Commercial & Accounting Services (Camden) Pty Ltd v
The defendant is a chartered accountant. He sold his practice to
the plaintiff, Commercial & Accounting Services (Camden) Pty
Ltd, on 1 April 2002 for $120,000 plus $10,000 per annum payable on
30 June for at least eight years. The defendant became an employee
of Commercial & Accounting Services and was to create a minimum
of 17 hours per week of chargeable time. The practice then had
The agreement for sale contained an undertaking by Mr Cummins
that he would refrain from a business of accounting services or tax
preparation for a period of at least three years within a radius of
10 kilometres of the business address of the practice.
Vanessa Ann Pollett was the principal of Commercial &
Accounting Services. She worked three days a week in the practice,
which made a profit after she received a working wage. The client
base was relatively stable year by year.
The defendant obtained a franchise to operate as a licensed
financial planner under the name RetireInvest. He conducted this
business in partnership and then on his own from premises close to
Commercial & Accounting Services' practice. Mr Cummins
worked in the practice on Mondays and Fridays and worked from his
RetireInvest premises for the balance of the week. He did spend
additional time at the practice in an endeavour to make up the
agreed 17 hours of chargeable time.
In early 2009, Mr Cummins told Ms Pollett he probably would not
stay on after the end of his term on 30 June 2010. Mr Cummins had
determined that he would then commence an accountancy practice from
his RetireInvest premises. It was ultimately agreed that he would
cease as at 30 June 2009. Mr Cummins was asked to provide a list of
the 'clingy clients' that would want to move with him, and
his family members.
Ms Pollett wrote to the defendant on 2 April 2009, stating
As agreed you will only approach 6 clients and family members,
all of which are current clients of Commercial & Accounting
Services (Camden) Pty Ltd. The list of these agreed upon clients
will be supplied to us prior to termination
All other clients, including files, lists working papers etc
will remain the property of Commercial & Accounting Services
(Camden) Pty Ltd.
The defendant said he never received that letter. However, the
described list was requested from him. Before he left he wrote up a
list of six clients and family members.
On 1 July 2009, the defendant wrote to clients, advising of his
termination. The letter included a statement that:
'Many people have expressed their wish to continue having
their accounting and tax needs met by myself, for which I am
grateful. This has necessitated my return to my own accounting and
tax practice trading as Denis Cummins Public Accountant & Tax
Contact details for the practice were provided, along with a
letter that the client could complete and send to Ms Pollett to
arrange for their files to be transferred.
The evidence was held to be unsatisfactory as to how many people
received the letter, however, the defendant made lists of
approximately 400 people, including clients with a personal
connection outside Best Practice; clients related to RetireInvest
either by family or friends or on inquiry for RetireInvest
services; people known to him whose address he obtained from the
White Pages; people in regular contact through his involvement in
Rotary; and people who had contacted him by email over the course
of the year for tax or financial advice.
In the first half of 2009 RetireInvest had about 250 clients. As
at August 2010 Mr Cummins had 1,093 clients, 876 of whom were
former clients of Best Practice and 550 of them were clients of
Best Practice when it was purchased from Mr Cummins in 2002.
Given the significant increase in the client base, it was
accepted that the defendant used a client list from the plaintiff
that had previously been provided in respect of seminars, for the
purpose of his mail out.
Gzell J found that the defendant used the confidential
information of the plaintiff to their detriment, so damages were
Expert evidence was tendered in respect of the change in
goodwill of the business as a result of the breach of confidence.
Different methods of calculating the damage to the plaintiff were
Gzell J ultimately adopted the 'future maintainable
earnings' methodology in determining the value of loss of
goodwill. This led to an award of damages in the sum of $117,995.
Commercial & Accounting Services was also entitled to
declaratory and injunctive relief.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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