Michael Wilson and Partners Limited v Robert Colin Nicholls & Ors [2009] NSWSC 1033

Michael Wilson and Partners Limited v Robert Colin Nicholls & Ors [2009] NSWSC 1033

The defendants breached their fiduciary (and some contractual) obligations to the plaintiff by diverting business opportunities, misusing confidential information, soliciting clients, earning secret profits and conspiring to deprive the plaintiff of fees and opportunities. Associated corporate entities, acting with the former employees, were knowingly involved in or assisted those breaches and are thus liable on a Barnes v Addy basis. Claims for constructive trust over shares in the defendants' companies are refused, but plaintiff may elect between remedies (account of profits or equitable compensation) for identified transactions. Proceedings are not an abuse of process. The proper law...

Jurisdiction
Australia
Judgment Date
06 October 2009
Procedural Posture
Commercial (equity) Proceedings, Claim for Breach of Fiduciary Duty, Conspiracy, and Related Equitable/commercial Causes / Final Judgment After Trial
Outcome
Plaintiff's claim for constructive trust dismissed; plaintiff entitled to elect between equitable account of profits or equitable compensation for identified transactions; detailed orders and quantum to follow after further submissions. Defendant's abuse of process claim dismissed.
Legal Topics
['fiduciary Duties of Employees' 'constructive Trusts' 'account of Profits' 'equitable Compensation' 'choice of Law (conflict of Laws)' 'conspiracy to Injure by Unlawful Means' 'interference With Contractual Relations' 'employment Contracts' 'accessorial Liability (barnes V Addy)' 'abuse of Process']
['equity' 'employment Law' 'private International Law' 'civil Procedure' 'commercial Law'] ['fiduciary Duties of Employees' 'constructive Trusts' 'account of Profits' 'equitable Compensation' 'choice of Law (conflict of Laws)' 'conspiracy to Injure by Unlawful Means' 'interference With Contractual Relations' 'employment Contracts' 'accessorial Liability (barnes V Addy)' 'abuse of Process']

Case Brief

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Procedural Posture

Commercial (equity) Proceedings, Claim for Breach of Fiduciary Duty, Conspiracy, and Related Equitable/commercial Causes / Final Judgment After Trial

Legal Issues

  1. 1 ['Whether former employees and others breached fiduciary and contractual duties owed to employer by diverting business and misusing confidential information' 'Whether defendants or associates were liable as accessories for breaches (Barnes v Addy)' 'Whether conduct amounted to conspiracy to injure by unlawful means and/or interference with contract' 'What law governed employment contracts and claims (choice of law)' 'Whether the proceedings were an abuse of process' 'Appropriate remedies in equity: constructive trust, account of profits, equitable compensation']

Ratio Decidendi

The defendants breached their fiduciary (and some contractual) obligations to the plaintiff by diverting business opportunities, misusing confidential information, soliciting clients, earning secret profits and conspiring to deprive the plaintiff of fees and opportunities. Associated corporate entities, acting with the former employees, were knowingly involved in or assisted those breaches and are thus liable on a Barnes v Addy basis. Claims for constructive trust over shares in the defendants' companies are refused, but plaintiff may elect between remedies (account of profits or equitable compensation) for identified transactions. Proceedings are not an abuse of process. The proper law...

Court Disposition

Plaintiff's claim for constructive trust dismissed; plaintiff entitled to elect between equitable account of profits or equitable compensation for identified transactions; detailed orders and quantum to follow after further submissions. Defendant's abuse of process claim dismissed.

Orders

  • ['Constructive trust over TIL, TSL, TFZE shares refused;' 'Plaintiff may elect between an account of profits and equitable compensation for listed former client transactions up until cut-off date;' "Defendants' motion to dismiss for abuse of process dismissed;" 'Parties to bring in short minutes of order and address...