wales Miners' Federation v Glamorgan Coal Co Ltd [1905] AC 239 (HL) (passim); White v Riley [1921] 1 Ch 1 (CA) at 26 (Warrington LJ); Ware and De Freville Ltd v Motor Trade Association [1921] 3 KB 40 (CA) at 91 (Atkin LJ - "To induce a person to break his contract is not unlawful unless done knowingly and intentionally"); D C Thomson and Co Ltd v Deakin [1952] 1 Ch 646 (CA) at 694 (Jenkins LJ); Greig v Insole [1978] 1 WLR 302 (Slade J) at 332F, 336G-338H, 343G-344G; Schindler Lifts Australia Pty Ltd v Debelak (1989) 89 ALR 275 (FCA/Pincus J) at 293-294; Hawkins v Clayton (1988) 164 CLR 539 at 594 (Gaudron J); Northern Territory v Mengel (1995) 129 ALR 1 at 14-15 (Mason CJ, Dawson, Toohey, Gaudron and McHugh JJ).
In my opinion, the authorities establish conclusively that the gravamen of the tort is intention. Although the requirement of knowledge of the contract is sometimes discussed as if it was a separate ingredient of the tort, it is in fact an aspect of intention. The requirement that the alleged tortfeasor have "sufficient knowledge of the contract" is a requirement he have sufficient knowledge to ground an intention to interfere with contractual rights.
Both this intention to interfere with contractual rights and the necessary supporting knowledge of the contract refer to the "actual" or "subjective" state of mind of the alleged tortfeasor. I take the words "well knew" in proposed subpara159F(1) and subpara155C(1) to refer to a conscious awareness of the prohibition in the Indenture without any relevant misunderstanding of its effect. I do so because, to my mind, that is what the expression, without words of qualification, naturally signifies.
Although an alleged tortfeasor must have "a fairly good idea" that the contract benefits another in the relevant respect, knowledge of the contract may be sufficient for the purpose of grounding the necessary intention to interfere with contractual rights although the precise term breached is not known: D C Thomson and Co Ltd v Deakin, supra, at 687 (Lord Evershed MR); Emerald Construction Co v Lowthian [1966] 1 WLR 691 (CA) at 700-701 (Lord Denning MR), 704 (Diplock LJ); Daily Mirror Newspapers Ltd v Gardner [1968] 2 QB 762 (CA) at 780-781 (Lord Denning MR), 784 (Davies LJ); Woolley v Dunford (1972) 3 SASR 243 (SA/Wells J) at 282; Carlton and United Breweries Ltd v Tooth and Co Ltd (1986) 7 IPR 581 (NSW/Young J) at 625-626.
Cases of the kind just mentioned differ from those, like the present one, in which, according to the pleading, the alleged wrongdoer "well knew" of the term breached. In cases of the former kind, there may be sensed to be difficulty or awkwardness in speaking of an "intention" or of "knowledge" that a breach of contract will result, the term which is in fact breached not being known to exist."
Lindgren J then went on to discuss the decision of the English Court of Appeal in Emerald Construction Co Ltd v Lowthian. [172] In that case union officers objected in principle to sub-contract agreements. When they learned of a labour only sub-contract, they threatened the head contractor with adverse consequences if the sub-contract was not terminated. The sub-contractor in turn sought an interlocutory injunction pending final hearing. It was not in issue that the union officers were not aware of the precise terms of the sub-contract. Therefore, they did not "know" that it was not possible for the head contractor to terminate the sub-contract without breaching it. It was put that, in these circumstances, there could not be an intention to procure a breach.
After referring to the judgment of Lord Denning MR and Diplock LJ, Lindgren J summarised their Lordships' decision as follows:-
"Lord Denning accommodated the law's general requirement that there be an intention to procure a breach to lack of knowledge of the precise contractual provision breached, by abandoning the terminology of "intention" with respect to breach in favour of that of "recklessness" and "indifference" (cf Falconer v ASLEF [1986] IRLR 331 at 334, para35). Lord Diplock retained the word "intention", holding that intention might be proved by evidence of what may be appropriately referred to as "reckless indifference".
…
Insistence on a pleading of intention in this case is consistent with the statement in the joint judgment of Mason CJ, Dawson, Toohey, Gaudron and McHugh JJ in Northern Territory v Mengel, supra, that
" ... the recent trend of legal development, here and in other common law countries, has been to the effect that liability in tort depends on either the intentional or the negligent infliction of harm." (at 14)
Illustrating this "description of the general trend" by reference to the class of tortious conduct with which we are presently concerned, their Honours concluded,
" ... it is still accurate to describe the tort as one that depends on an intention to harm for that is necessarily involved if a person knowingly interferes with the enjoyment by another of a positive legal right, whether such knowledge (of the terms of the contract) is actual or constructive." (at 15 - emphasis supplied)"
In Northern Territory v Mengel [173] the joint judgment of Mason CJ, Dawson, Toohey, Gaudron and McHugh JJ stated at [18]:-
"The first development of significance was the recognition, in Lumley v Gye, of the tort of intentional interference with contractual rights. Subsequent developments in the United Kingdom have, to some extent, impinged upon the intentional element of that tort. Liability does not depend on whether there is a predominant intention to injure and it has been held that constructive knowledge of the terms of a contract is sufficient, so that a defendant may be liable if he or she recklessly disregards the means of ascertaining those terms. But it is still accurate to describe the tort as one that depends on an intention to harm for that is necessarily involved if a person knowingly interferes with the enjoyment by another of a positive legal right, whether such knowledge is actual or constructive."
Their Honours' reference to constructive knowledge above was footnoted to refer to the decision in Emerald Construction Co Ltd v Lowthian at [701].
In Fightvision Pty Ltd v Onisforou, [174] the Court of Appeal considered the decision in Northern Territory v Mengel and Allstate Life Insurance v Australia & New Zealand Banking Group Ltd, before concluding at [171] as follows:-
"The position may be stated, we think, as follows. The plaintiff must prove that the defendant intentionally procured the breach. The requirement that the defendant have sufficient knowledge of the contract is a requirement that he have sufficient knowledge to ground an intention to interfere with contractual rights. Ignorance of the existence of the contract or of its terms born of inadvertence or negligence is not enough. On the other hand, reckless indifference or wilful blindness to the truth may lead to a finding of the necessary intention."
The HFP sought to rely on the trilogy of British cases, being OBG v Allan; Douglas v Hello! Ltd (No 3); Mainstream Properties v Young [2007] UKHL 21. [175]
Referring to those cases, Young JA (with whom Beazley and Basten JJA agreed) in Sidameneo (No 456) Pty Ltd v Alexander [176] relevantly stated at [135]-[141] as follows:-
"In OBG Ltd v Allan [2007] UKHL 21; [2008] 1 AC 1, 29, Lord Hoffmann said:
To be liable for inducing breach of contract, you must know that you are inducing a breach of contract. It is not enough that you know that you are procuring an act which, as a matter of law or construction of the contract, is a breach. You must actually realize that it will have this effect. Nor does it matter that you ought reasonably to have done so.
…
However, the Australian test is different. In Short v City Bank of Sydney [1912] HCA 54; 15 CLR 148, 160, Isaacs J said:
But to constitute that cause of action, the defendant must have induced or procured the doing of what he knew would be a breach of contract. A bona fide belief reasonably entertained that it was not a breach of contract would be fatal to the claim. If the defendant did not know of the existence of the contract, he could not induce its breach; if he reasonably believed it did not require a certain act to be performed, his inducing a party to the contract to do something inconsistent with it could not be regarded as an inducement or procurement knowingly to break the contract; if he believed on reasonable grounds that the contract had been rescinded, or performance waived, when in fact it had not, he could not be said to knowingly procure its breach.
The other judges were Barton and O'Connor JJ. They merely said that they agreed with the reasons of PW Street J in this court (Short v City Bank (1912) 12 SR (NSW) 186) who had held that the Bank did not intend to breach contractual relations and there was no foundation for "suggesting that such a breach ought to have been apparent to it as a reasonable or probable consequence of its action."
In Carlton & United Breweries Ltd v Tooth & Co Ltd (1986) 7 IPR 581 at 625, I said, after reviewing the authorities to that date:
… all the cases are consistent with the proposition that so long as the defendant has actual knowledge that there is a contract between the plaintiff and X, then if the defendant acts in such a way as to induce a breach of that contract, he is liable even though he does not know the actual terms of the contract unless he has reasonable grounds for believing that the contract did not contain the term which is relied on,* and this is a fortiori the position where (a) the term is a very common one in contracts of that type; or (b) he deliberately closes his eyes and refrains from enquiring whether the term existed or not.
[*I should have added here "and does so believe"]
Although that decision was reversed on appeal, the passage I have quoted was not considered on appeal.
The law was considered by the Full Federal Court in Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (1995) 58 FCR 26. The court consisted of Lockhart, Lindgren and Tamberlin JJ. Lindgren J gave the leading judgment. His Honour did not focus on whether the actor's assessment of the situation was reasonable, he intimated that one must get to what the actor intended and that the surrounding circumstances were relevant as to the finding of intention to interfere. He did not appear to read the decision in Short as requiring a finding that the actor acted reasonably.
It seems to me that, in cases where the real issue is whether the defendant says that it thought that the contract had been rescinded or terminated or that it did not contain the term allegedly breached, the defendant must show that it did believe that the contract had been terminated or as the case may be and that such belief was reasonably held. Thus I adhere to what I said in Carlton & United Breweries."
In the instant case, I am satisfied that the Plaintiff has pleaded intention to injure and provided particulars of knowledge as described above. As was stated in Northern Territory v Mengel the tort of inducing breach of contract depends on an intention to harm. Liability in tort depends upon intention or negligent infliction of harm. Knowingly interfering is necessary for an intention to harm. To that end, constructive knowledge can arise where a Defendant acts with reckless indifference or wilful blindness. Constructive knowledge was not raised in the Further Amended Statement of Claim but was advanced in the Particulars supplied by the Plaintiff. Although in submissions HFP objected to the Particulars as going beyond the pleadings I propose in light of the discussion when they were raised before me, to consider the Plaintiff's claim the Plaintiff's case as put. [177]
[11]
Commencement of Employment
The Plaintiffs' primary submission was that Ms Humphries had actual knowledge based on the fact that she was aware of the following matters when Ms Bainbridge commenced her employment with HFP on 20 March 2012:-
1. Ms Bainbridge had been a partner of Focus Partners. [178] Ms Humphries had given advice to Ms Bainbridge when Ms Bainbridge had been considering becoming a partner of Focus Partners as Ms Humphries recalled that Ms Bainbridge "had some misgivings at the time about the proposed arrangements with Focus Partners and the people and personalities involved"; [179]
2. Ms Bainbridge, whilst a partner and being a party to a partnership agreement; [180]
3. Ms Bainbridge, after ceasing as a partner, had become an employee of Focus Partners; [181]
4. Ms Bainbridge had an employment agreement; [182]
5. The employment agreement contained a restraint; [183]
6. The restraint prevented Ms Bainbridge from soliciting clients (or Ms Humphries at least assumed that this was the case); and [184]
7. Ms Bainbridge had sought and received legal advice as to whether the restraint was enforceable; [185]
Ms Humphries stated that after Ms Bainbridge commenced her employment she neither requested for a copy of the employment agreement nor the partnership deed. Ms Humphries' evidence was that she employed a number of people over the years and had never asked for a copy of their employment agreement and did not believe that that was common practice. [186] She stated that Ms Bainbridge had told her that she had obtained her own legal advice in relation to the restraints as she made her own decisions based on that advice. [187]
Ms Humphries' evidence was that, at the time of engaging Ms Bainbridge, she was not provided with a copy of her employment agreement from Focus Partners but assumed that she would be precluded from soliciting clients. [188]
The Plaintiffs submitted that, although the thrust of Ms Humphries' evidence was that she never had any knowledge of the terms of the restraint to which Ms Bainbridge was subject, this is glaringly improbable against the weight of evidence. It was contended that as Ms Bainbridge was herself aware of the terms of the restraint of which she was subject, including the non-dealing clause, it is quite likely that Ms Bainbridge had told Ms Humphries about the terms of the restraints to which she was subjected.
I accept that Ms Bainbridge was aware of the terms of the restraints to which she was subject. Their details were the subject of negotiation and detailed discussion. Ms Bainbridge was reminded of the restraints at her exit interview with Focus Partners on 22 February 2012. [189]
The basis upon which it was suggested that Ms Bainbridge had told Ms Humphries about the terms of the restraint were that Ms Humphries regarded Ms Bainbridge as an upfront, forthright and honest person [190] and it is likely that in the usual course of things an upfront, forthright and honest person would tell her about the terms of the restraints to which she was subject. . The Plaintiffs particularly drew attention to the evidence of Ms Humphries that Ms Bainbridge would tell her whenever she had contact with a client of Focus Partners. [191] Ms Humphries assessment of Ms Bainbridge's front, honesty and forthrightness does not assist with speculation about whether the later did in fact disclose the terms of the restraints particularly in light of the confidentiality provision of the agreements that she was subject.
The evidence of Ms Richards, was that she had found Ms Bainbridge to be very helpful, personable and cooperative to deal with. [192] She stated that on 23 February 2012 she found out that Ms Bainbridge had had left Focus Partners and a few weeks after she tracked her down with a view to having her continue performing work for her and her husband as a financial planner. The details of the conversation were as follows:-
"I wasn't really interested in the ins and outs of why she left, I was only interested in engaging her to continue to be Harry's and my financial planner. She said:
Di: "I can't do your financial planning."
Me: "Why not?"
Di: "Because I have a contract which says that I can't."
Me: "But I will keep Terry as my accountant, and just have you as my financial advisor."
Di: "Sorry Judy, I can't do that either."
Me: "I don't care what arrangements are in place, no-one can tell me who I can and can't use as my financial planner." [193]
Ms Richards' evidence was that, following the conversation, she arranged to collect her documents from Focus Partners and then contacted Ms Bainbridge to inform her of this fact. At this point, Ms Bainbridge said:-
"Well if you aren't going to get Focus Partners to look after your affairs, you will need someone to do that so I will do that for you."
Ms Humphries accepted that Ms Bainbridge would have told her about her conversation with Judith Richards. [194] The Plaintiff's contention was that this conversation would have been relayed to Ms Humphries, thereby informing her of the non-dealing restraint. Ms Humphries, in her evidence, denied going into the detail of the conversation which would indicate to her the restriction under which Ms Bainbridge had in undergoing work for her. [195] Further into evidence she indicated that she could not recall whether these details were provided to her. [196] Then, she stated "I don't believe she did." [197] Further, she stated:-
"I can only respond by saying that I don't believe that Ms Bainbridge did relay, in that level of detail, the conversation which she had to me." [198]
Contrary to the Plaintiffs' contention, the evidence form Ms Richards does not necessarily impart details of the non-dealing restraint. If Ms Bainbridge was referring to the non-dealing restraint in her discussion with Ms Richards her earlier statement that she was precluded by contract from working with her would be in conflict with the decision to take on her work after she insisted on ending her relationship with the Plaintiffs.
A similar contention is made by the Plaintiff in relation to the contents of a file note relating to Bradley Combe-Starr. This file note, dated 21 March 2012, records as follows:-
"Bradley requested that I meet him at his Grandmother's house after he learned of my cessation of employment with Focus Partners. He advised he still wants me to attend to his financial planning management, so I explained that I was not equipped at that stage to be able to transfer the business across but would keep him informed of what was required." [199]
When Ms Humphries' was cross-examined in relation to this she stated:-
"Do you remember Ms Bainbridge telling you about this conversation that she had with Mr Coombe-Starr?
A. I recall Dianne mentioning to me that there were two sons of one of her clients - two grandsons of one of her clients and that she had met with them at - at her client's house.
Q. Did she tell you that what she said to them at that meeting was that she was not equipped at that time to be able to transfer the business across?
A. I don't believe that she did say that to me. I - my recollection of that conversation is that she told me that she met with grandson of - of one of her clients at - at her client's home.
Q. Is it the case that you have no recollection or you deny it?
A. I have no recollection." [200]
I have previously expressed my caution about the file notes of Ms Bainbridge Even so the content of the conversation passed on to Ms Humphries would not in my view have disclosed the non-dealing restraint.
When Ms Christensen was asked how it was that HFP knew that Ms Bainbridge executed the partnership deed and knew about the restraints contained in the deed, Ms Christensen responded:-
"I believe that they knew of - that she was a partner and that there was a deed - there would have been a deed in place. And whether they knew of the specific restraints, I don't know." [201]
When it was put to Ms Christensen as to whether she aware of any evidence that would indicate that Ms Bainbridge had told either Ms Humphries or Ms Sultman (from HFP) about the terms of the restraint which she was being asked about, she responded "no." [202] Ms Christensen subsequently admitted that the allegation that HFP knew about the restraints was based on an assumption about what Ms Humphries and Ms Bainbridge had discussed. [203]
In her affidavit, sworn 16 August 2013, Ms Humphries deposes that she made it very clear from the outset to Ms Bainbridge that she would not be able to contact any of her former clients at Focus Partners. [204] When Ms Humphries was asked questions relating to this the following exchange takes place:-
"Q. You were aware that Ms Bainbridge had been party to a partnership agreement, weren't you?
A. Yes, that's correct.
Q. You also knew that in late 2011 Ms Bainbridge had ceased being a partner and had become an employee as you'd explained?
A. That's correct, yes.
Q. You knew that Ms Bainbridge upon becoming an employee had an employment agreement?
A. That's correct, yes.
Q. Before Ms Bainbridge ever came and worked for you you knew that the employment agreement contained a restraint, didn't you?
A. Yes, I did.
Q. You knew that the restraint prevented Ms Bainbridge from soliciting clients of Focus Partners?
A. I didn't know the details of the restraint. I hadn't been provided with a copy of her employment agreement but I assumed that she would be prevented from soliciting clients, yes.
Q. And Ms Bainbridge had told you that she had received legal advice on the extent to which the restraint was enforceable?
A. Yes, she did. She told me that she had sought legal advice on her employment agreement. I recall that was through a firm of solicitors in Wodonga, Harris Lieberman, and that she'd been told that that restraint was not enforceable.
Q. Did you have a view about the extent to which the restraint was enforceable or not?
A. No, I--
OBJECTION. QUESTION ALLOWED
WITNESS: No, I did not. No, I trusted that she had obtained her own independent legal advice. That's an area outside my knowledge or experience.
HARDING
Q. You didn't take legal advice?
A. No, I did not. I relied on the legal advice that she had already obtained." [205]
Ms Humphries' evidence was that Ms Bainbridge confirmed that she would not solicit clients. [206] Her evidence was that she had seen no evidence that Ms Bainbridge had initiated any contact with any of her former clients at Focus Partners to transfer their work to HFP. She had a belief on her part that if a client chose to contact Ms Bainbridge themselves and sought to retain her as their financial advisor and that this was a decision made by a client. [207] The file notes kept by Ms Bainbridge were reviewed by Ms Humphries although according to her evidence not until the commencement of the proceedings. [208] To this extent she did so they were consistent with her understanding of Ms Bainbridge's actions.
Ms Humphries' evidence was that by March 2012 she knew that there was a restraint but it was in general terms. [209] She accepted Ms Bainbridge's advice that she had spoken to her solicitor who had advised that the restraint was not enforceable. [210] She stated that she did not have a view in relation to the restraint but relied on the legal advice that Ms Bainbridge had obtained and what she had told her. [211] Specifically, she did not ask to see a copy of the advice. [212]
I am satisfied that whatever opinion Ms Humphries might have had of Ms Bainbridge, the evidence does not establish that Ms Bainbridge told her the details of the restraints. Consistent with the principles referred to earlier, the evidence of conversations sighted by the Plaintiffs do not give rise to an inference that Ms Humphries was consequently aware of the details of the restraints and in particular the non-dealing restraint. [213] Nevertheless Ms Humphries was clearly aware that there was some restraint relating to solicitation.
[12]
Letters of Demand to Ms Bainbridge
The next source of knowledge which the Plaintiff alleged Ms Humphries had arises from letters of demand directed to Ms Bainbridge dated 6 March 2012 [214] and to Ms Bainbridge's solicitors dated 23 March 2012. [215] The case put in relation to these items of correspondence was as follows:-
1. Ms Humphries accepted that it was likely that Ms Bainbridge had told her that she had received both letters of demand. [216]
2. The letter of demand of 6 March 2012 threatened legal proceedings against Ms Bainbridge. Ms Humphries accepted that it was likely that Ms Bainbridge had told her that she was dealing with her solicitors in relation to the letter. [217]
3. The letter of 23 March 2012 threatened the commencement of proceedings, not only against Ms Bainbridge but also against HFP. [218] Accordingly it is submitted that it is highly likely that Ms Bainbridge would have brought this matter to the attention of the principal of her employer, Ms Humphries, as this likely would have been a matter of importance to HFP and to Ms Humphries. [219]
4. Ms Humphries, in her affidavit, did not refer to either of the letters of demand of 6 March 2012 and 23 March 2012.
5. Ms Humphries initially stated that she did not believe that she was shown a copy of the letter of 6 March 2012 as "Ms Bainbridge was very much dealing with her solicitor in relation to the matters." She was asked whether she had a recollection one way or the other as to whether she was actually told about the letter and Ms Humphries responded stated:-
"I don't have a recollection, a strong one, but she was telling me about the allegations that were being made about her." [220]
1. Ms Humphries subsequently stated that she did not believe that she was shown a copy of the letter. [221] When asked whether it was possible that she did see the letter at the time, she stated:-
"I don't accept that because it was not consistent with what has happened, with how things were at the time." [222]
1. Contrary to the Plaintiffs' submissions I did not find this evidence confusing.
2. In relation to the letter of 23 March 2012, the Plaintiff also submitted that Ms Humphries' evidence was confusing. When questioned about whether she had asked to see this letter Ms Humphries stated:-
"I don't believe that I asked for a copy of this letter from Di." [223]
1. When further questioned, she stated:-
"I don't believe that I asked for a copy of this letter from Di. I really don't. It's not how we were dealing with each other at the time." [224]
1. When it was put to her whether it was her evidence that Ms Bainbridge did not tell her about a threat against Huon Partners, she stated:-
"I don't recall her telling me about a threat. I can only recall her telling me that there was no basis for the allegations that were being made against her to the best of my recollection." [225]
1. At T 423.46, Ms Humphries was asked:-
"What I want to suggest to you is that you did see a copy of this letter on or shortly after 23 March 2012 because Ms Bainbridge gave you a copy or showed you a copy or you were asked for a copy."
1. To which Ms Humphries responded:-
"I don't accept that. I did not."
The letter of 6 March 2012 was sent to Ms Bainbridge by the solicitors for Focus Partners, Macpherson + Kelley Lawyers. [226] That letter annexed copies of the restraints of in the partnership deed and employment agreement. It alleged that Ms Bainbridge had been contacting clients of Focus Partners with a view to soliciting work in breach of the agreements and further, that Ms Bainbridge had been telling clients that she would inform them of the new employer once the details were confirmed. It was further asserted that Ms Bainbridge's actions appeared to be in breach of the advisor deed between Lonsdale Financial Group Ltd, the partnership and herself personally and that Lonsdale had been made aware of her actions. The letter went on to seek an undertaking from Ms Bainbridge that she would immediately cease and desist from contacting clients of Focus Partners by any means and to abide by the terms of the agreement.
In response to that letter, Harrison Lieberman Solicitors wrote to the solicitors for the Plaintiff, in a letter dated 7 March 2012, denying that Ms Bainbridge was in breach of any contract with Focus Partners and specifically stating:
"Our client will not undertake to 'immediately cease and desist from contacting any client of Focus Partners by any means.' This was never the subject of any agreement and, further, Focus Partners' clients include members of our client's family and also her friends.
Our client will continue to abide by the terms of the contract which she entered into with Focus Partners." [227]
Subsequently, on 14 March 2012, a letter was written by Mr Mark Stephens, Chief Executive Officer of the Lonsdale Financial Group Ltd, to Ms Bainbridge informing her that they believed that her actions in approaching a number of financial planning clients who were clients of Focus Partners was in breach of the restraint provisions of the original Advisor Deed, particularly clause 7. [228]
When the letter from Lonsdale of 14 March 2012 [229] was received by Ms Bainbridge, Ms Humphries gave evidence that Ms Bainbridge informed her of the letter and told her the action that was taken. [230] Ms Humphries evidence was that she did not ask to see a copy of the letter, [231] she stated in this regard:-
"A. No, I didn't, and I based that on, that Dianne was keeping me informed on what was going on, and that that was her solicitor. The way the letter was described to me was that it was accusing her of soliciting clients and she told me that she hadn't been doing that, and I had no reason to disbelieve that that was the case. So she had received a letter or warning. It wasn't threatening - if I read the letter now, I don't see that it threatens legal actions. It was reminding her - the way she described it to me was that she wasn't to solicit clients and she assured me that she wasn't soliciting clients. At that point in time, I felt that that was sufficient.
Q. Did you ask her whether the letter threatened legal proceedings?
A. No, I did not." [232]
In relation to the letter addressed to Ms Bainbridge from M+K Lawyers, dated 6 March 2012, Ms Humphries' evidence was that Ms Bainbridge told her that Focus Partners were alleging that she was contacting clients and she had provided information to her solicitor at Harris Lieberman. [233] She stated that she did not specifically recall whether she was told about this letter but does recall Ms Bainbridge telling her what Focus Partners were alleging. [234] Ms Humphries was cross-examined extensively in relation to whether or not she saw a copy of this letter. She stated that she did not believe she did. [235]
In relation to the reply from Harris Lieberman solicitors, [236] Ms Humphries conceded that, once the solicitor had responded to the allegations, Ms Bainbridge would have told her, she did not ask to see a copy of the letter as Ms Bainbridge had told her:-
"We have responded to deny the allegations and that there was no basis for them." [237]
It was put to Ms Humphries that, in March 2012, it was likely that Ms Bainbridge, having been threatened with imminent legal proceedings, would have told her of that fact. [238] Ms Humphries accepted this proposition. [239] It was then put to her that, having been told of imminent legal proceedings being threatened against Ms Bainbridge, there was a real risk that HFP might itself become caught up with the litigation against Ms Bainbridge. Ms Humphries responded as follows:-
"A. I don't agree. Again, I can only refer to that fact that I trusted Di implicitly, I would not bring anybody into my business that I didn't trust implicitly, and I trusted what she was telling me, that she was not soliciting clients or canvassing clients was true. So as a result I did not consider that was - there were significant risk of legal proceedings, no. Because I thought there was no basis for them." [240]
Ms Humphries reiterated her view at as follows:-
"A. I restate that I did not believe that there would be any basis for that because I had been told continuously that there was - well, the allegations were being made but they were - were not true and that they were being responded to appropriately, so, on the basis that I trusted that there was no solicitation and that there was no canvassing, I did not consider that that was a, a significant risk.
Q. Did it ever cross your mind that Focus Partners, despite what Ms Bainbridge was telling you, might still bring proceedings against Ms Bainbridge?
A. No, it didn't because I couldn't see that there was a basis.
Q. Are you therefore saying that it didn't even cross your mind that there might be proceedings against Huon Financial Planning? Is that what you're saying?
A. That's correct. All the allegations had been made against Ms Bainbridge and she had been able to address them with me.
Q. What I want to suggest to you, Ms Humphries, is that it did cross your mind. That's what I'm suggesting to you. That there was a risk that Focus Partners would bring proceedings against Ms Bainbridge and also against Huon Financial Planning, her new employer. Do you accept that?
A. No, I do not." [241]
The Plaintiffs rely upon Ms Humphries regarding Ms Bainbridge as an upfront, forthright and honest person, to suggest that Ms Bainbridge would have told Ms Humphries the terms of both letters and/or shown her copies of the letters. As indicated earlier Ms Humphries' general assessment of Ms Bainbridge's front, honesty and forthrightness does not assist with what amounts to speculation about whether she made disclosure.
Ms Humphries' evidence was that, to the best of her recollection, they were not shown to her. There is no evidence to suggest otherwise.
Viewed as a whole, I do not regard Ms Humphries' evidence in relation to the correspondence received by Ms Bainbridge as having deviated. I am satisfied from the exchanges that Ms Humphries was aware of the allegation that Ms Bainbridge had breached the restraint as to soliciting although this was denied by her and in this respect addressed by her solicitors. She was also aware of the correspondence from Lonsdale and Ms Bainbridge's rejection of the allegations made against her.
[13]
Letter of Demand to Huon Partners
The Plaintiff's next contention related to the letter of demand of 23 March 2012 addressed to Huon Partners who, it is suggested, would have read the letter and provided a copy of it to Ms Humphries or at least told her about the letter and what it contained. This submission is based on the fact that the letter itself expressly threatened legal proceedings against Ms Bainbridge's employer and it was known to all that this was HFP (Ms Humphries). The letter itself included copies of the restraints, both in the partnership deed and in the employment agreement, which were attached as relevant excerpts. It is suggested on this basis that Ms Humphries would have been squarely on notice as to the terms of the restraints. It is submitted that this conclusion flows from the following:-
1. A hard copy of the letter was sent by post to the post-box which was shared by Huon Partners and HFP.
2. An electronic copy of the letter was sent by email to all@huonpartners.com.au. Ms Humphries' evidence was that the email would have been likely to have been received by one of the client service coordinators, Terry Bowran or his successor, Tracey Flemming. [242]
3. The sketch plan drawn by Ms Humphries of the office environment where she worked indicated that the principals and employees of Huon Partners and HFP shared an environment which was small and intimate.
4. HFP had failed to call anyone from Huon Partners to corroborate Ms Humphries' claims that she never received the letter, meaning that the Court can more confidently infer that the letter was received or seen by Ms Humphries. [243]
5. The evidence supported that there was a close connection between Huon Partners and HFP, demonstrated by the following:- [244]
1. The two businesses shared "Huon" in their name;
2. The two businesses shared the same offices; [245]
3. The two businesses shared the same reception with a sign behind it stating "Huon" and featuring the "Huon logo"; [246]
4. Employees in the two businesses all had "Huon Partners" email addresses; [247]
5. The two business shared administrative support; [248]
6. The two businesses shared a central server and had common IT; [249]
7. The two business used the one accounting system; [250]
8. The two businesses shared the same post office box; [251]
9. Financial planners at HFP provided consulting services to Huon Partners, entered their time on Huon Partners' billing system and were billed to Huon Partners as a disbursement; [252]
10. Likewise, employees of Huon Partners (including the client services co-ordinator, Tracy Flemming form time to time performed tasks for HFP and entered their time on HFP accounting (WIP) system. [253] (Ms Humphries admission that this was the case [254] was said to sit uneasily with her evidence that Ms Fleming "did not provide any services to HFP." [255] );
11. Terry Bowran and her successor Tracy Flemming, whose titles were client services coordinator, in 2012 both used "Huon Group" email stationary;
12. Charmaine Parer, who did accounting and compliance work for self-managed superannuation funds, [256] in 2013 also used "Huon Group" email stationary;
13. The website for Huon Partners in June 2012 had a financial planning page which referred to "our" financial planning services, being those provided by HFP (cf. Ms Humphries' assertion in her affidavit of 20 August 2014 that the Huon Partners website referred only to "Huon Financial Services Pty Ltd", which ceased its operations in August 2010;
14. Letters from Huon Partners identified 'Huon Superannuation Services' as a "division of Huon Group" and had Ms Humphries' name on the letterhead;
15. Ms Humphries gave evidence in her affidavit of 16 August 2013 that HFP "worked closely" with Huon Partners to provide the best outcomes for clients who use the services of both businesses. It was submitted Ms Humphries' attempt to qualify this statement in cross-examination (by emphasising that the same applies for other accounting firms who she works with [257] was an example of Ms Humphries being an advocate for her cause;
16. Many 'ethical letters' sent out by Huon Partners referred to the transfer of financial planning work as well as accounting work. It was submitted that Ms Humphries' evidence that this was "unusual" and "not in accordance with my understanding" [258] was unconvincing and a further instance of the disparity between the reality of documents and the picture sought to be painted by Ms Humphries;
17. Moreover, Ms Humphries in cross-examination accepted that she had been involved in requesting Huon Partners to send out an ethical letter on one occasion. This contrasted with her affidavit evidence that "I was not involved in any decision by Huon Partners to send these [ethical] letters." Moreover, Ms Bainbridge is also recorded in the contemporaneous documents as having involvement in the issue of ethical letters to Focus Partners;
18. Ms Humphries in 2012 was familiar with the names of the principals of Huon Partners and the number and role of its employees; [259]
In relation to the assumption that the letter of 23 March 2012, being sent by email to an address all@huonpartners.com.au, that email would have reached Ms Humphries at HFP, Ms Christensen's evidence was that she believed that Huon Partners and HFP were "all sharing a website and sharing email and everything like that." [260] She conceded that the notion of an email addressed to "all@huonpartners" would reach everyone with an email address including those at HFP was an assumption. [261] She conceded, however, that it was possible that the email might go to the administration manager at Huon Partners and only that person. [262] She insisted initially that even if the "all@huonpartners" emails went to the practice manager only it did not follow that HFP would not have received the email. [263]
Ms Christensen admitted that she did not contact Ms Humphries at her email address, did not call Ms Humphries and did not instruct solicitors to send the letter addressed to Ulf Ericson to Ms Humphries. [264] She also stated:-
"I would say that somebody at HFinancial Planning did have knowledge, one of their employees, if not the main person." [265]
When asked what, if anything, happened to the email after it was received by the immediate recipient was a matter of speculation on her part, Ms Christensen responded by stating:-
"I guess it's speculation. We just relied on it going to the group as was sent."
HFP drew attention to the fact that Ms Humphries was unshaken in her evidence that she never received a copy of the letter of 23 March 2012. In particular, Ms Humphries, in her first affidavit at [85] [266] and in her second affidavit at [52]-[53], [267] makes clear that she did not receive a copy of the letters. Her copy of the letters was sent to Huon Partners. In cross-examination, Ms Humphries believed that Ms Bainbridge was dealing with the correspondence with her solicitors and she was adamant that Mr Ulf Ericson (to whom the said letter was addressed), did not tell her about the letter. [268] Ms Humphries denied that the letter was "the talk of the office" [269] and she denied being told about the letter, deliberately asking not to see a copy of it. [270]
The evidence given by Ms Humphries was that the recipients of the email address, all@huonpartners.com.au, were Terri Bowran and later Tracey Flemming and at times Jennifer Wain. [271] Ms Humphries' own evidence was that she could not recall any emails that were sent or received by her in relation to contractual obligations of Dianne Bainbridge during the period 23 to 26 March 2012. [272] She conceded that there may be documents but they could not be retrieved. [273]
Ms Humphries was asked in relation to the production of documents referred to in Exhibit A, paragraph 1(b) which required to produce:-
"The letter dated 23 March 2012 from M+K Lawyers to Huon Partners with the subject heading 'Solicitation of Focus Partners' Clients by Dianne Bainbridge.'"
Ms Humphries' response was:-
"A. Yes, I've been unable to be provided a copy of that or any emails that
would have related to that, they haven't been able to recover. Again I state though that I don't believe that I received any emails around that date.
Q. It is possible though and you're unable to say without certainty, without the search having been undertaken?
A. I'm certain that I didn't receive emails of those dates in relation to Diana (sic) Bainbridge's contractual obligations with Focus Partners.
Q. You may well have received them at a later date though. That's right, isn't it?
A. I don't believe so.
Q. But you don't know?
A. I generally do not believe so. I'm quite happy to state that." [274]
In Ms Humphries' affidavit of 20 August 2014, evidence was given of conversations Ms Humphries is said to have had with Mr McGrath and Ms Wain relating to the letter of 23 March 2012 addressed to Huon Partners. [275] Those paragraphs were admitted only as evidence of the fact, not truth pursuant to a restriction under to s 136 of the Evidence Act 1995 (NSW).
The evidence establishes that there were a number of ethical letters sent out by Huon Partners referring to the transfer of financial planning work as well as accounting work. [276] Ms Humphries gave evidence that her understanding was that an ethical letter was generally something sent between accounting firms in relation work to be conducted by that practice. She stated that it was not something that was sent by financial planning firms generally. [277]
Her attention was thereafter drawn to the contents of the ethical letters referred to which mentioned financial planning work. [278] Her responses to questions as to why such letters would refer to financial planning work assumed that they were a reference to financial planning services provided by her firm. When questioned regarding this, she stated:-
"It is unusual that that reference would be in there, I don't know why it would have been included." [279]
And further:-
"It is, that is not in accordance with my understanding of ethical letters." [280]
Ms Humphries gave similar explanations in relation to each of the aforesaid letters. [281] The letter of 23 March 2012 specifically referred to ethical letters in relation to the Kooyong Superannuation Fund, Yola Cox, the Mick McCormick Family Superannuation Fund and the Ian and Nancy McMasters Superannuation Fund. None of these clients were the subject of the ethical letters referring to "financial planning" work.
Ms Humphries stated that she was not involved in any decision by Huon Partners to send these ethical letters. [282] There was however evidence that recorded that Ms Bainbridge was involved in preparing ethical letters to send to Focus Partners in reference to Judith Richards' Superannuation Fund [283] and Mercedes Wolfenden. [284] There was also evidence of Ms Humphries requesting Mr McGrath from Huon Partners to arrange an ethical letter in relation to the Mick McCormick Family Superannuation Trust. [285]
The aforementioned evidence indicates a close collaboration between HFP and Huon Partners in relation to the sending of ethical letters quite apart from the sharing of resources and premises. The account given by Ms Humphries as to why the letter would not have been provided to her was contested by the Plaintiffs. Neither Ulf Ericson, Glenn McGrath nor anyone else from Huon Partners were called.
The relevant principles for determining whether a witness not called was in the camp of one or another of the parties was set out in Payne v Parker (1976) 1 NSWLR 191 by Glass JA at [201]-[202]. Although that was a dissenting decision, His Honour's application of the principles was acknowledged as being correct and was specifically referred to by Campbell J in Manly v Byrne (supra) at [53]. In the circumstances I am satisfied that:-
1. The witnesses from Huon Partners would be expected to be available for the HFP;
2. The relevant witnesses are properly to be regarded as being in HFP's camp for the purposes of the current dispute
3. The evidence that each witness could be given is relevant to a matter in contest between the parties; and
4. The absence of each such witness is unexplained.
HFP referred to Cross on Evidence, [286] submitting that the rule does not require a party to merely give cumulative evidence. It is asserted that, based on Ms Humphrey's belief as to the reason why Huon Partners did not provide her with a copy of the Ericson letter, HFP was entitled to take the view that any further evidence would merely confirm Ms Humphrey's own evidence as she did not receive the Ericson letter.
In Cubillo v Commonwealth, [287] O'Loughlin J held:-
"…(i)n Cross on Evidence at para [1210] it is remarked that the rule does not operate to require a party to give merely cumulative evidence, such that if five people attended a relevant meeting, and some are called, no Jones v Dunkel inference can normally arise in respect of those who are not. Essentially, the rule does not compel time to be wasted by calling unnecessary witnesses. However, that statement by no means provides a shield against a justifiable criticism that a party deliberately kept less favourable witnesses from testifying. A further aspect of the rule is that the evidence of the missing witness must be such as would have elucidated a matter, in that the witness must have some knowledge of the event or issue. This characteristic of the rule was explained by Glass JA in Payne v Parker at 202:
"... the condition is made out when the witness is presumably able to put a true complexion on the facts, might have proved the contrary, would have had a close knowledge of the facts, or where it appears that he had knowledge. I would think it insufficient to meet the requirements of principle that one party merely claims that the missing witness has knowledge, or that, upon the evidence, he may have knowledge. Unless, upon the evidence, the tribunal of fact is entitled to conclude that he probably would have knowledge, there would seem to be no basis for any adverse deduction from the failure to call him." (footnotes omitted)." [288]
Ms Humphries' evidence in relation to the ethical letters, specifically the involvement of HFP, did not explain why Huon Partners were repeatedly writing in relation to work that she was to perform at HFP. I regard her explanations in relation to her involvement with these letters as unsatisfactory.
Although the pleadings themselves recognise that HFP and Huon Partners were separate entities I am satisfied that they represented themselves as linked at least until June 2012 through a single website. The evidence was that In August 2010 HFP was set up as a separate company operating form the same premises and sharing some resources with Huon Partners. While the businesses were separate they shared a website. Screen shots from that website on 6 June 2012 were in evidence [289] Ms Humphries evidence was that in September 2010 she asked Ms Jennifer Wain, Huon Partner's Practice Manager to remove any reference to financial planning from the Huon Partner's website as this related to the previous financial planning entity Huon Financial Services Pty Ltd which ceased to operate in August 2010. [290] She claimed that the deletion was overlooked. [291] She stated that Ms Wain approached her in early to mid-2012 to acknowledge the previous request but to confirm that she had not deleted the financial planning tab from the Huon Partners website "until now" [292] . Ms Humphries was cross examined regarding this website. She acknowledged that as at June 2012 it referred to HFP as distinct from Huon Financial Service and further the fact that HFP was an authorised representative of Lonsdale (an event which followed the creation of HFP). [293] The presence of these details do not support Ms Humphries claim that the failure to delete the financial planning tab was oversight.
The timing of Ms Wain's said approach and any subsequent deletion is consistent with the receipt by Huon Partners of the letter of the letter of 23 March 2012 and the commencement of proceedings. The suggestion that two businesses allowed such an alleged oversight to persist yet update the information to include references to HFP and Lonsdale for just short of two years is implausible.
Furthermore the letter of 23 March 2013 does not appear to have elicited a response from Huon Partners. There ultimately was a response sent to Huon Partners on 4 June 2012 to another ethical letter by Ms Wain. That letter did not mention the letter of 23 March 2012 but instead advised Ms Christensen that:-
Although Ms Bainbridge is working from the office where Huon Partners is located she is in fact working for a Company that is a subtenant of Huon Partners.
The Directors of Huon Partners do not own any shares or that any management control in relation to the Company that Ms Bainbridge is working for. [294]
Specifically mentioned in the letter of 23 March 2012 was that if anyone knowingly induces or assists Ms Bainbridge to breach the restraints in her employment agreement and the partnership deed, they and/or "your firm" may be liable for damages arising from that breach. Although the letter was confined to allegations of "canvassing or soliciting business" it stated that it was important that the recipient be aware of Ms Bainbridge' obligations to Focus Partners and that neither anyone of "your company" nor Ms Bainbridge "engages in further or continuing breaches". At that stage, there was no allegation made in relation to breaches of the non-dealing provisions. Annexed to that letter was correspondence addressed to Harris Lieberman Solicitors dated 23 March 2012, the solicitors for Ms Bainbridge. That letter referred to alleged breaches of clauses 28.1(b), 28.2 and 28.3 of the partnership deed and the restraint of trade clause in the employment agreement, in addition to common law duties. It stated:-
"Where there is a breach of these obligations, our client is entitled to recover from the employee or former employee the loss suffered as a result of the actions of the employee or former employee and also any profits made by that person or any other person which extends to your client's new employer Huon Partners." [295]
I do not accept Ms Humphries denial that the letter of 23 March 2012 was discussed with her based on representations said made to her as to its confidential nature. The letter concerned the alleged conduct of Ms Bainbridge. On the evidence referred to I am satisfied that an inference is open that the letter was discussed and HFP's failure to call any evidence from Huon Partners enables such an inference to be drawn consistent with the principles referred to earlier in Manly v Byrne (supra).
Based on the fact that the letter referred to clients that went to Huon Partners as opposed to HFP and that the allegation made not extending to breach of the non-dealing restraints, I am unable to be satisfied that the letter itself was shown to Ms Humphries and, if it was, it was in circumstances whereby she became aware of the non-dealing restraints.
[14]
First Statement of Claim
The Plaintiffs further claimed that the restraints came within the knowledge of Ms Humphries in July 2012, following service of the first Statement of Claim in the proceedings, [296] and the letter serving the statement of claim dated 13 July 2012. [297] That Statement of Claim set out the precise details of the restraint in clause 28.2 of the Partnership Deed. [298] Ms Humphries was heavily cross-examined in relation to this issue. She stated that she had read it closely with her solicitors [299] and the contents of paragraph 27 in particular. [300]
When asked about the relevant paragraphs of the Statement of Claim, Ms Humphries' explanation was that her "focus" at the time of its receipt had been on the Employment Agreement rather than the Partnership Deed. [301] This was because Ms Bainbridge was no longer a partner. [302] However, when it was put to her she accepted that when she read the restraint closely with her solicitors and the precise terms of the restraint in the partnership deed, she stated:-
"I am reading that information now, yes, it does." [303]
Ms Humphries conceded that she did not request a copy of the partnership deed at the time [304] although she could have easily done so. [305] She stated that she would have asked for a copy of the Partnership Deed if that had been recommended to her. [306] Ms Humphries' stated that it was at the District Court at Albury that she had her first recollection of being informed of the non-dealing restraint in a conversation with her barrister. [307] Specifically, she stated:-
"Di had spoken to me in relation to that restraint in general terms in that she had taken her own legal advice and that legal advice was that it was so broad as to be unenforceable." [308]
Proceedings were listed at the District Court at Albury on 10 June 2014. [309]
Ms Humphries was heavily cross-examined in relation to these matters. Apart from the Statement of Claim, the employment agreement had been annexed to an affidavit by Ms Christensen in 2013 which Ms Humphries agreed that she had read with her solicitors. [310] Nevertheless, she stated that she did not have a clear recollection. [311] It was then put to her that she had read the employment agreement long before the hearing of these proceedings set down in June of 2014. Ms Humphries response was:-
"I can't say with absolute clarity that I did. I recall reading affidavits although I am not sure whether I read in detail all the attachments. Well, I was very much working with my solicitor in relation to that." [312]
Ms Humphries accepted that when she read the employment agreement, she understood from the reading of the restraint that it effectively precluded Ms Bainbridge from working on files of former clients. [313] She accepted that she would have come to the same understanding had she read the clause in March 2012. [314]
Ms Humphries' evidence that, when she read the relevant paragraph of the Statement of Claim closely with her solicitors that set out the precise terms of the partnership deed. [315]
Ms Humphries also stated that she knew the identity of the clients for whom Ms Bainbridge was performing work and knew who had been formerly clients of Focus Partners. Her evidence was:-
"Q. As well as being aware of - you were aware, weren't you of Ms Bainbridge's clients as she under took work for them?
A. Yes, she would inform me of that.
Q. You were aware if those clients had come from Focus Partners?
A. Yes, she would inform me of that.
Q. You were also aware if those same clients were referred to Huon Partners for accounting services.
A. No, not - not always. I was aware if we were doing financial planning work for them but not always if there was account work. Di would deal with that separately.
Q. But you knew that those sorts of referrals were going on?
A. For the self-managed superannuation funds, yes, I was aware that the administration was coming across." [316]
Ms Humphries stated that, as at 23 March 2012, it would have been very difficult for her to cease performing services to former Focus Partners clients, although she theoretically could have. [317]
Bearing in mind that the document was served on her and she had the benefit of legal advice, it is my view inconceivable that Ms Humphries was not aware at the time of service of the first Statement of Claim of all the relevant restraints and the allegations as to breach contained therein. They included an allegation of breach by:-
"(f) … either directly or indirectly provided and are continuing to provide services to clients that have ceased to be clients of Focus Partners." [318]
I do not accept Ms Humphries's evidence to the contrary. As discussed earlier I do not regard the terms of the partnership restraint as uncertain in its referring to non-dealing and solicitation.
[15]
Constructive Knowledge
The Plaintiffs allege that even if Ms Humphries did not have actual knowledge of the terms of the restraints from March 2012 or alternatively July 2012 the circumstances suggest that Ms Humphries was recklessly indifferent or had kept herself deliberately ignorant to these matters. This was put forward on the basis that Ms Humphries could have requested a copy of the partnership deed and the employment agreement from Ms Bainbridge or asked to see copies of the letters of demand that M+K Lawyers had sent to Ms Bainbridge which Ms Humphries accepted that Ms Bainbridge had told her about, including the letter of demand of 23 March 2012 which attached the precise terms of the restraint. The same could be said of the correspondence to Huon Partners which I have accepted as having been discussed with her.
Although I have found that there was knowledge of the non-dealing restraint from 16 July 2012 and non-solicitation at least at the time of Ms Bainbridge's employment with HFP I turn to consider the case of constructive knowledge in the event I am in error.
Whilst the Plaintiffs have contended that the circumstances are such so as to give rise to constructive knowledge under the Emerald "reckless indifference" construction of jurisprudence, I do not accept that this has been made out. In my opinion, the circumstances do not evince an intention to infer breach "heedless of the terms". In Emerald, the inference was established by the unequivocal terms of the demand that the union officials made of the subcontractor. There was no unequivocal demand on Ms Bainbridge to terminate her contract with Focus Partners from which it could be inferred that Ms Humphries was intent on breaking the contract at all costs not caring about the manner in which that was achieved.
The question of wilful blindness needs to be considered in light of the decision in Sidameneo (No 456) Pty Ltd v Alexander. As noted earlier Young JA referred to his decision in Carlton v United Breweries Ltd v Tooth & Co Ltd [319] to state that a person who acts so as to induce a breach may be liable even though he does not know that actual terms unless he has reasonable grounds for believing that the contract did not contain the term relied on.
However Young JA effectively stated that "reasonable grounds" would not exist where:-
1. The term is a very common one in contracts of that type; or
2. [0ne] deliberately closes his eyes and refrains from enquiring whether the term existed or not.
In relation to the first of these alternatives this was not established. The evidence from Ms Christensen was that Focus Partners employed about 14-15 staff members as at June 2012, whereas HFP employed 3 staff members. [320] The employment agreement kept by HFP was devoid of any non-solicitation, non-compete or non-dealing clauses. [321] When Ms Christensen was confronted with this, her response was:-
"I think it is a pretty lame employment agreement." [322]
Ms Christensen's evidence was that in the course of conversations, discussing employment related matters with colleagues in her profession over a 30 year career, she had not had cause to refer to the non-dealing restraint but had had cause to refer to the non-solicitation, non-compete and confidential information restraints. [323] The Plaintiffs did not, in their final submissions, advance this argument on constructive knowledge.
In relation to the second of the alternatives the question of what constitutes wilful blindness was discussed in the New Zealand Court of Appeal decision of Diver v Loktronic Industries Limited [324] . The parties in that case approached the elements of the tort on the basis taken by the House of Lords in OPG v Allan, although there were some immaterial differences in approach between that case and earlier New Zealand authorities. HFP acknowledged that the same can be said for the position under Australian law as observed in Sidameneo. Nevertheless, HFP observed that the fact that Australia has its own body of law should not obscure the fact that, to the extent that the test in OBG v Allan, Short v City Bank of Sydney and Sidameneo overlap, they are concerned with whether the Defendant's beliefs about assurances from the contracted party are reasonable, the proposition demonstrated by that fact that the Defendant in Sidameneo was found at [136] and [157] not to be liable under both tests. [325]
At [33]-[46] in Diver v Loktronic, Ellen France J in delivering the judgment of the Court analysed the authorities in the United Kingdom, New Zealand and the United States before concluding:-
"[47] As we read these authorities, the references to wilful blindness and "shut-eye" knowledge suggest that more is required in this case than the possibility of the existence of a contract and an associated failure to inquire into that possibility. Rather, the required state of knowledge involves a suspicion of sufficient strength that a contract exists and a deliberate choice not to make inquiries. The fact that the existence of a contract should have been obvious is not sufficient as that is negligence. A subjective, rather than an objective, inquiry is required. Such an approach accords with the fact that this is an intentional tort."
In Carlton v United Breweries Ltd v Tooth & Co Ltd, Young JA referred to circumstances of "induce a breach" and where one "deliberately closes his eyes". He footnoted the reference to reasonable grounds for believing to add "and does so believe.
On the evidence, I am satisfied that Ms Humphries was in fact given assurances by Ms Bainbridge and those assurances were based on the information from Ms Bainbridge's solicitors. The unchallenged evidence also was that Ms Humphries had been informed of the letter from Lonsdale and had been advised by Ms Bainbridge that her solicitors had asked for evidence substantiating the allegations and had received no response. The fact that this advice was given was not challenged. There is no evidence that Ms Humphries conducted any due diligence and acquired any other body of knowledge inconsistent with the assurances that she had provided to her prior to 16 July 2012.
The fact that a party makes enquiries of the contracted party, receives assurances that the contemplated conduct does not involve a breach of contract and fails to obtain written confirmation of the assurance does not equate to wilful blindness or reckless indifference. [326] The fact that HFP did not seek independent advice does not assist the Plaintiffs because the Plaintiffs cannot succeed by showing that the Defendant was negligent in not obtaining further advice. [327] The fact that a Defendant has grounds to suspect that a contracting party might be breaching the restraint does not amount to reckless indifference or wilful blindness. [328] Rather there need to be a suspicion of sufficient strength and a deliberate choice not to make enquires.
On the evidence I am satisfied that there was a reasonable basis for Ms Humphries to believe that there was a restraint as to solicitation but not a restraint as to servicing up until she received the first Statement of Claim and read it with her solicitors.
On the facts as found by me including those advanced by the Plaintiffs as to procuring or inducing, Ms Humphries was entitled to rely on the assurances she had been given and I am satisfied that she did so. The case of wilful blindness has not been established.
It follows I am not satisfied that the case as to constructive knowledge prior to 16 July 2012 has been established.
[16]
Did the Fifth Defendant induce or procure the breach?
Paragraphs [27] and [28A] of the Further Amended Statement of Claim plead that HFP sought, procured, knowingly assisted and/or induced Bidalam, Amalbi and Bainbridge to breach the terms of the Partnership Deed and, in the case of Ms Bainbridge alone, the Employment Agreement. The particulars provided were that HFP agreed by means of discussion with Ms Bainbridge in March 2012 that Ms Bainbridge would be employed for the purposes of conducting a business in direct competition with Focus Partners and sought to procure Focus Partners clients to be clients of HFP.
Ms Christensen was asked what conduct she had in mind when she verified the Pleadings. She stated:-
"They basically took the clients that she brought to them." [329]
Following further questioning, Ms Christensen was asked and responded as follows:-
"Q. Ms Christensen, is the basis for the allegation made in that sub-paragraph about discussions between Ms Humphries and Ms Bainbridge about Ms Bainbridge joining Ms Humphries so they could establish a business in competition based on your awareness that the two women had discussions and an assumption by you that this particular matter is one of the matters they would've discussed?
A. Yes." [330]
Ms Humphries' evidence was that she was engaging Ms Bainbridge to primarily work with her existing client base in terms of ongoing service to clients. [331] She indicated that her goal was to grow her business by freeing up her own capacity to actually bring on new clients. [332] She was adamant that she was not employing Ms Bainbridge to bring in new clients. [333] However, in her affidavit dated 16 August 2013, Ms Humphries stated in relation to her conversation with Ms Bainbridge in November 2011 that she was considering engaging her:-
"Well, if you are interested in working for me, you should know that it would be on the basis that you would be starting from scratch again. I would be prepared to cover your wage from existing business revenue for the first 12 months while you build up a new business and help me with my clients as well as marketing. We will then need to review things to see how we are travelling after the initial 12 month period." [334]
At [32] of her affidavit, she stated:-
"Given my knowledge of the industry we work in, my experience in financial planning, I expect that Di probably would be under a restraint of trade and would definitely not be able to contact any of her former clients at Focus Partners if she was to resign from her job with them."
Ms Humphries' evidence was that she envisaged expanding services into Bright and Corowa by having an office in those two centres one day per week and either her or the new advisor would go to that office. [335] After Ms Bainbridge commenced her employment, the evidence from Ms Humphries was that they work on a business plan and Ms Bainbridge took ownership of Alpine, focusing on the office at Brighton. She stated that this was one of the two places nominated in her affidavit as a potential growth area. [336]
It was specifically put in cross examination that Ms Humphries had formed a plan with Ms Bainbridge to bring across clients form Focus Partners to Huon and that the plan had been formed between the two before Ms Bainbridge had been put on enforced leave on 22 February 2012. Ms Humphries denied this. [337]
I am satisfied that Ms Humphries did have plans to expand her business and Ms Bainbridge was part of those plans as Ms Humphries affidavit evidence suggests. Ms Bainbridge was clearly on notice that her tenure was reviewable at the end of 12 months and that she had to start from scratch. However there was no evidence to contradict Ms Humphries evidence denying the existence of a plan or agreement as put in cross examination and particularised in the pleadings. Ultimately this assertion was not advanced in submissions.
Instead the Plaintiffs submitted that HFP committed an actual interference in contractual relationships between the Plaintiffs and Ms Bainbridge by procuring or inducing a breach of the restraints by:-
1. Assisting Ms Bainbridge to breach restraints in the partnership deed and/or the employment agreement;
2. Permitting, facilitating an providing the environment in which the breaches were allowed to occur;
3. Having dealings with Ms Bainbridge which the Defendant knew to be inconsistent with either or both of the partnership deed or the employment agreement: Allstate Life Insurance Company v ANZ Banking Group Ltd (1995) 58 FCR 26. [338]
The Plaintiffs' oral submissions in relation to this issue were as follows:-
"HARDING: Your Honour, I pass quickly to the element of procuration, procuring breach. Your Honour I would just commend to your Honour para 76 of our written submissions. My written submissions which set out how it is that the plaintiffs contend that Ms Humphries, who had actual or constructive knowledge of the restraints, the non-dealing restraints, procured a breach of contract. It did so, this is set out in our list of issues as well, by assisting Ms Bainbridge to breach the restraints.
Importantly by permitting, facilitating, and providing the environment of which the breaches were allowed to occur, and consistent with the statement of principle in all state, having dealings with Ms Bainbridge which the defendant knew to be inconsistent with either or both of the restraints.
Just for completeness, your Honour, the relevant passage there - there should be a reference to p 44 of that judgment. The dealings which Huon Financial Planning had with Ms Bainbridge which were manifestly inconsistent with the non dealing restraints were continuing to permit Ms Bainbridge, in her employment, from providing services - or continuing to permit and allow Ms Bainbridge, in the course of her employment, to provide services to former clients of Focus Partners.
I'll just remind your Honour in that context that Ms Humphries in cross examination, in the transcript reproduced at para 75 of my submissions, accepted that she understood from reading the restraint in the employment agreement that it prevented Ms Bainbridge from working on the former files of Focus Partners.
With that understanding, your Honour, in my submission Ms Humphries, assuming she knew of the restraints either actually or constructively, also knew that it was a breach of contract for Ms Bainbridge to continue to service those clients and yet Ms Humphries permitted that state of affairs to continue. She had every power to stop it, as Ms Bainbridge's employer, but did not do so." [339]
HFP contended that the Plaintiffs' submissions sought to recast the tort of "inducing" breach of contract as a tort of "assisting" or "permitting" or "facilitating" breach of contract. I accept that the way that the Plaintiff sought to cast this aspect of its claim is at variance of that pleaded and particularised in the Further Amended Statement of Claim. HFP sought to question the form of the Plaintiff's pleading, contending that using the words "knowing assistance" is not a proxy for "inducing" or "procuring" breach of contract. Further, HFP contended that the use of the word "agreed" in the particulars is inadequate to establish the tort. HFP contended that the Plaintiffs have sought to compensate for the acknowledged absence of any evidence of procurement (as opposed to assistance) by recasting the tort in the way that I have described.
The Plaintiffs did not address the issue in relation to the pleadings. Instead they referred, to the decision in DC Thomson & Co Ltd v Deakin [1952] Ch 646 as quoted in Allstate Life Insurance Co v ANZ Banking Group Ltd (supra), in support of the submission that "procuring" can include acting in a way that is inconsistent with the contract. The Plaintiffs contend that the quotation from DC Thomson & Co Ltd v Deakin relates to procurement, not just knowledge. However, it is important to read the quotation in the context used by Lindgren J. The relevant section of His Honour's judgment was as follows:-
"But where, as in the present case, the particular contractual provision breached is "known" (in the sense to which I have earlier referred) to the alleged tortfeasor, this kind of question does not arise. There is no reason why the requirement of intention should not be applied with full force in the light of the pleading that the banks "well knew" of the prohibition in the indenture. The words of Jenkins LJ in DC Thomson & Co Ltd v Deakin, supra (at 694), are apposite:
'... there seems to be no doubt that if a third party, with knowledge of a contract between the contract breaker and another, has dealings with the contract breaker which the third party knows to be inconsistent with the contract, he has committed an actionable interference [emphasis supplied].'
In my opinion, if an alleged tortfeasor knows of the particular provision which is in fact breached but does not "know" or "intend" (signifying the same thing) that the contract into which he enters with the contract breaker constitutes a breach of that provision, no tort is committed."
The Plaintiffs' argument that the extract of Jenkins LJ's decision, referred to by Lindgren J, relates to the element of procurement does not deal with the argument advanced by HFP that it was applied in Allstate to make a point in relation to the element of knowledge, not the element of procurement. In my view, HFP's argument is correct. Lindgren J, in his decision, emphasised that the pleading in that case as inducement, nothing more than the act of the banks taking the benefit of the contract breaker was insufficient. The Plaintiffs' contention, relating to the passage of Jenkins LJ, focused on its content and not the context in which the Court in Allstate used it.
The Plaintiffs further drew attention to what is claimed to be a discussion in Allstate as to what is required for "procuring" and quotes from this passage in Lindgren J's judgment:-
"The words 'induce' or 'procure' import effort, care, management or contrivance towards the obtaining of a desired end." (emphasis added)
The Plaintiffs' written submissions in reply state at [40]:-
"In the plaintiffs' submission, the concept of 'management' is consistent with the conduct alleged in the present case, including in relation to the defendant 'permitting, facilitating and providing' the environment in which the breaches were allowed to occur. In particular, at no stage did Ms Humphries make any attempt to prevent Ms Bainbridge from breaching a contract (For example by directing her not to undertake work for former clients of Focus Partners). Instead, in her management of Ms Bainbridge she continued to permit Ms Bainbridge to undertake work for those former clients."
Lindgren J's judgment, however, shows that the above quotation was actually a reference to a submission made by subsequent participant banks in the proceedings. Furthermore, the judgment itself carefully considered the decision of the High Court in Short v City Bank, Specifically, Lindgren J drew attention to the fact that in Short's case, Barton (with whom O'Connor J agreed) dismissed the appeal for reasons given in the Supreme Court. Lindgren J referred to the following judgment of Street J in the Full Court:-
"To make out a cause of action of this kind, it is incumbent upon the plaintiff to establish three things. He must establish in the first place that the defendant in fact induced and procured the breach complained of; in the second place that the breach was procured with the deliberate intention of injuring the plaintiff, or in such circumstances that it must have been obvious to the defendant that the reasonable consequence of what he did would be to injure the plaintiff; and in the third place that what was done did in fact injure him.
In the present case the plaintiff has, in my opinion, altogether failed to adduce any evidence showing that the bank did anything for the purpose of inducing or procuring the Society to break its contract. The words "induce" and "procure" in their ordinary significance, I think, convey the idea of persuasion or contrivance, and I think that a person complaining of a breach of contractual relations brought about by these means must show that the person whose actions are complained of did something in the nature of effectually persuading or prevailing upon the other party to the contract to violate his obligations under it. The persuasion may take the form of advice or friendly solicitation, or it may take the form of intimidation or molestation, but in every case I think that it must be shown that the defendant deliberately intervened between the contracting parties, either with the express design of depriving the plaintiff of the benefit of his contract, or under such circumstances that he must have known that the effect of his intervention would be to deprive the plaintiff of that benefit.
In the present case it is abundantly clear that though the claim made by the bank was an excessive claim, all that it did was done in pursuance of what it believed to be its contractual rights, and that it was not animated by any desire to deprive the plaintiff of any benefit to which he might be entitled under his agreement with the Society. Most assuredly nothing that it did was done with the express intention of procuring a breach of the contractual relations between the plaintiff and the Society, and I am quite unable to find any foundation for suggesting that such a breach ought to have been apparent to it as a reasonable or probable consequence of its action. In point of fact as I have already pointed out, the Society's reason for refusal to deliver was not the bank's action, but the impending liquidation, while the liquidator's refusal to deliver was based upon the very obvious ground that there was not sufficient wheat to satisfy all claimants, and that he could not safely part with any of it, until the rights of all parties had been ascertained [emphasis supplied]." [340]
In The Law of Torts by RP Balkin and JLR Davis, [341] the authors doubt that the proposition referred to in the quotation from DC Thomson & Co Ltd v Deakin is consistent with the return to orthodoxy brought about by the decision in OBG Limited v Allan as the dictum does not require proof or persuasion by the Defendant. In support of this view, the authors cite Carty "The Economic Torts in the 21st Century." [342]
That article and the passage from DC Thomson & Co Ltd v Deakin were considered by Le Mier J in Jaddcall v Minson (No 3) [2011] WASC 362 where His Honour stated at [191]-[199]:-
"191 In D C Thomson & Co Ltd v Deakin Jenkins LJ identified 'inconsistent dealings' as an aspect of the tort of interference with contractual rights. Lord Jenkins said at 694:
'But the contract breaker may himself be a willing party to the breach, without any persuasion by the third party, and there seems to be no doubt that if a third party, with knowledge of a contract between the contract breaker and another, has dealings with a contract breaker which the third party knows to be inconsistent with the contract, he has committed an actionable interference: see, for example, British Industrial Plastics Ltd v Ferguson [1940] 1 All ER 479, where the necessary knowledge was held not to have been brought home for the third party; and British Motor Traders Association v Salvadori [1949] Ch 556. The inconsistent dealing between the third party and the contract breaker may, indeed, be commenced without knowledge by the third party of the contract thus broker; but, if it is continued after the third party has notice of the contract, an actionable interference has been committed by him: see, for example, De Francesco v Barnum (1890) 45 Ch D 430.'
192 In British Motor Traders Association v Salvadori [1949] Ch 556 Roxburgh AJ considered that 'any active step taken by a defendant having knowledge of the covenant by which he facilitates a breach of that covenant is enough' to establish the tort.
193 Commentators have considered whether engaging in inconsistent dealings or facilitating a breach is sufficient to amount to inducing a breach of contract since the more traditional approach to the tort taken by the House of Lords in OBG Ltd v Allan. O'Sullivan J in 'Intentional Economic Torts, Commercial Transactions and Professional Liability' (2008) 24 Journal of Professional Negligence 164 concluded that tortious liability based on knowingly making an inconsistent contract is entirely consistent with OBG Ltd v Allan reasoning. On the other hand, Carty H, An Analysis of the Economic Torts (2nd ed, 2010) concludes that inconsistent transactions should not be seen as tortious per se.
194 I find the reasoning of Ms Carty compelling. The tort of inducing a breach of contract requires a breach caused by the defendants' persuasion or inducement. The defendant is liable for being instrumental in the decision to breach. In Thomson v Deakin Jenkins LJ asserted that 'inconsistent dealings' could give rise to liability in this tort. The other members of the court did not consider the point. Jenkins LJ drew support for his assertion from the judgment of Roxburgh J in British Motor Traders Association v Salvadori. In Salvadori the defendant bought a car from the claimant's co-contractor knowing that the sale constituted a breach by the co-contractor of his obligation not to sell the car within a year. At one point in his judgment Roxburgh stated that inducement to breach of contract included offering a price high enough for the contract breaker to agree. He also later referred to the active steps the defendant must take, before he will be liable. Ms Carty observes that as such this would appear to be a run-of-the-mill direct persuasion case. However, later in his judgment Roxburgh J asserted that simply by agreeing to buy the car, known by him to be on offer in breach of contract, the defendant was taking active steps by which he facilitated the breach of contract.
195 Ms Carty argues that this minimal degree of interference cannot be sufficient to render the defendant liable in tort. Arguably, the only legitimate reason for adding tort liability to the contract breaker's already existing liability in contract is precisely because the defendant has played an important part in persuading the co-contractor to break his contract. It would appear justifiable to demand a causal link before facilitation could lead to liability. If the defendant has simply said 'yes' he is better regarded as the tool of the contract breaker, rather than vice versa. That view is supported by Batts Combe Quarry. There the father breached his contract not to assist in carrying on a rival quarry business. The breach involved the provision of a sum of money to his sons to enable them to purchase a rival quarry. The Court of Appeal agreed with the trial judge that the mere acceptance by the sons of the gift did not amount to a procuring by them of the breach of contract.
196 Furthermore, Ms Carty argues persuasively at page 47 of her book that none of the cases cited in support of the 'inconsistent transaction' doctrine are solid authority for its existence. In BMTA v Salvadori the defendant induced the claimant's co-contractor to breach his contract by offering a high enough price for the contract breaker to agree.
197 In OBG Ltd v Allan the House of Lords did not address the question of whether facilitating a breach of covenant or being a party to inconsistent dealings is enough to establish the tort. However, their Lordships discuss the tort in terms of inducing, procuring or persuading a breach. And the other wide dicta of Jenkins LJ - outlining varieties of the tort to include direct and indirect intervention in a contract - were of course rejected. In the subsequent Court of Appeal decision in Meretz Investments NV v ACP Ltd [2007] EWCA Civ 1303; [2008] 2 WLR 904 there are dicta that seem to deny liability for inconsistent transactions: Arden LJ at [139]. So Toulson LJ in that case notes that inducing breach of contract 'requires the defendant's conduct to have operated on the will of the contracting party': [177].
198 Ms Carty argues that:
'The acceptance of inconsistent transactions as tortious places liability in the area of facilitating a breach. This appears to downgrade the need for causal and intentional harm, emanating from the defendant. Yet, it was accepted in Allen v Flood that 'the procuring [of] … a breach of contract was … the gist of the action' [1898] AC 1, 123 Lord Herschell. In effect, the defendant must be the person in the background who 'pulls the strings' [as Lord Macnaghten put it in Allen v Flood [1898] AC 1, 152]. This requires accepting Batts as correct and rejecting the wider dicta in Salvadori.'
199 Once it is accepted, as I do, that merely facilitating a breach of the Restraint Clause is not enough to establish the tort, the plaintiffs' case against Mr Lowick cannot succeed. There is no evidence that Mr Lowick did anything to persuade Mr Minson or Mr Bruske or Mrs Bruske to breach the Restraint Clause or that Mr Lowick's conduct influenced them to make up their mind to breach the Restraint Clause. There is no evidence that Mr Lowick's conduct operated on the will of Mr Minson or Mr or Mrs Bruske to cause them to do the things that amounted to breaching the Restraint Clause. The plaintiffs' case in tort against Mr Lowick is not made out. "
I accept the HFP's contention that to accept the proposition put forward by the Plaintiffs would modify the tort to reflect the fact that the non-dealing restraint can be breached more passively than a non-solicitation restraint.
Whether the primary breach involved actively soliciting or the more passive breach does not in my view derogate from the need for the Plaintiffs to establish that it was HFP who induced or procured the breach. In Qantas Airways Ltd v Transport Workers Union of Australia [2011] FCA 470 at [447]-[450], Moore J stated:-
"[447] In addition to establishing intention, it is necessary to show the tortfeasor procured or induced the breach of contract. This element was discussed by Finkelstein J in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Corke Instrument Engineering Australia Pty Ltd (2005) 223 ALR 480. His Honour said at [19]:
The first mentioned tort [inducing breach of contract] was given life by Lumley v Gye (1853) 2 El & Bl 216. See also Quinn v Leathem [1901] 1 AC 495. The gist of the cause of action, at least where the interference is direct, is the knowing interference with (or procuring a breach of) contractual relations, when there is no sufficient justification for the interference or procuration. Proof of malice in the sense of spite or ill-will is unnecessary: South Wales Miners' Federation v Glamorgan Coal Co Ltd [1905] AC 239 at 246 and 250. It is, however, necessary to show that the breach of the contract has been "procured" or "induced". Sometimes the cases have noticed a distinction between "procuring" or "inducing" which is said to be unlawful, and "advice" which is said not to be unlawful. The prevailing view is that to induce a breach of contract means to create a reason for breaking it; to advise a breach of contract is to point out the reasons that already exist. The former is actionable while the latter is not. See generally South Wales Miners' Federation v Glamorgan Coal Co Ltd [1905] AC 239; D C Thomson & Co Ltd v Deakin [1952] Ch 646 at 686.
[448] It is tolerably clear that his Honour was adopting what had been said on the subject of "procuring" and "inducing" in Thomson v Deakin at 686. It is a passage in the judgement of Evershed MR which reads:
I appreciate that in these matters there is a difficult question of distinguishing between what might be called persuasion and what might be called advice, meaning by the latter a mere statement of, or drawing of the attention of the party addressed to, the state of facts as they were. In the case of Camden Nominees Ld v Forcey [1940] Ch 352, before Simonds J, it was held that the advice given was of such a nature (was of a character obviously intended to be acted upon) that it was for all practical purposes equivalent to persuasion; but, if the matter be advice be merely (in the ordinary sense of that word), it seems to me that there can be no complaint about it; nor do I think that Mr Beyfus can derive any substantial assistance by saying that Bowaters proved themselves merely chicken-hearted and that the ease with which a person may be persuaded is not a relevant consideration in determining whether the persuader was wrongful in what he was doing. That may, as a general proposition, be true; but in this case the evidence on this motion, whatever may emerge when the matter is fully investigated, falls too far short of any proof of what is required to constitute a cause of action such as would entitle the plaintiffs to an injunction. Put another way, I cannot see that the evidence establishes that there was anything done by Bowaters vis-à-vis the plaintiffs which is fairly attributable to any such pressure, persuasion or procuration on the part of any of these defendants, as would in any event cause them to be liable in tort.
[449] …
[450] It seems to me this dichotomy between advice which appears to be a fairly broad concept and pressure, persuasion or procuration is relevant to my assessment of whether any of the respondents have committed the tort."
This view of the meaning of induce or procure was further supported by the decision of Stevenson J in Network Ten Pty Ltd v Seven Network (Operations) Ltd. [343]
The Plaintiff contends that this position as to procurement /inducement is artificially narrow and would lead to some absurd results. Specifically it contends that an employer who has knowledge of the terms of the restraint to which an employee is subject would not be liable unless the Plaintiffs can establish that the employer positively directed, instructed or counselled the employee to breach the contract. It contends that an employer knowing a restraint could nevertheless avoid liability by passively taking the benefit of the employee's breach. The response to this is as stated by Peter Gibson L.J. in Millar v Bassey:-
"……. The tort gives a plaintiff a right of action in respect of a failure to comply with the terms of a contract against a person who is not a party to the contract. This is inconsistent with contractual principles, in particular in breaching the privity rule (see Cane; Tort law and Economic Interests (1991), pp122-125). As stated by Hobhouse J in Rickless v United Artists Corporation[1986] F.S.R 502 at 524:
Unless the tort is to become virtually equivalent to the enforcement of contracts against third parties, it must remain an essential element of the tort that the interference occurs with the requisite intent [sc. To cause a breach to the Plaintiff's contract." [344]
Consistent with these authorities neither the Plaintiffs' pleaded case not the element of inducement or procurement has been established. It follows that the Plaintiffs' case on this ground must fail.
[17]
The Prohibition against Double Recovery
When the settlement with the First to Third Defendants was foreshadowed by the Plaintiffs on day 1 of the proceedings, Counsel for HFP contended that, on one view of the common law where a Plaintiff seeks the same damages against concurrent wrongdoers and settles its case against one wrongdoer then, depending on the settlement, there may be deemed to be satisfaction of the claim so that the proceedings against the second concurrent wrongdoer is either stayed or dismissed. [345]
Counsel for the Plaintiffs responded on day 2 of the proceedings:-
"HARDING: ...Next, my learned friend, Mr Botsman yesterday asked through your Honour for an answer to a question from me as to whether we accepted the judgment sum that has been entered in favour of defendants one to three should be set off, in effect in any judgment sum that is or may be ordered in favour of D5. The answer is no, we don't accept that at all having regard to s 95 of the Civil Procedure Act and the authorities. We do, however, take - there is obviously a live issue in terms of recoverability which your Honour need not be concerned about.
But when it comes to recoverability, if my clients receive from Ms Bainbridge, the amount of the judgment sum or some part thereof, then there would be a good argument available to Mr Botsman and without commenting on the merits of the argument, there would be a good argument available to Mr Botsman. I would expect that his clients may be entitled to credit, that off the amount that they have to pay on any judgment sum that is entered against them. What it doesn't mean and in my respectful submission, the authorities don't suggest and s 95 of the Civil Procedure Act makes it plain that the plaintiff is entitled to bring different causes of action against different defendants and to have judgment entered accordingly against each one.
It then becomes an issue of recoverability. If the loss and the damage is the same and if the course of action arises out of essentially the same facts then obviously if we've only got one set of loss and we're not allowed to recover twice. But, that's an issue of recoverability that need not concern your Honour. Your Honour needs only to consider whether we have made out our course of action as against Huon. So, that's my response to the inquiry made yesterday. [346]
There was no response to this statement and in particular HFP did not seek leave to file a Further Amended Defence.
Notwithstanding this, In its written submissions HFP contended that, in view of the fact that the business interests sought to be protected by the Plaintiffs' claim were the same as against all Defendants (namely the protection of Focus Partners' business interests for a period of two years), the Defendants have a joint liability. [347]
HFP next contended that, by reason of s 95 of the Civil Procedure Act 2005 (NSW) and the commentary in [95.20] of Ritchie's Uniform Civil Procedure NSW:-
1. Payment of damages by one jointly liable Defendant is taken into account in fixing the liability for damages of other Defendants;
And:-
1. Where, as in the instant case there are no reservations contained in the settlement deed, satisfaction by Ms Bainbridge should discharge the liability of Huon Financial.
The orders which were made in relation to the liability of the First to Third Defendants were identified earlier together with the submissions made at the time by Counsel for the Plaintiffs as to their effect. The specific reference by counsel for the Plaintiffs to the provisions of s 95 of the Civil Procedure Act 2005 (NSW) suggests an acceptance of a case of joint liability, despite the use of the words "different causes of action."
I accept the Plaintiffs' submissions that in its term s 95 relates to recovery after the judgment and not to the calculation of damages prior to judgment. [348]
HFP's submissions refer to the notes in Ritchie's refer to the case of Jameson v Central Electricity Generating Board (2000) 1 AC 455 as standing for the proposition that:-
"Satisfaction would discharge other potential tortfeasors if the amount had either been determined or agreed upon as full value of the disputed claim for damages".
Jameson was a case involving several not joint liability, nevertheless the endorsed draft order as to settlement was noted to be expressed in the following terms:-
"In full and final settlement and satisfaction of all causes of action in respect of which the Plaintiff claims in the Statement of Claim."
Notwithstanding this, in Baxter v Obacelo Pty Ltd Giles JA (with whom Mason P and Sheller JA agreed) stated that what was said by Lord Hope in Jameson, although in relation to concurrent tortfeasors applied equally to joint tortfeasors. [349] His Honour thereafter considered extensively the speeches in Jameson, quoting in particular from Lord Hope and Lord Clyde, before stating:-
"[82] The reasoning as to the operation of the rule against double satisfaction does not turn on whether the satisfaction was by payment of a judgment sum, on the one hand, or by payment of an agreed settlement amount, on the other hand. The formality of a judgment is of no significance to whether there will bedouble satisfaction. Accordingly, if there is to be an inquiry into whether thesettlement satisfied the loss, there should be the inquiry even if the settlementwas given effect by entry of judgment.
[83] Although limiting the inquiry, Lord Hope accepted that whether receipt ofthe settlement amount enlivened the rule against double satisfaction depended on whether the settlement amount was received in full satisfaction of the tort. Inquiry by the court determining what it would have assessed as the plaintiff's damages was excluded. But where, from the terms of settlement or for some other reason within the inquiry, it was shown that the settlement amount was not received in full satisfaction of the tort, the settlement amount would not be full satisfaction for the purposes of the rule against double satisfaction, and there would be no bar to further proceedings against another tortfeasor or other tortfeasors. This recent discussion of the House of Lords is consistent with the principle earlier essayed. In my opinion, judgment for an agreed settlement amount does not necessarily bar the plaintiff from proceeding against a joint or concurrent tortfeasor.
[84] It would be unfortunate if the position were otherwise. Settlement is to beencouraged, and a plaintiff who makes a reasonable settlement should be able to receive its fruits; he should not be inhibited in receiving the settlementamount by fear of the effect on maintaining a claim against another tortfeasoror other tortfeasors. The common law rule that the release of one jointtortfeasor released the other or others should not re-emerge as an uncriticaloperation of the rule against double satisfaction. (In Thompson v AustralianCapital Television Pty Ltd the settlement amount seems to have been paid (see at 576), but it was not suggested that the plaintiff had received fullcompensation for his loss.) It may be noted that the Restatement (Second) ofJudgments (par 50) and of Torts (pars 885-886) both provide that an agreedpayment to the plaintiff by one tortfeasor does not discharge the liability ofanother tortfeasor or other tortfeasors except to the extent that it is so agreed,and W P Keeton, Prosser and Keeton on the Law of Torts, 5th ed (1984) West Publishing Co, Minnesota states at 355 (citations omitted):
"The only desirable rule would seem to be that a plaintiff should never be deprived of a cause of action against any wrongdoer when the plaintiff has neither intentionally surrendered the cause of action nor received substantially full compensation. If the statutes are taken into account, this is now the rule actually applied in most American jurisdictions. Where there has been such full satisfaction, or where it is agreed that the amount paid under the release is so received, no claim should remain as to any other tortfeasor; but these are questions of fact, and normally to be determined by the jury, wherethe amount of the claim is unliquidated. The release, however, may very well be taken as a prima facie acknowledgment of satisfaction, and the burden placed upon the plaintiff to prove that it is not."
[85] In the present case it is not necessary to explore the burden of proof or the extent of permissible factual inquiry. The facts are there and do not go beyond the undoubtedly permissible. In my view, the opponents did not agree to the judgment for, or receive, the $250,000 in full satisfaction of their loss. Mr Whitehead was released in consideration of payment of $250,000, but thedeed of release did not include language such as that in Jameson v CentralElectricity Generating Board, to the effect that the $250,000 was in satisfaction of the opponents' proceedings. On the contrary, it made it plain that the opponents intended to continue the proceedings against the claimant. The $250,000 cannot have been received in full satisfaction of the opponent's loss, because recovery of further compensation was contemplated." [350]
The decision in Baxter was dismissed on appeal by the High Court. [351] At [48] Gleeson CJ and Callinan J stated:-
"….If, either expressly or by implication, a settlement agreement manifested a common intention of the parties to the agreement that the settlement sum was to be paid and received in full satisfaction of the rights of the plaintiff, against the defendant or anyone else, in relation to the loss or damage incurred, then, for both of those reasons, a further claim would fail. The most obvious way to negative such an intention would be by an express reservation of rights. While the effect of the settlement agreement, in the ordinary case, will be the most significant factor bearing upon either or both of the two possible grounds mentioned, it is not possible to eliminate any other circumstances which, in a given case, could indicate unconscientiousness, or loss of the subject matter of a claim. Bearing in mind the obligation to give credit for the amount already recovered, a defendant who could show that the actual loss or damage incurred by the plaintiff did not exceed the amount already recovered would succeed in any event. Leaving aside questions of onus of proof, to say that there is no such excess is simply to say that the loss has been fully recouped."
Gummow and Hayne JJ came to a similar conclusion at [69].
In the present case, it was clear at the time of the settlement with the First to Third Defendants that the Plaintiffs proposed to continue proceedings against HFP. The proceedings against Huon Partners had earlier been dismissed. There was no acceptance of the sum paid under settlement as full satisfaction of the loss or damage that the Plaintiffs alleged they had suffered. HFP has not amended their Defence to allege that the actual loss of damage said to have been suffered by the Plaintiffs did not exceed the amount already recovered, nor to raise an issue of credit.
I do not regard the decision in Permanent Custodians Ltd v Geagea (No 3) [2014] NSWSC 1489 as supportive of HFP's claim that the payment of damages by one jointly liable defendant is to be taken into account in fixing the liability for damages of another defendant in the way contended by HFP. That case referred to the application of Part IV of the Civil Liability Act 2002 (NSW) which relates to proportionate liability. By reason of s 34 of the Act, its application does not extend to intentional torts. Although HFP raised the decision of Michael Wilson & Partners v Slater [2014] FCCA 2871 at [76]-[80], it did not explain how the discussion in that case assisted in its argument. For all these reasons, I would not uphold this aspect of HFP's argument.
[18]
Damages
In order to support its case as to damages, the Plaintiffs qualified Adjunct Professor Wesley McMaster from the College of Business, Victoria University. Professor McMaster is a certified financial planner and fellow of the Financial Planning Association of Australia. Between November 1997 and November 1999, he was the chair of the board of Financial Planning Association of Australia. Apart from expertise in Financial Planning, his CV [352] shows expertise in the business of financial planning, including writing articles and presentations on the valuing of financial planning businesses.
HFP's expert was Mr Bill Charlton of Altitude Accounting Pty Ltd. Mr Charlton is a chartered accountant with some 35 years' experience and specialises in business advisory services, valuations, taxations and financial planning. He also has a consultant role with Securitor Financial Group Limited and in that role has provided valuation business improvement advice for financial planning and accounting firms. [353]
The experts of both parties produced primary reports and responses to each other's reports. Professor McMaster produced his first report, dated 7 October 2013. [354] In response, Mr Charlton provided an opinion for the Defendant on the profits derived by HFP from the acquisition of the clients that were formerly Focus Partners' clients. That report is dated 3 April 2014. [355] Professor McMaster was required to comment on Mr Charlton's report and consequently produced a supplementary report on 15 April 2014. [356] Before that report, however, Mr Charlton produced a second report [357] dated 6 May 2014 in which he highlighted the need for further information as to financial statements and other explanations used by Focus Partners to understand and respond to the calculations made by Professor McMaster. It is not in issue that these documents were not produced.
Professor McMaster subsequently made observations on both of Mr Charlton's reports on 11 June 2014. These observations did not result in the production of documents by Focus Partners. Mr Charlton subsequently produced a third report [358] dated 27 August 2014. Following a request by the Plaintiff's solicitors, Professor McMaster produced a supplementary report dated 24 April 2015. [359]
On 27 April 2015, orders were made directing both experts to confer in accordance with UCPR 31.24 with a view to producing a joint expert report pursuant to UCPR 31.26. A teleconference occurred on 28 April 2015 and the joint expert report was admitted into evidence as Exhibit C7. That report discloses several matters in respect of which the experts agreed for the purpose of the calculation of damages; these are were:-
1. A finalised list of "Schedule A" clients, being those whose matters were lost to Focus Partners; [360]
2. Total of fees per client were principally agreed, [361] however, there was no financial information on the list of clients or amounts billed or received from Focus Partners;
3. The discount rate used to calculate net present value;
4. The fact that the list of "Schedule A" clients indexation should not be applied to financial planning fees;
5. The salary costs certainly do need to be taken into account when calculating the profitability when providing accounting and financial planning services;
6. The net present value methodology in calculating the loss basis is appropriate; and
7. The principle of calculating the loss to Focus Partners has been the amount of accounting and financial planning services fees which Focus Partners did not receive from lost clients for the period of longevity of each client less the period that Mr Charlton estimated that each client had been a client of Focus Partners was logical and reasonable.
There were essentially two areas in which the parties were in dispute relevant to the question of damages. These were:-
1. The longevity of clients; and
2. Costs.
[19]
Longevity
In her affidavit of 1 July 2014, Ms Christensen stated at [8]-[9]:-
"8. As at 30 November 2011 Focus Partners had approximately 1250 clients and an annual turnover of $1,500,000. Focus Partners Financial Services had approximately$496,000. I know this from records of the business..
9. In relation to the accounting practice, my best estimate, based on experience since 1985, of approximately 28 years, is that:
1. 75% of clients have been clients of the practice for more than ten years (and half of these would have been clients for more than 20 years);
2. About 15% would have been clients for between 10 and 15 years;
3. About 10% would have been clients for less than 5 years; and
4. My estimates are based on my knowledge of my client base, experience and understanding of the Focus Partners business and I therefore believe that the above estimates are accurate an reasonable. We do not have accurate records setting out when clients commenced using our services because our computer records are upgraded every few years."
HFP submitted that damages should be calculated for no longer than the period of the restraint or a reasonable period found by the Court. In my view this contention is misconceived. The question is: what is the loss which flowed from the breach. This cannot be calculated by reference to the period of the restraint based on the clients remaining with Focus Partners for longer than two years had the breach not occurred. In my view there is no basis, fact or principle upon which to limit the recovery as HFP contends.
Using these figures, Professor McMaster averaged the longevity of the clients in the first instance and came to a figure of 9.03 years. [362]
In evidence, Professor McMaster agreed that he subsequently reduced the weighted average following comments from Mr Charlton that there would be a delay in a client being referred to a financial planner due to the period of time that it would require for the accounting relationship to be established. [363] In his report of 15 April 2014, Professor McMaster calculated the revised weighted average longevity at 7.68 years. [364] Then, supplied with new information from an email of M+K Lawyers on 23 April 2015, Professor McMaster revised the longevity period again to 9.8 years (weighted average) based on advice that, of the 164 financial planning clients not affected by Ms Bainbridge, that there was evidence of a 95% retention rate over 9 years. [365] In cross-examination, Professor McMaster conceded that this calculation was based on an assumption that the 156 clients of those acquired in 2006 (from an original 177) which were still with Focus Partners. He had not been provided with information which related to the remaining 169 clients that made up the 346 financial planning clients of Focus Partners. [366] Professor McMaster stated that he was not given any reason for including information about 177 of the 346 financial planning clients. [367] Professor McMaster further conceded that clients could leave a firm for a variety of reasons, including poor service, disagreements of advice or loyalty to a departing financial planner. [368] Professor McMaster's attention was then drawn to the contents of paragraph 32 of his report of 7 October 2013 where he stated:-
"It is my experience that it is highly unusual for a client to leave a professional services business and move to another professional services business, assuming the first business provider's satisfactory service without being approached by the second business or referred to the second business by an intermediary."
He conceded that there were no references in his instructions to the reasons the clients' leaving being the result of any inducements by HFP. He further conceded that this was an assumption that he made. [369] It was then put to Professor McMaster that his calculation, including only 10% of clients moving within 2.5 years was understated because the actual proportion wrongly supposed that the "lost" clients were included in the sample size. Mr Charlton indicated that if the departing clients were included in the calculation but the proportion of clients moving in less than 2.5 years would not be as high as 20% but would be around 16%. [370] Professor McMaster indicated that he was only aware from the hearing that the firm had something like 350 clients and if that were the case then it should have been possible to make a calculation based on a wider and broader profile which would be more accurate. [371] He conceded that he had not been provided with any information in relation to the remaining 169 clients. [372]
The information which was the subject of Ms Christensen's earlier affidavit was supplemented by an affidavit sworn 24 April 2015 in which she stated:-
"8. I refer to paragraphs 8 and 9 of my Supplementary Affidavit of 1 July 2014 [at CB p 238], in which I set out information in relation to the average longevity of clients.
I have identified the clients Focus Partners purchased from Colin Trinnick in 2006 from the Visiplan software Colin provided to us when we purchased the business. Of the 177 clients purchased from Colin:
(a) 6 have since deceased
(b) 2 are no longer clients
(c) 13 went with Bainbridge
(d) 156 remain as clients of Focus Partners Financial Planning." [373]
Mr Charlton gave a detailed critique of Professor McMaster's report in his report of 27 August 2014. [374] In contrast to Professor McMaster who adopted a generalised approach based on estimates provided to him from Ms Christensen Mr Charlton carried out calculations of assumed longevity which the Plaintiffs, in submissions, [375] accepted as based on "actual demonstrated longevity of the "Schedule A" clients themselves." It is clear from attachment R [376] of his report and the analysis conducted in attachment S [377] that Mr Charlton has shown that the Schedule A clients display an average longevity of 6.54 years retention. Mr Charlton indicated in his report of 27 August 2014 that, in order to simplify his calculations and remove any further contention, he standardised this longevity figure across all clients across both accounting and financial planning and on all future income calculations in the expert report. [378]
I accept Mr Charlton's opinion as the more credible basis on which to assess the issue of longevity as it is based on an actual analysis of the Schedule A clients themselves and not on the more subjective estimates provided by Ms Christensen.
[20]
Costs
The next issue in dispute was the approach to the calculation of costs that would have been incurred by the Plaintiffs to service the lost "Schedule A" clients.
Ms Christensen indicated, in her affidavit of 1 July 2014 at paragraph [6]-[7], that she was asked to determine the variable costs of the accounting and financial planning clients to Focus Partners, being the additional costs which would have been incurred in the clients were required to be serviced. [379] In determining the additional costs for the accounting clients, Ms Christensen stated that she factored in "printing, stationary, postage, telephone, salaries and superannuation for the accounting staff" before concluding that the costs of the accounting clients represented 47% of the total accounting income of Focus Partners in 2012/13. In relation to financial planning clients, Ms Christensen stated that there would not be a need to increase staff as Focus Partners' existing staff would be able to service all of the lost clients, however, there would be additional costs for "printing, stationary, postage, telephone and the monthly license fee from Lonsdale." She concluded that the financial planning clients represented 9% of the total financial planning income of Focus Partners, based on the 2012-13 financial year. Attached to Ms Christensen's affidavit was a summary which set out the basis of her calculation.
Ms Christensen was cross-examination extensively as to attribution of costs, attributable to the Schedule A clients. [380] Ms Christensen conceded that, at the request of her solicitors, she prepared a variable costs approach. [381] She further conceded that, insofar as instructing Professor McMaster, she informed him that the cost of servicing the financial planning clients was 9%. [382] She stated that she believed that he was expert enough to have requested any further information should he have required it. [383] Details of Ms Christensen's calculations were provided at Exhibit B, p 240, however, it was acknowledged that this was an extract. [384] A full profit and loss statement was supplied and was contained in Exhibit B, p 1884 in relation to financial planning and at p 1886 for accounting. Critically, the full profit and loss included salaries as service costs for financial planning clients. [385] It was contended that when these were included for 2012/13 year, the profits were about 20% of the income. [386]
The basis upon which Ms Christensen excluded the salary component from her marginal costs approach was explained in Ms Christensen's affidavit of 24 April 2015 at [4] where she stated:-
"4. At paragraph 7 of my Supplementary Affidavit of 1 July 2014 I stated that there would not be a need to increase financial planning staff to service the clients that went to Huon, as Focus Partners' existing staff would be able to service all of those clients. By way of further explanation:
(a) at the time of Diane's departure, our financial planning staff were not working with a client portfolio filled to capacity and would have been capable of servicing the departed clients;
(b) prior to Ms Bainbridge notifying of her departure, we had already planned to have Zac Trinnick join our financial planning team. I, along with Terry Howard, assisted with client care during the transition period only.
(c) we now have more financial planning clients than we did when Dianne departed and have been able to service these clients without any increase in financial planning staff numbers from the time that Dianne was last employed, We had 2 financial planners including Dianne during the time of her employment, and we still have 2 financial planners. At all relevant times we employed only 2 administrative staff, Shannon Knight and Rowena Galley, in relation to the Financial Planning aspect of the business." [387]
Whatever view one takes of Ms Christensen's ability to calculate additional expenses attributable to the lost clients, I do not accept the assumption that salary related costs are not to be included in light of the agreement reached by both experts - that they need to be taken into account in calculating the profitability of providing accounting and financial planning services. [388]
I accept that rationale provided by Mr Charlton in his report dated 27 August 2014 at [22], where he states:-
"22. Whilst I have no doubt that Ms Christensen can calculate selected variable expenses as a percentage of income after 28 years as a Chartered Accountant, the question is whether a marginal cost approach (where some clients are fixed with the full costs of servicing - including salaries - whilst other clients are only fixed with variable costs - excluding salaries) is an appropriate methodology in this case and if it is, whether it is appropriate to apply such a methodology selectively (i.e. To Financial Planning clients but not Accounting clients). In simple terms, Prof McMaster says that wages should be taken into account in assessing the post-costs income from Accounting clients, but not Financial Planning clients, whereas I say wages need to be taken into account in both contexts. I disagree that the marginal cost methodology is appropriate because it is almost certain that following the departure of a number of clients, management would take steps to reduce costs in salaries and overheads so that existing cost structures and margins could be maintained across the client base - particularly if they were still operating with the free capacity to service both outgoing and retained clients, but only continuing to receive income from the latter. This is especially true in Financial Planning, where a very specific skill set and supporting qualifications are needed in order to provide these services, with legal implications if this advice is provided by an individual who does not possess the appropriate authority, giving Financial Planning staff a higher value - and therefore a higher cost - than other professions where there is less of a focus on regulatory compliance." [389]
In the joint report, Mr Charlton nevertheless stated that he was unable to agree on the calculation of costs associated with producing accounting and financial planning revenue in the case of Focus Partners as insufficient data had been supplied. [390] He stated that, since his report of 27 August 2014, a schedule of staff and salaries had been supplied to him, however, this was a list of employees/directors with their gross salaries and it was insufficient for the purposes of determining wage costs between financial planning and accounting. He received profit and loss statements from Focus Partners but only some of the expenses had been disclosed and there was no detailed breakdown of the service fees component. [391] As a result of the lack of information concerning the true relationship between expenses and income, Mr Charlton relied on industry averages as a reasonable basis for determining the true profitability for the accounting and financial planning businesses. [392] For the purposes of his calculations, Mr Charlton used industry performance benchmarks prepared by B-Star Pty Ltd. [393] The two methodologies used by Mr Charlton involved using an average cost approach whereby he subtracted from projected revenues for the client the projected average expenses associated with that client based on industry averages for comparable businesses. These calculations were performed on two alternative bases:-
1. A gross profit calculation in which he subtracted from the projected future income stream over the longevity of each of the clients an average allocation (based on industry averages) for the direct costs of servicing those clients, being salaries, wages, superannuation, payroll tax, dealer fees and training and development costs. [394]
2. A net profit calculation in which he subtracted from the projected future income stream over the longevity of each lost client an average allocation of the total costs for services those clients (based on industry averages) including the direct costs but including other costs, including fixed costs such as rent. [395]
In my view, bearing in mind the fact that the fixed costs have already been incurred by Focus Partners, the appropriate calculation would be a gross profit calculation as proposed by Mr Charlton. This comes to a figure of $347,127.00 in relation to both accounting and financial planning. [396] Mr Charlton's detailed calculations, based on his assumptions as to the costs issue and the longevity issue are contained in attachment 6 to his report of 27 August 2014. [397]
I do not regard a more realistic approach to the lost profits being a review of the actual revenue and costs as per HFP's profit and loss statement. The object of the award of damages in a tortious case is to put the injured Plaintiffs in the position that he/she would have been had the tort not occurred. [398] I accept the Plaintiffs' contention that the exercise involves a comparison between the Plaintiffs' actual position and the position that the Plaintiffs would have been in had the tort not occurred. I do not accept that this can be viewed by examining the performance of HFP after the occurrence of any tort by HFP. Nor do I accept the submission by HFP that the loss occasioned through the "Schedule A" clients can be estimated by averaging out the profits of Focus Partners in respect of the remaining 346 financial planning clients which, according to HFP's submissions, would come to a profit of $275 per client. [399]
I accept Professor McMaster's evidence that that he could not draw any conclusions based on a profit per client of $275 based to the remaining not the lost clients. [400]
In its written submissions [401] HFP referred to the evidence of Professor McMaster and, in particular, to his acknowledgment in evidence that, as a general rule in the financial planning industry, profitability amounts to 20% of gross fees and expenses account for about 80% of revenue. [402] HFP further submitted that, in the case of the June 2013 profit and loss for the financial planning division, Professor McMaster acknowledged that the division ratio of expenses to revenue was about 80% [403] and the ratio was 65% for June 2011 and 75% for June 2012. [404] On this basis, HFP submitted that, based on Focus Partners' own profit and loss statements, the appropriate deductions should have been made for costs for financial planning was approximately 80% not 9%. However both the 2012 and 2013 year figures are affected by the loss of clients.
In the circumstances I would prefer to rely on the industry averages utilised by Mr Charlton in his calculations and, on this basis, I would have awarded damages in the amount of $347,127.00.
[21]
Orders
For these reasons the orders are as follows:-
1. Verdict for the Fifth Defendant.
2. Subject to an approach to my Associate within 14 days from the date hereof to relist the matter for argument as to any further or other orders as to costs, the Plaintiffs are to pay the costs of the Fifth Defendant, HFP.
3. The exhibits are to be retained for 28 days.
[22]
Endnotes
Exhibit B, p1760 at [179]
References to their dates of commencement with HFP are set out in Exhibit B, p 366 (being Attachment S to the Report of Bill Charlton dated 3 April 2014) and reproduced as an appendix herein.
Exhibit B, p 1761 at [186]
Exhibit B, p1760 at [181]
(1874) LR 9 Ch App 244; See also Exhibit B, pp 16-17, Further Amended Statement of Claim at [22]-[26]
Exhibit B, pp 17-18, Further Amended Statement of Claim at [27]-[28A]
Exhibit B, p 37, Further Amended Defence of the Fifth Defendant at [30(A)]
Exhibit B, p 37, Further Amended Defence of the Fifth Defendant at [31]
T 160.30-161.4
(2000) 49 NSWLR 262 at [84]-[88]
[2014] NSWCA 424
Fuller-Lyons v New South Wales [2015] HCA 31
[2004] NSWCA 123
(2000) 199 CLR 620
Exhibit B p 212 at [7]
Exhibit B, p 140
Exhibit B, p 1614
Exhibit B, p 141 at [13]
Exhibit B, p 564
Exhibit B, pp 572-3
Exhibit B, p 586
Exhibit B, p 605
Exhibit B, p 603
Exhibit B, pp 143-4
Exhibit 5
Exhibit B, p145 at [34]
Exhibit B, p145 at [35]
Exhibit B, p 622
Exhibit B, p 625
Exhibit B, p 146 at [38]-[39]
Exhibit B, p 218 at [25]
Exhibit B, p 621
Exhibit B, p 621
Exhibit B, p 146
Exhibit B, p 647
Exhibit B, p 627
Exhibit B, p 637
Plaintiff's submissions, 18 May 2015 at [15].
T 356.14
T 356.17
T 361.10
T 361.12-362.14
T 357.8
T 356.10
T 356.14
T 356.23
T 360.20
T 356.19
Exhibit B, p 502
Exhibit B, p 586
Exhibit B, p 217-8
Exhibit B, p 603
Exhibit B, p 622; see also Exhibit B, p 10, Further Amended Statement of Claim at [11]
Exhibit B, p 37, Amended Defence at [30A]
HFP did not plead to [6], [5] and [16] of the Further Amended Statement of Claim; see Exhibit B, pp 31-33, Amended Defence at [6] - [21A]]
[2011] NSWCA 267 at [28]
[2012] NSWSC 1425
Supra: clause 1(b)
T 139.25-140.10
(2012) 205 FCR 187
T 121.27
T 121.36
[1984] AC 705 at [716]-[717]
T 321.35
T 321.27
T 321.46-322.3
Plaintiff's Outline of Closing Submissions at [36] and First Submissions of the Fifth Defendant at [87]
[1984] AC 705 at [716]-[717]
T 108.18
T 108.26-34
T 141.24
T 141.46
T 147.13-.21 and 148.33
T 150.29
T 151.2-.11
T 151.29
[2009] NSWCA 25
T 401.7-.22
T 177.43-178.1
T 321.35-.37
T 321.27
Birdanco Nominees v Money (2012) 36 VR 341 per Robson AJA at [45]-[46]
Exhibit B, pp 601-2
JD Heydon, "The Restraint of Trade Doctrine", 3rd Edition, Lexis Nexus Butterworths
being for lesser periods of 12, 6 and 3 months
Exhibit B, p 544
Exhibit B, p 556 at clause [7.2]
Exhibit B, p 16
Exhibit B, p 1219
T 8.33
T 55.33
T 56.12
T 61.41
T 61.48
Exhibit B, p 666
T 406.6
T 408.1
T 408.23
[(2007) 230 CLR 89
At [179]
(1938) 60 CLR 336 at [170]
Hasler v Singtel Optus Pty Ltd [2014] 87 NSWLR 609 at [57]
Supra per Leeming JA at [109]
T 407.35
Supra
Affidavit of Helen Christensen sworn1 July 2014, Exhibit B, p 217 at [22]
T 408.32-409.14
Exhibit B, p 931
Exhibit B, p 43
Exhibit C, Joint Witness Expert Report dated 5 May 2015 at [11]
This is recorded in the Appendix herein
[1998] NSWCA 30
Plaintiffs' Written Submissions at [58]
Exhibit B, p 188 at [5]
Exhibit B, p 191
Exhibit B, p 223 at [30(b)]
Exhibit B p 199 at [1]-[3]
Exhibit B p 200 at [4]
Exhibit B, p 196
Exhibit B, p 197 at [3]-[5]
Exhibit B, pp 196-7
Exhibit B, pp 223-4
Exhibit B, pp 223-4 at [30(e)]
Exhibit B, pp 193-4 at [4]
Exhibit B, p 194 at [5]
HFP's Written Submissions at [81]
Exhibit B, pp 1137-8
Exhibit B, p 785
Exhibit B, p 816
Exhibit B, p 1156
Exhibit B, p 979
Exhibit B, p 985
Exhibit B, p 831
Exhibit B, p 994-1009
Exhibit B, p 174
Exhibit B, p 177 at [19]
Exhibit B, p 178 at [27]
Exhibit B, p 805
Exhibit B, pp 922-3
Exhibit B, p 666
Exhibit B, p 931
Exhibit B, p 666
Exhibit B, p 1155
T 405.25
T 420.46
Exhibit B, p 765
Exhibit B, p 975
Exhibit B, p1754 at [97]
Exhibit B, p1754 at [95]
Exhibit B, p 1753 96]
Exhibit B, p 1878 at [7]
Exhibit B, p 219 at [26]
Exhibit B, p 669
T 181.41; T 182.15; T 184.40-185.11
Exhibit B, p 1789 at [5]
T 184.2
T 184.14
T 184.30
Exhibit B, p 1862 at [18]
Hampton Court v Crooks (1957) 97 CLR 367 at 371-2
Exhibit B, p 366, See Appendix
Exhibit B, p 315
Exhibit B, pp 17-8
T 9.13-.43
T 56.31-57.35, 116.7-119.25 and Exhibit B, p 29A
Further Particulars of Paragraphs 27 and 28 of the Further Amended Statement of Claim dated 30 April 2015
Plaintiffs' Outline of Closing Submissions at [63]-[68]
Supra at [88]
(1995) 58 FCR 26
(1912) 15 CLR 148
(1937) 37 SR (NSW) 394
[1966] 1 WLR 691
(1995) 185 CLR 307
(1999) NSWCA 323
Otherwise referred to as OBG Ltd v Allan
[2011] NSWCA 418
T 116.7-119.30
T 362.2
Exhibit B, p 141
T 364.8
T 364.10
T 364.16
T 364.20; Exhibit B, p 145 at [34]
T 364.24-.26
T 364.30, 391.18-.22
T 385.35
T 385.11
T 364.24
Exhibit B, p 621
T 366.6
Exhibit B, pp 151-2, Affidavit of Ms Humphries dated 16 August 2013 at [82(e)]
Exhibit B, p 174
Exhibit B, p 177, Affidavit of Judith Richards dated 20 October 2013 at [19]
T 416.34
T 416.49
T 417.12
T 417.23
T 417.34,
Exhibit B, p 805
T 418.14-.27
T 75.14
T 79.46
T 81.19
Exhibit B, p 147 at [46]
T 363.46-364.49
Exhibit B, p 151
Exhibit B, p 152 at [82(j)]
Exhibit B, p 152 at [82] (e) and [82] (h) (later admission limited to Ms Humphries' understanding) and p1745 at [32]
T 395.10
T 395.14
T 395.20
T 395.24
State of New South Wales v Fuller-Lyons [2014] NSWCA 424 per Macfarlan JA at [30]-[31]
Exhibit B, p 63
Exhibit B, p 715
T 379.18
T 382.40
Exhibit B, p 716
Plaintiff's Outline of Closing Submissions at 71(3)
T 379.44
T 379.50
T 380.43
T 423.29
T 423.32
T 424.30
Exhibit B, pp 663-4
Exhibit B, p 665
Exhibit B, p 675
Exhibit B, p 365
T 365.36
T 367.18
T 367.18-.29
T 378.30
T 378.36
T 379.36-381.8
Exhibit B, p 665
T 383.23
T 386.38
T 386.42
T 387.8-.13
T 390.8-.29
T 376.42
Manly Council v Byrne [2004] NSWCA 123 per Campbell J (with whom Beazley JA and Pearlman AJA agreed) at [51]
Plaintiff's Outline of Closing Submissions at [13]
T 334.50
T 327.21-.28
T 343.24-.50
T 327.33-42
T 378.1-.3
T 351.14
T 335.7
T 338.24-.30; T 340.24-.26
T 350.1-.26
T 350.1-.26
T 328.42-.43
T 347.25
T 331.50-332.13; T 333.18-.30
T 376.11
T 326.1-.28
T 49.4
T 83.3
T 83.32
T 84.6
T 67.10-.35
T 67.40
Exhibit B, p 152
Exhibit B, p 1747
T 431.4-.12; T 432.1; T 434.7
T 431.29
T 432.15-.18
T 430.38
T 319.31
T 319.47
T 319.50-320.14
Exhibit B, pp 151-2 at [82]-[83]
Exhibit B, pp 1105, 1128, 1121, 1222, 1253 and 1272
T 375.22-.26
T 375.48
T 376.11
T 376.25
T 376.1-.377.22
Exhibit B, p 150
Exhibit B, p 1209
Exhibit B, p 1184
Exhibit B, p 666
J D Heydon, Cross on Evidence (10th Edition, LexisNexis Butterworths), p 1215
Todorovic v Waller (1981) 150 CLR 402 at [412] per Gibbs CJ and Johnson v Perez (1988) 166 CLR 351 at [355] per Mason CJ; McCrohon v Harith [2010] NSWCA 67 at [51]
Written submissions of HFP at [133]
T 251.10
Written submissions of HFP at [135]-[136]
T 239.3-.11
T 240.10
T 240.46, 241.4
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 12 October 2015