Charltons CJC Pty Ltd v Fitzgerald (No 3) [2013] NSWSC 1945

Charltons CJC Pty Ltd v Fitzgerald (No 3) [2013] NSWSC 1945

Damages for loss of clients and income are to be assessed by determining, for each client lost due to the defendants' breaches, the amount of earnings generated in the financial year prior to departure, reduced by 10% to reflect actual accounts, and applying a multiplier of 0.98 as reflective of market value and contingencies. Where causation is established, Charltons is entitled to compensation for the quantum so calculated. The defendants must compensate for clients where it was not proved those clients would have left absent the breach. In cases of shadow clients, only a modest percentage of potential revenue was allowed given uncertainties on retention probability.

Jurisdiction
Australia
Judgment Date
18 December 2013
Procedural Posture
Civil / Damages Assessment Following Liability Determination
Outcome
Judgment for the plaintiff
Legal Topics
['damages for Breach of Contract' 'breach of Restraint of Trade Clause' 'loss of Business and Clients' 'causation in Damages' 'fiduciary Duties of Employees' 'assessment of Damages' 'res Judicata and Issue Estoppel']
['contract Law' 'equity' 'employment Law'] ['damages for Breach of Contract' 'breach of Restraint of Trade Clause' 'loss of Business and Clients' 'causation in Damages' 'fiduciary Duties of Employees' 'assessment of Damages' 'res Judicata and Issue Estoppel']

Case Brief

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Procedural Posture

Civil / Damages Assessment Following Liability Determination

Legal Issues

  1. 1 ["What loss has been occasioned to Charltons by virtue of the established breaches of the defendants in performing work for former clients of Charltons in the restraint period and in performing work for 'shadow clients' whilst still employed by Charltons?" 'What is the appropriate quantum of damages suffered by Charltons as a result of those breaches?']

Ratio Decidendi

Damages for loss of clients and income are to be assessed by determining, for each client lost due to the defendants' breaches, the amount of earnings generated in the financial year prior to departure, reduced by 10% to reflect actual accounts, and applying a multiplier of 0.98 as reflective of market value and contingencies. Where causation is established, Charltons is entitled to compensation for the quantum so calculated. The defendants must compensate for clients where it was not proved those clients would have left absent the breach. In cases of shadow clients, only a modest percentage of potential revenue was allowed given uncertainties on retention probability.

Court Disposition

Judgment for the plaintiff

Orders

  • ['Plaintiff awarded damages against all defendants in the sum of $303,334.81' 'Interest to accrue at the Reserve Bank rate plus 4% from 1 July 2012' 'Court to hear the parties further on costs']