FEDERAL COURT OF AUSTRALIA

Fortrend Securities Pty Ltd v Wollermann (No 2) [2025] FCA 96

ORDERS

THE COURT ORDERS THAT:

1.    The proceeding be dismissed.

2.    If the parties are unable to resolve the question of costs, then:

(a)    the respondents file and serve a written submission about the issue, not exceeding 5 pages, within ten days; and

(b)    the applicants file and serve a written submission about the issue, not exceeding 5 pages, within ten days of receipt of the respondents’ submission.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011 (Cth).

REASONS FOR JUDGMENT

O’CALLAGHAN J

INTRODUCTION

1    This proceeding was set down for trial on counsels’ estimate of five days. It ended up taking 15 days. Because of other court commitments of my own, and issues about the availability of counsel, it was necessary to hear the case in dribs and drabs between early May and mid-September last year. On the second last day of the hearing, I insisted that the applicants do more to clarify the precise nature of the confidential information that they alleged the first and second respondents had unlawfully misused, and upon which the applicants’ case depended. That process, which included giving the respondents a chance to respond to a written document filed by the applicants and arguments about the content of a chronology, further delayed the matter until late November 2024. It was a most unsatisfactory way to hear and decide a case, and it has meant that I have had to deal in these reasons with submissions made and evidence given as long ago as early May last year.

2    Fortrend Securities Pty Ltd (FSA), and Fortrend Securities Inc (FSI) (together Fortrend or the applicants) offer to Australian resident clients the ability to trade in securities listed on exchanges in the United States. Mr Joseph Forster was and is the Managing Director of FSA and the President and owner of 100% of the shares of FSI.

3    In order for it to offer to Australian resident clients the ability to trade in securities listed on exchanges in the United States, FSA provides US-domiciled stockbroking accounts for Australian resident investors by introducing clients to FSI, which in turn introduces clients to a United States clearing firm called StoneX. StoneX is the platform through which FSA executes trades on behalf of clients. When FSA opens a new client account it completes account forms as required by Australian law, as well as forms required to open accounts with FSI and StoneX. FSI retains its own separate records as required by the relevant regulators in the United States and submits the relevant forms to StoneX. Approximately 95% of FSA’s business and trading activities occur in stock markets in the United States.

4    The third respondent, Shaw and Partners Limited (Shaw), is an Australian investment house with over $28 billion under administration and advice. It is a competitor of FSA. Shaw uses Pershing LLC as its US clearing house.

5    The first respondent, Christopher Wollermann, was employed by FSA in 2009 as an adviser. The second respondent, Stephen Lyle, was employed by FSA in the same capacity in 2012. Both of them were authorised representatives on FSA’s Australian financial services licence. They are also both CFA Charterholders.

6    Their employment was governed by contracts of employment.

7    By at least 2015, Messrs Wollermann and Lyle were the primary points of contact for the majority of FSA’s clients. Mr Forster agreed in cross-examination that they had the day-to-day role of managing client relationships, including as follows:

You would agree that, from 2013 onwards, the people who were having most of the day-to-day interactions with existing and potential clients were Wollermann and Lyle and not you?---Yes.

…

You accept though, don’t you, that Wollermann and Lyle were servicing those – all of those clients. Correct?---Absolutely, yes, they were. Yes. It was their job to be day-to-day servicing clients, to nurture those clients, to make recommendations, to know those clients, to get to know them better, to – and to help them grow their portfolios, ask for – and develop other accounts for other family members. So we treat clients as a family unit.

8    Mr Wollermann and Mr Lyle resigned on 18 November 2022, ceased their employment with FSA on 16 December 2022 and joined Shaw on 19 December 2022.

9    The fourth respondent, LWAM Pty Ltd (LWAM), is an entity incorporated by its directors, Mr Wollermann and Mr Lyle, in order to enter into a services contract with Shaw, pursuant to which:

(a)    LWAM became an independent contractor to Shaw;

(b)    LWAM would receive a fixed net payment of $150,000 per month for the first three months (first incentive period) with no gross commission;

(c)    Shaw received a reduced commission for the 24 months after the first incentive period;

(d)    various licence fees were payable to Shaw;

(e)    LWAM would receive a signing bonus of $1,000,000 payable in two equal instalments;

(f)    LWAM would receive an asset-based bonus of $250,000 if it was the adviser to $75 million of client assets within the first year; and

(g)    Shaw would pay or reimburse LWAM for the cost of retaining a dealer’s assistant with a salary capped at $120,000 for one year and would pay or reimburse LWAM for 50% of the salary thereafter.

10    After Mr Wollermann and Mr Lyle commenced working with Shaw, a significant number of Fortrend clients transferred their accounts to Shaw. Shaw completed the transfers using something called the Automated Customer Account Transfer Service (ACATS) system. It is necessary to understand how that system operates and the forms required to effect it.

11    The ACATS is a transfer system for US stocks developed by the National Securities Clearing Corporation (NSCC). US clearing firms are generally members of the NSCC so that the transfer of customer accounts from one clearing firm to another can take place via the ACATS.

12    In order for a new account to be opened with a new clearing firm, the new clearing firm must submit a completed ACATS transfer form to the old clearing firm to initiate the transfer. Mr Wollermann and Mr Lyle deposed that such a transfer typically takes approximately two to seven business days.

13    The minimum requirements to open an account and complete an ACATS transfer form for an individual are the client’s name, date of birth, email, phone number, citizenship and address, a certified copy of the client’s identification, the account number, account name and a recent account statement from the previous clearing firm. Further details are required in some instances, for example, where the client is a company or a US taxpayer. The transfer forms also require the client’s signature.

14    The minimum requirements to open an account and complete an ACATS transfer form for a corporation are the information set out above for each director and/or beneficial owner with an interest of at least 25%, the entity’s name, its ACN and registered address.

15    In this proceeding, Fortrend contends that Mr Wollermann and Mr Lyle, in breach of their obligations of confidence and related contractual, fiduciary and statutory duties, unlawfully caused Fortrend clients to transfer their accounts to Shaw.

16    Several relevant events occurred in the notice period between 18 November 2022 (when Mr Wollermann and Mr Lyle resigned) and 16 December 2022 (when they finished working for FSA).

17    Sometime after 18 November 2022, Mr Wollermann made (and on 26 December 2022 destroyed) a list of the most significant clients that he and Mr Lyle serviced at FSA. Mr Wollermann then ranked those clients by asset value (i.e. by the value of funds under management). At the hearing, it was dubbed the “ranking list”. It contained the abbreviated names and contact information of FSA clients, together with the asset value rankings but not the details of the asset values themselves. Mr Wollermann’s evidence was that he had “a very clear picture” of where those clients ranked, as he was very familiar with the accounts. In compiling the ranking list, he deposed that he viewed (but did not download) data in StoneX to confirm the rankings. Some of the ACATS forms that were later lodged by Shaw bore handwritten numbers corresponding to the ranking list. As Mr Wollermann explained in his 30 January 2023 affidavit at [75]:

At paragraph [79] of the Forster Affidavit, reference is made to a hand-written number on some of the ACATS documentation. In or about November 2022, I compiled a list of the most significant clients that Lyle and I serviced at FSA, and I ranked them by asset value. I had a very clear picture of where the clients ranked, as I was intimately familiar with the accounts. That said, in compiling that list, as a check I viewed (but did not download) a report on the StoneX system. The list only contained the abbreviated name of FSA clients, together with the asset value ranking (not the asset values themselves). The handwritten numbers on some of the ACATS documentation is referable to the ranking in that list. I no longer have that list in my possession, custody or control, as I destroyed it on or about 26 December 2022. Lyle and I oversaw the completion of the ACATS documents in respect of the clients that transferred to Shaw, together with Shaw’s administrative staff. We used the handwritten numbers to prioritise the processing of the ACATS.

18    Messrs Wollermann and Lyle admitted that it was a mistake to have made the list and to that extent, but only to that extent, they breached their contractual confidentiality obligations. But they say that the consequences of this conduct are minimal, because the ranking list did no more than record what Mr Wollermann (and Mr Lyle) had as “know-how” in relation to the clients in question. At most, they say, that might sound in nominal damages, which the applicants neither attempted to quantify nor sought.

19    At some point after 18 November 2022, Mr Wollermann and Mr Lyle reset their work iPhones (which they had also used for personal use during their employment) and returned them to FSA. Mr Forster then returned the phones to Mr Wollermann and Mr Lyle.

20    On 12 December 2022, Fortrend’s then-solicitors wrote to Mr Lyle and requested that he (i) return his phone, laptop and other FSA property, and (ii) delete all FSA emails which had been forwarded to his personal email account and any other FSA materials in his possession. Mr Lyle duly did so and told Mr Wollermann about this letter.

21    Mr Wollermann deleted all FSA documents on his laptop on either 15 or 16 December 2022 and later destroyed the laptop because it had suffered water damage. He also destroyed a Western Digital Hard Drive “[t]o put beyond doubt whether [he] had retained any confidential information of FSA”. See transcript at pages 879–880.

TRANSFER OF CLIENTS TO SHAW

22    Mr Wollermann and Mr Lyle deposed that they told some clients that they were resigning from FSA, both as a professional courtesy and because there would be a change in the management of the clients’ accounts. Their evidence was that, with one exception (Mr Wollermann’s parents-in-law), they did not tell any clients that they were moving to Shaw until after they had left FSA.

23    Mr Wollermann and Mr Lyle denied that they took any steps to solicit or facilitate the transfer of any client accounts to Shaw during their employment with FSA. However, they deposed that after their employment with FSA ended on 16 December 2022, they both immediately started contacting clients to inform them that they were working with Shaw.

24    The steps taken by Mr Wollermann and Mr Lyle to facilitate the transfer of each client from FSA to Shaw were set out in detail in their respective affidavits ([88] to [190] in the case of Mr Wollermann (affidavit number 3) and [95] to [200] in the case of Mr Lyle (affidavit number 2)). I will return to the detail of that evidence below. Critically, in his closing address, senior counsel for the applicants did not maintain that this evidence given by Mr Wollermann and Mr Lyle was untrue in any material respect.

25    Mr Wollermann and Mr Lyle admitted that some of the relevant ACATS forms bore a handwritten number which corresponded to the ranking set out in the ranking list, but contended that otherwise no confidential information of FSA was used in the transfer process because the information was either known to them, publicly available or provided directly by the clients over the phone, by email or during in-person meetings.

26    Mr Wollermann and Mr Lyle denied they took any information or documents that contained the StoneX account numbers when they left employment with FSA, or that they prepared the ACATS forms before they left to go to Shaw. See transcript at pages 703, 732, 735, 786, 787 and 833.

EMPLOYMENT CONTRACTS

27    The relevant terms of the employment agreements of both Messrs Wollermann and Lyle with FSA were substantially the same.

28    It was a term of those agreements that:

(a)    “Confidential Information” means (clause 10.10):

any trade secret or any information relating to the business affairs, accounts work, marketing plans, sales plans, prospects, research, management, financing, products, inventions, designs or processes of Fortrend and any data bases, data surveys, customer lists, specifications, drawings, records, reports, software or other documents, material or other information whether in writing or otherwise concerning Fortrend or any other of their customers or suppliers to which you gain access, whether during or after the termination of your employment.

(b)    Messrs Wollermann and Lyle agree not to disclose any Confidential Information to any person (except in limited circumstances) and not to use any Confidential Information for the benefit of any person except Fortrend (clauses 10.2 and 10.3);

(c)    the obligations in clause 10 in respect of Confidential Information cease if the Confidential Information is lawfully within the public domain (clause 10.4); and

(d)    Messrs Wollermann and Lyle deliver all Confidential Information physically capable of delivery to Fortrend on termination of their employment or, if requested by Fortrend, destroy the Confidential Information (clauses 10.6 and 10.7).

THE PLEADED CASE ABOUT CONFIDENTIAL INFORMATION

29    The applicants contended that Shaw obtained the benefit of Fortrend’s confidential information and sue Messrs Wollermann and Lyle for breach of their contractual obligations, their obligations under ss 180(1), 181(1), 182(1) and 183(1) of the Corporations Act 2001 (Cth) (Corporations Act) and their fiduciary duties as employees of Fortrend. Although the alleged breaches of ss 180(1) and 181(1) were originally pleaded, they were not maintained in the applicants’ written closing submissions. In the event, the applicants have claimed loss and damage arising from the use of Fortrend’s confidential information by Shaw, Mr Lyle, Mr Wollermann and LWAM to benefit themselves.

30    As counsel for the applicants accepted, the first key question that arises in respect of every pleaded and pressed cause of action in this proceeding is: “did Mr Lyle and Mr Wollermann use confidential information of Fortrend in breach of their duties and/or breach of contract?”. If the answer to that question is “no”, then the proceeding is to be dismissed.

31    By paragraph 11 of their Further Amended Statement of Claim (FASOC), the applicants pleaded:

In the course of its dealings with FSA Clients, FSA and FSI obtained or generated, and then used and stored, the following confidential information concerning FSA Clients:

(a)    their identities;

(b)    the fact that they were individuals who were involved or interested in trading in US securities;

(c)    the fact that they were FSA Clients;

(d)    their contact details, including their:

(i)    phone numbers;

(ii)    home addresses; and

(iii)    email addresses;

(e)    their personal information, including their:

(i)    dates of birth; and

(ii)    identification information, including copies of identification documents such as passports, driver licenses and Medicare cards;

(f)    their social media contacts, including LinkedIn;

(g)    the makeup of their stock trading portfolios, including risk profiles and appetite;

(h)    their trading histories;

(i)    which securities they had historically invested in;

(j)    their employment and financial status;

(k)    structuring of their corporate, superannuation and trust entities,

(together and individually, including as set out in [11A] the Confidential Client Information).

PARTICULARS

The Confidential Client Information is confidential to the FSA Clients as it was provided to FSA by them in confidence, and is subject to FSA Policies (as defined below) requiring it to be kept confidential.

Further particulars, and or further specific information confidential to FSA, may be provided after discovery and evidence.

32    I note that the “confidential information concerning FSA Clients” as set out in paragraph 11 of the FASOC does not include clients’ StoneX account numbers. Further, as I have said, Mr Wollermann and Mr Lyle admitted that they used the names of the clients and their telephone numbers and/or email addresses to prepare the ranking list (ranked in order of funds under management) and that they also looked at, but did not download, the StoneX information to come up with the rankings. See transcript at page 1119.

33    Mr Wollermann and Mr Lyle contended that the client names, phone numbers and email addresses are not confidential. They admitted that looking at the StoneX material and writing down on the ranking list the relative rank of each client or group of clients constituted a breach of contract, because that was confidential information. They contended, however, that the breach was of no moment, including because they had the rankings in their heads (see transcript at page 1037) and there was no evidence adduced that the ranking list was of any use, since most of their income was derived from commissions on trades not from fees from funds under management (see transcript at pages 1038–1039).

34    Paragraph 11A of the FASOC was as follows:

Further or alternatively to paragraph 11, as at September 2022 FSA owned and had the benefit of confidential information, being the identity of each client, the size of their investments, the companies they were invested in, and the fact that those clients were investing in companies listed on stock exchanges in the United States (Confidential Client Information).

35    Relevantly, it was then alleged that “[a]t all material times the confidential client information was confidential information within the terms of each of the Wollermann EA and the Lyle EA” (at [15A]) and that “the Confidential Client Information was imparted to Shaw, Wollermann and Lyle in circumstances where each of them knew, or ought reasonably to have known, that it was confidential to FSA and FSI” (at [31]).

36    The FASOC next relevantly pleaded as follows:

58B    From September 2022, and following entry into the Services Agreement, Wollermann and Lyle:

(a)    Disclosed to FSA clients the fact that Wollermann and Lyle were leaving FSA;

(b)    Advised those FSA clients how to use the ACATS system to transfer their holdings to Shaw for management;

(c)    Compiled a list of FSA clients with details of their investments and size of holdings in various companies using the Confidential Client Information provided same to Shaw (the “CCI list”).

58C    Following notification to them that Fortrend intended to commence this proceeding, Wollermann and Lyle destroyed the CCI list on 26 December 2022.

58D    Wollermann and Lyle have failed to explain why the CCI list was destroyed.

PARTICULARS

At the hearing on 1 February 2023 see [T52 – 53].

58E    It is, in all the circumstances, to be properly inferred that Wollermann and Lyle destroyed the CCI list so as to deny Fortrend relevant evidence of their wrongful provision of the CCI to Shaw.

37    The FASOC is far from a model of good drafting (although I note that the original versions of it were not prepared by counsel who appeared at the trial). No good purpose is to be served by reciting further from it. It is sufficient to say that the trial was conducted on the basis that the applicants’ case was that it had suffered loss and damage by reason of the breaches of contract and breaches of duty alleged (and by Shaw having induced, and being an accessory to, the breaches of contract).

38    In their written closing submissions, the applicants at one point seemed to have jettisoned [11] of the FASOC. In [5] of those submissions, it is said that “[t]he Applicants … bring this proceeding because in late 2022, Shaw obtained the benefit of Fortrend’s confidential information (the client list)”. That sentence is footnoted as follows: “[t]he term Client List is used to mean the matters set out at 11A of FASOC which identifies the confidential information”.

39    But at [57] of the applicants’ written closing submissions, [11] of the FASOC was apparently resurrected: “[t]he confidential information the subject of this proceeding is set out at paragraph 11 and 11A of the Applicants’ Further Amended Statement of Claim (which will be referred to as the Client List)”.

40    Then at [58] of their written closing submissions, the applicants proffered yet another definition of the “confidential information” relied on:

The confidential information is the Client List; the identity of each client, the size of their investments, the knowledge of their portfolio holdings, the companies they were invested in, the fact that those clients were investing in companies listed on stock exchanges in the United States, their Stone X numbers, the clients’ names and correlative details for individual accounts and entity accounts, the knowledge of their portfolio holdings.

(Footnotes omitted.)

41    I raised the question of what case was actually being put with senior counsel for the applicants during the course of his closing address. The transcript records at pages 1119–1121 what ensued:

MR WYLES: … so what this case comes down to, your Honour, as we understand the way the submissions have been made, is that the first issue between us is the content of the client list. And we say, your Honour, that it included understanding the types of securities that were being traded, the size of the investments and the StoneX numbers, the existence of the StoneX numbers.

HIS HONOUR: Just before you go on, as I understand it, the respondents admit that they used the names, phone numbers, slash email addresses, call that contact details.

MR WYLES: Yes.

HIS HONOUR: To create the – what has been called ranking list – the piece of paper that was created and then destroyed. They admit – Mr Wollermann and Mr Lyle admit that they did that. The document, as I understand it, comprised abbreviated names and contact details – whether it’s a phone number, email or both – and then, a number – a ranking, based on asset value.

MR WYLES: That’s their evidence. We - - -

HIS HONOUR: That’s right.

MR WYLES: That’s their contention.

HIS HONOUR: So they admit that, so you get that far on an admission. They also admit that they looked at, but didn’t download, the StoneX information for the purpose of creating the ranking.

MR WYLES: Yes.

HIS HONOUR: So they next say that the reasons that … the names, phone numbers, email addresses – wasn’t confidential. That’s their - - -

MR WYLES: Sorry, your Honour?

HIS HONOUR: It wasn’t confidential. That’s their contention. And, I think, having a transcript, it’s conceded – and I will be corrected if I’m wrong – but it’s conceded that, looking at the StoneX material was a breach of contract, because that was confidential information. But it’s said, well, that doesn’t lead anywhere, because all it did was to enable Mr Lyle and Mr Wollermann to create an asset value, and that actually wasn’t terribly important, because 90 per cent of the clients generated fees, not on the basis of the value of the assets but on turnover – my expression – and in any event, you can see that because the first 26 people that went across didn’t have any – well, that cohort wasn’t reflective of the asset they had used. I think that’s what’s said.

So whatever the rights and wrongs of those submissions are is for me to determine, but assuming you get to the point – we’re at that point now. Am I correct in understanding that, to get further than that, you need to persuade me that I should infer – or conclude from all the evidence and the circumstances and demeanour of witnesses and so forth – that there are other pieces of confidential information that they used in order to persuade, or effect the transfer of clients from Fortrend to Shaw? I need you to tell me what precise forms of information you say I should infer were used. And I don’t think it helps me – I say this with great respect – I don’t think it helps me to say a client list. That’s a defined term, in your submissions, which gathers together everything in paragraphs 11 and 11A - - -

MR WYLES: Just 11A. Just 11A.

HIS HONOUR: Just 11A. So 11 - - -

MR WYLES: Just 11A.

HIS HONOUR: So you don’t press paragraph 11 of the [FASOC]?

MR WYLES: I think we redefined everything in 11[A], your Honour.

HIS HONOUR: Well, 11[A] says:

Further or alternatively to paragraph 11.

So - - -

MR WYLES: I understand that, but – if your Honour just bear with me for a moment.

HIS HONOUR: Yes, of course.

MR WYLES: We’ve certainly conducted the case, your Honour, on the basis of 11[A], the confidential information, the identity of each client, the size of their investments, the companies they were invested in, the fact that those clients were investing in companies listed on US stock exchanges, and we didn’t specifically mention the account number, but that’s so they’re – I can tell your Honour that’s the specifics of the confidential information which we say constitutes the – and that’s what we were seeking to articulate with some clarity.

HIS HONOUR: So plus the account numbers.

MR WYLES: Yes. And we’ve learned about the importance of the account numbers, really, in the course of the proceeding.

42    I then pressed counsel about whether he continued to rely on any part of [11] of the FASOC. In the end, he said that he relied on 11(a) (client identities), (c) (the fact that the clients were FSA Clients), (d) (contact details), (e) (personal information) and (k) (corporate, superannuation and trust structures), but no other part of [11] was pressed. See transcript at pages 1121–1122.

43    I then took counsel back to his reliance on the rolled up concept of “client list”. The following exchange then occurred (see transcript at page 1124):

HIS HONOUR: I don’t mean to be difficult, but client list is a term that has found its way into your submission and it – again I don’t mean this at all disrespectfully - - -

MR WYLES: No, no.

HIS HONOUR: - - - but it has a bit of a bootstrap quality about it, because you put everything you’ve said in 11 and 11A and then call it the client list and then - - -

MR WYLES: I – I inherited 11 and 11A, and in – you know, I should have always asked your Honour for six months adjournment, and I can see that now. And I apologise that we haven’t been more felicitous early on, but in the circumstances, what we were trying to do was to non-bootstrap, your Honour. And we should have made it clearer earlier, with the benefit of hindsight and the alarm of running cases, that we should have just been more incisive in 11 and 11A. So I’m not seeking to get any bootstrap advantage, your Honour. I understand the obligation we have to satisfy your Honour about is that the evidence establishes that what – if we call it – if we call it the critical Fortrend information, whatever I call it to try to abbreviate the submissions, but that critical Fortrend information has to be quite incisive, and it is the names, the contacts, of course; it is the information such as dates of birth and tax file numbers.

HIS HONOUR: Social security numbers.

MR WYLES: Yes, ... as we’ve seen in the documents.

HIS HONOUR: Tax identification numbers?

MR WYLES: Yes, your Honour. And where necessary, passports and driver licences. The structuring of their corporate superannuation and trust entities …

44    Sometime later, counsel turned to the fact that each of the ACATS forms in evidence contained the relevant clients’ StoneX number. Counsel candidly admitted that “there’s not a piece of evidence that says this is where it came from”. See transcript at page 1139.

45    Later, I again raised with counsel how he was putting the applicants’ case, and I insisted that he provide “a document that identified each of the clients that are relevant during the period of which [he had] spoken and, by reference to court book numbers, identify … with razor-sharp precision what confidential information [he] says I should infer either one or both of Mr Lyle or Mr Wollermann provided to Shaws [sic]”. See transcript at pages 1150–1151.

46    Counsel for the respondents did not object to that course being adopted.

47    As a consequence, 33 days later (on 14 October 2024) the applicants sent an email to my chambers attaching a document entitled “Schedule of confidential client information accessed and used by the respondents”. This document was electronically filed with the court on 6 February 2025.

48    In response, the respondents sent an email to my chambers attaching a document entitled “Respondents’ submission in response to applicants’ schedule of confidential client information” dated 15 October 2024. This document was electronically filed with the court on 6 February 2025.

49    The respondents made this submission at paragraphs 3 and 4 of that response:

The Respondents proceed on the basis that the schedule provided by the Applicants definitively identifies the confidential information said to have been misused.

The Applicants’ schedule does no more than set out the information that was used by the Respondents to complete the ACATS Transfer Form for each relevant client. It says nothing about how that information is said to have been taken from the Applicants, how it is said to have been given to Shaw, or how it is said to have been misused. Those critical questions have not been answered by the Applicants at all, let alone in their schedule.

50    In their written closing submissions, the respondents made the following submission (at [5] and following):

From the outset of the case, the Respondents have accepted that the conduct of Mr Wollermann and Mr Lyle in relation to the Ranking List was a breach of their contractual confidentiality obligations. However, the consequences of that breach are minimal, if any.

Mr Wollermann’s reference to data on StoneX when he was preparing the Ranking List merely confirmed what he knew about the accounts in question based on his long-standing work with the relevant clients. Further, the use of numbers corresponding to the Ranking List on ACATS forms later prepared by Mr Wollermann and Mr Lyle at Shaw is of limited, if any, significance. At best, it might have resulted in some ACATS being prioritised, such that a client was transferred from the Applicants to Shaw marginally more quickly. This would lead to an award of no more than nominal damages. The Applicants have not advanced any evidence directed at quantifying this notional loss. In any event, the evidence at trial was that the first 26 clients were processed as a “batch” without any prioritisation.

Leaving to one side this concession in relation to the contract case, the conduct of Mr Wollermann and Mr Lyle does not involve any misuse of the pleaded confidential information. Even if it were possible, and permissible, for the Applicants to re-focus their case on the client and account names, contact details and the asset value ranking of the clients in question, the use of such information by Mr Wollermann and Mr Lyle does not involve any breach of confidence (or any related fiduciary or statutory duties).

(a)    The names of the clients and accounts in question were well-known to Mr Wollermann and Mr Lyle, who had worked closely with all of the clients in question (often over a very extended period). This information plainly formed part of the stock of trade knowledge that a departing employee would retain and be entitled to use (subject to any valid contractual restraint of trade).

(b)    The contact details of the clients in question do not constitute confidential information – there were many ways that Mr Wollermann and Mr Lyle could readily obtain such contact details, including for example through social media or simple Internet searches.

(c)    The asset value ranking for particular clients do [sic] not constitute confidential information. Having had the carriage of the relationship between the Applicants and the clients in question, Mr Wollermann and Mr Lyle were very familiar with their portfolios. The asset values were part of their knowhow and stock of trade knowledge. Further, and critically, the clients themselves had all of the details of their holdings and their values. It was a simple matter for a transferring client to provide that information to Mr Wollermann, Mr Lyle and Shaw (indeed, it occurs automatically as a part of the ACATS process). Information which can so readily be obtained through willing disclosure by the client cannot be the confidential information of the Applicants.

(Footnotes omitted.)

51    I should also mention that the applicants also pleaded that Mr Wollermann and Mr Lyle breached restraint of trade provisions in their respective employment agreements (both as to working for a competing business and soliciting clients). But the claims were not pressed at the trial.

THE APPLICANTS’ WITNESSES

52    The applicants relied on evidence from the following witnesses:

(a)    Joseph Forster – the Managing Director of FSA and the President and owner of 100% of the shares of FSI;

(b)    Peter Waite – a recruitment consultant who was called under subpoena;

(c)    viva voce evidence from Katherine Agoos – a former client of the applicants who was called under subpoena;

(d)    viva voce evidence from Earl Evans – the CEO of Shaw who was called under subpoena;

(e)    viva voce evidence from Steven Arnison – the General Counsel of Shaw who was called under subpoena;

(f)    Scott Reid – a forensic IT expert; and

(g)    Philip Hand – a wealth management executive who was called as an expert witness in relation to quantum.

53    Only Mr Forster, Ms Agoos and Mr Hand were cross-examined.

THE RESPONDENTS’ WITNESSES

54    The respondents relied on evidence from the following witnesses:

(a)    Mr Lyle;

(b)    Mr Wollermann;

(c)    Malcolm Cameron – the Victorian State Manager of Shaw;

(d)    Owain Stone – an independent forensic accounting expert; and

(e)    Michael Burrell – an investment adviser and the director of compliance at Burrell Stockbroking & Wealth Management, a former client of Fortrend.

55    Mr Lyle, Mr Wollermann, Mr Cameron and Mr Stone were cross-examined.

THE EVIDENCE RELEVANT TO THE ALLEGATION OF MISUSE OF CONFIDENTIAL INFORMATION

The evidence of Mr Lyle

56    Mr Lyle’s main affidavit was dated 22 December 2023. In it he deposed (at [80]) that during his notice period with FSA, out of courtesy he told several of his clients that he had resigned from FSA, but he did not tell any client about the fact that he and Mr Wollermann had established LWAM. He also said that they decided not to tell any clients about the fact that they were joining Shaw. As he put it: “I simply wanted my clients, with whom I had personal and professional relationships, to know out of courtesy that I had resigned from FSA, with my last day being 16 December 2022”. He said that, in response, some clients told him that they wanted to transfer their accounts to wherever he was going and asked to be contacted after he had left FSA.

57    He further deposed at [82]–[83]:

I did not take any steps to facilitate the transfer of any client accounts to Shaw during my employment with FSA. However, immediately after my employment ended, I began to reach out to clients and inform them that I was to start in the office at Shaw on 19 December 2022. Most of those clients expressed their desire to move their accounts to Shaw.

For those clients who indicated to us a preference to move their accounts to Shaw, either Wollermann or I had further contact with the client to facilitate that transfer. We met or had telephone calls with the client to get the relevant details required to open an account and assist in completing the required paperwork to effect the transfer. I describe the required transfer paperwork at paragraphs [88] to [91] below, and the interactions I had with each client at paragraphs [95] to [200] below.

58    Mr Lyle gave the following evidence about the transfer process (at [84]–[87]):

In order to transfer a client from FSA to Shaw, there are three key steps. First, we establish a domestic Shaw account for the client. Secondly, we establish an account with Pershing LLC (Shaw’s clearing firm). Finally, we use the Automated Customer Account Transfer Service (ACATS) to transfer the client’s assets from the StoneX account (being FSA’s clearing firm) to the new Pershing LLC account (Shaw’s clearing firm). At that point, the transfer is complete.

ACATS is an electronic transfer system developed by the National Securities Clearing Corporation. As US clearing firms are typically members of NSCC, the transfer of customer accounts from one clearing firm to another can take place via ACATS.

The ACATS transfer process is extremely simple. Once the receiving account has been established, all that is required is for the receiving broker/clearing firm to submit a completed ACATS form to the delivering broker/clearing firm to initiate the transfer of the account assets.

Once a completed ACATS transfer form is submitted to the delivering clearing firm, the assets are transferred from the “delivering account” to the “receiving firm” automatically.

In my experience, the transfer itself would take between 2-7 business days. …

59    Mr Lyle gave the following evidence about the transfer paperwork (at [88]–[94]):

In general, the paperwork to complete the three steps described at paragraph [84] above took less than an hour to prepare, because very little information is required. There are only three forms that were required. These are:

(a)    a Client Account Opening Form;

(b)    an International Form; and

(c)     an ACATS form,

(together, Transfer Paperwork).

…

The Client Account Opening Form is used to create a domestic Shaw account. It is a relatively straightforward form. For an individual, it requires some basic personal details to be entered into the form (e.g. the individual’s name, address, date of birth, occupation, citizenship and address) as well as some taxation information (the individual’s TFN and whether he or she is an international resident for tax purposes). It is similar for companies, requiring the entity name, its registered address, the details of its directors, and the details of its beneficial owners. There are further optional sections on the form (for example, where the company is a trustee of a trust, further details are required of the trust and its beneficiaries; and where a third party is to be transacting on behalf of the client, the third party authority section must be completed). The client is then required to sign the Client Account Opening Form and provide it to Shaw with copies of the client’s certified identification documents. A Shaw account can then be opened.

The International Form is then used to open an account with Pershing LLC. In fact, the International Form is a compilation of several forms required by Pershing LLC, but it is presented as a single document with Shaw branding for convenience. Some aspects of this form are similar to the Client Account Opening Form and require the same information (for example, the client’s name and address). There are some specific aspects of the form applicable to certain clients such as corporate clients or trustee clients. Each of these forms was nonetheless simple and could be completed by the client, or with information provided directly from the client. Again, the form required a client signature. Shaw would then supply the information to Pershing LLC in order to open a Pershing LLC account.

The ACATS form was the most straightforward of all the Transfer Paperwork. As I mention above, it only requires basic information about the receiving firm (that is, Pershing LLC) and the “delivering account” (that is, the client’s StoneX account). It was a requirement that the ACATS form be accompanied by a complete copy of a recent brokerage account statement (that is, a StoneX account statement). As with the other forms, the client was required to sign it. …

It was my practice when presenting clients with any kind of paperwork (both during my employment at FSA and while undertaking the client transfers to Shaw) to complete as much of it as I could, so that the client did not need to waste time searching for required information. Ideally, all that would remain for the client to do was sign the document (although, in practice, other details were often needed from the client).

I knew at least some of the information required to complete the Transfer Paperwork off the top of my head (in particular, client names, addresses, and contact details). If I required further details, I telephoned the particular client to obtain whatever I was missing (such as tax file numbers and ABNs) before meeting to complete the Transfer Paperwork.

I describe the specific process that I went through to complete the Transfer Paperwork for each client that transferred from FSA to Shaw at paragraphs [95] to [200] below. No confidential information of FSA was required, or used, to complete any aspect of the Transfer Paperwork, or throughout the transfer process.

60    Mr Lyle was not challenged in cross-examination about any of that evidence.

61    Mr Lyle also deposed (at [201]) that he and Mr Wollermann did not use FSA’s claimed confidential information to effect the ACATS. He said that “[t]his was unnecessary as the information needed to fill out the Transfer Paperwork was basic. I remembered much of that information for many clients (for example, names, phone numbers, and addresses). Otherwise, it was publicly available or the clients were able to provide it within a matter of minutes (for example, their tax file numbers and ABNs)”.

The evidence of Mr Wollermann

62    Mr Wollermann’s main affidavit was dated 24 December 2023.

63    He gave the following unchallenged evidence under the heading “FSA’s claimed confidential information” (at [50]–[55]):

I used my work phone for both business and personal use. As a result, the contacts on the phone were a combination of business and personal contacts and were automatically backed up to my personal iCloud. When I bought a new phone preparatory to leaving FSA, these contacts were downloaded to my new phone.

I know the names, account titles, addresses, professions, and a vast array of personal information for many of the clients whose accounts I serviced at FSA. …

I do not have any documents from FSA’s F:Drive or from StoneX in my possession, custody or control, and I have not had any such documents in my possession since the cessation of my employment on 16 December 2022. While I regularly took USBs home which contained FSA information on it [sic] during the course of my employment, I do not have, and have not had, any USBs or external hard drives, cloud storage devices or any other devices containing FSA’s information as described in paragraph [38] of the Second Forster Affidavit in my possession, custody or control since 16 December 2022.

The only FSA information that I had in my possession following the cessation of my employment was a list of the most significant clients that Lyle and I serviced at FSA, which I ranked by asset value. I had a very clear picture of where the clients ranked, as I was intimately familiar with the accounts. That said, in compiling that list, as a check I viewed (but did not download) a report on the StoneX system. The list only contained the name and contact information of FSA clients, together with the asset value ranking (but not any details about the asset values themselves). Paragraph [122] of the Second Forster Affidavit refers to handwritten numbers of some of the ACATS documentation. The handwritten numbers are referable to the ranking in that list. Lyle and I oversaw the completion of the ACATS documents in respect of the clients that transferred to Shaw, together with Shaw’s administrative staff. We used the handwritten numbers to prioritise the processing of the ACATS. I no longer have that list in my possession, custody or control, as I destroyed it on or about 26 December 2022.

Other than the list of clients referred to above, and the contact details on my phone, I deny having or using any information or documents from FSA after the cessation of my employment. I had no need to take any such information, because, as I set out at paragraphs [79] to [82] below, any client who wished to transfer their account to Shaw could provide the required information.

Further, there was no benefit to me, Lyle or Shaw, in any document of FSA on the F:Drive, StoneX or elsewhere. One of the major reasons Lyle and I decided to join Shaw was their use of Pershing as a clearing firm which meant that ACATS transfers could be completed. An ACATS transfer brings across all information that is required to service a client’s portfolio, including asset values and their cost base. I did not require any of FSA’s information because it was outdated as soon as I left the business. That is, once the transfer was complete, the information that was in Pershing was more up to date than any information that could have been taken from FSA.

64    Mr Wollermann gave the following unchallenged evidence about the transfer of clients to Shaw (at [76]–[77]):

At around the time I gave notice of my resignation to FSA, I told several clients that I was resigning as a personal and professional courtesy. During my notice period, the only clients that I told I was joining Shaw were my parents-in-law, Peter and Adele Levinge. Otherwise, I did not mention Shaw to any client. In response, several clients expressed a desire to transfer their accounts to wherever I was moving. I told these clients that I would contact them once I had left FSA and landed at my new firm.

I did not take any steps to facilitate the transfer of any client accounts to Shaw during my employment with FSA. However, immediately after my employment ended, I began to contact clients and inform them that I had commenced a role at Shaw on 19 December 2022. Most of those clients expressed their desire to move their accounts to Shaw. Where they had requested to do so, Lyle and I facilitated that transfer.

65    He continued under the sub-heading “Shaw Transfer Forms” as follows (at [78] and following):

The process for a client to transfer their portfolio to Shaw is very simple. Generally, the paperwork took less than an hour to prepare and required very few details from the client. There are three or four forms that are required to open a new account at Shaw (and its clearing firm, Pershing LLC), a Client Account Opening Form, an International Form and an Automated Customer Account Transfer Service (ACATS) form (Shaw Transfer Forms).

…

The minimum details required for each form are as follows:

(a)    Client Account Opening form:

(i)    for an individual, this requires basic personal details to be entered into the form (for example, the individual’s name, date of birth, email, phone number, citizenship and address). It is preferable, but not necessary to initially open an account, to also obtain some taxation information (the individual’s TFN and whether he or she is an international resident for tax purposes); and

(ii)    for a company, it requires the information set out above for any individuals who are directors and/or beneficial owners with >25% interest, and the entity name, ABN/ACN, and the entity name [sic] and its registered address. There are further optional sections on the form (for example, where the company is a trustee of a trust, further details are required of the trust and its beneficiaries; and where a third party is to be transacting on behalf of the client, the third party authority section must be completed). For the most part, these details can be obtained from ASIC and ABR or confirmed with the client.

(b)    International form (used to open an account with Pershing LLC) is a compilation of several forms required by Pershing LLC. The additional information required for this form was a social security number (for US tax paying clients) a certified copy of the trust deed (unless the account is a complying super fund which can be confirmed on the ABR), and a certified copy of the client’s identification.

(c)    ACATS form is short, and only requires the client’s StoneX account number and account title and a copy of a recent StoneX account statement. …

Each of the Shaw Transfer Forms requires the client’s signature.

It was my practice to pre-populate as many of the details required by the Shaw Transfer Forms as I could from my memory and publicly available sources. For example, I could recall client’s names and account titles, and could obtain their addresses and dates of birth from ASIC, and their ABN and trust details from ABR. It was also my practice to then call clients to confirm details and to obtain any missing information so that I could present the Shaw Transfer Forms in a state that was almost ready for the client’s signature. The pieces of information we invariably required from clients were a copy of a recent StoneX account statement, certified copy of the trust deed (unless the account is a complying super fund), certified identification, and social security number (for US tax paying clients). Most of these details would generally be confirmed in a short phone call. Otherwise, I could let the client know what information needed to be gathered before we met in person, and we could complete any gaps during that meeting.

I describe the interactions I had with each client who transferred to Shaw at paragraphs [88] to [190] below. No confidential information of FSA was required to complete any aspect of the transfer paperwork.

ACATS transfer

Once a client has provided us with the Shaw Transfer Forms, the Shaw accounts team creates a Shaw account and then a Pershing account. The team then submits the ACATS form. If the ACATS form is compliant (including with a recent account statement) and the client’s details in Pershing match the details in StoneX then the client’s assets automatically transfer to the Pershing account (as described below).

The transfer of assets typically occurs via the ACATS (which stands for automated customer account transfer system). Most US clearing firms are ACATS participants. I do not understand exactly how that process works, but once the necessary paperwork is submitted to the transferee clearing firm, the transfer of the client’s assets from the transferor firm to the new account with the transferee firm is automated.

About 12 hours after the account is established, it is typically ready or able to initiate an ACATS request. The automated transfer then typically settles within 2 to 8 business days, but there is typically nothing further to be done on our end during this period.

Further, because FSA is dually regulated, there are many requirements to open an account at FSA are [sic] not required to open an account at Shaw. Shaw has automated systems and human, financial and technological resources that streamline and expedite the process.

A recurring issue that we encountered processing the ACATS forms was that often the details provided by the client did not match the details in StoneX. For example, on many occasions, the client’s details (such as account titles) were incorrectly entered in StoneX. On these occasions, the transfer was rejected despite the correct details being entered on the ACATS forms. In these cases, we often had to engage in a process of trial and error to seek to determine what error had been entered into StoneX in order for the transfer to be approved, before fixing the error at the Pershing end after the transfer completed.

No challenge to relevant evidence of Messrs Wollermann and Lyle

66    I have not set out or sought to summarise the detailed evidence given by Mr Wollermann and Mr Lyle in their main affidavits about the transfer of clients from Fortrend to Shaw, which document by document, client by client, describes the information that they used in the process. Both of them gave detailed evidence about the contact they had with each client who transferred their portfolio to Shaw and the detailed steps they each took to obtain the information required to complete the ACATS transfer forms (including obtaining each client’s StoneX account number and a recent account statement). That evidence is that they generally pre-prepared the transfer paperwork with information they could recall as a result of working with the clients (such as account and client names) and then called the client to obtain any other details needed to complete the paperwork. They would then visit the client at their home, or the client would attend the Shaw office, to sign the paperwork and provide copies of their identification, a trust deed (if applicable) and a StoneX account statement. As the respondents submitted, that evidence was not challenged in any material respect, and I accept it.

67    It was put to both Mr Wollermann and Mr Lyle in cross-examination that they took information or documents that contained the StoneX account numbers when they left employment with FSA and that they prepared the ACATS forms before they moved to Shaw. See transcript at pages 703, 732, 735, 786, 787 and 833. Both Mr Wollermann and Mr Lyle denied having done so, and I accept their evidence. Both of them in general impressed me as honest and careful witnesses.

WHY THE MISUSE OF CONFIDENTIAL INFORMATION CASE MUST FAIL

68    As I have said above, the applicants pleaded a rolled up case under the employment agreements, the Corporations Act and in equity. But as the applicants agreed in their written closing submissions at [118], “[t]here is no appreciable difference in scope between the contractual obligations as contained in the relevant Fortrend Employment Agreements concerning confidential information and the obligations upon Mr Wollermann and Mr Lyle pursuant to their fiduciary duties as employees and equitable obligations concerning the confidential client information they held on behalf of Fortrend”. It was also not suggested that any different result could arise under the Corporations Act provisions sought to be invoked.

69    In addition to the size of client investments, the companies they invested in and the fact that the clients invested in companies listed on stock exchanges in the United States (the information pleaded in [11A] of the FASOC), the confidential information ultimately relied on comprised, in respect of each relevant client, one or more of the following:

    client name;

    client address;

    client contact details;

    director details;

    beneficiary details;

    trust details;

    superannuation fund details;

    StoneX account information; and

    Fortrend Securities brokerage account statement.

70    The last two items in that list – namely, StoneX account information and Fortrend Securities brokerage account statements – can immediately be put to one side. They were not mentioned in the pleading and the applicants are to be held to their pleaded case. Some attempt was made to argue that those documents fall within the rubric of “personal information”, but the pleading had another genus of documents in mind, viz “dates of birth; and identification information, including copies of identification documents such as passports, driver licenses and Medicare cards”.

71    Further, it is not at all apparent to me what precise information and statements are being alluded to – and it is not for the court to trawl though exhibits to find what might be meant. In that regard, the cases repeatedly remind plaintiffs in cases such as this that confidential information must be identified with precision. See Ocular Sciences Ltd v Aspect Vision Care Ltd [1997] RPC 289 at 360 (Laddie J); Reinforced Plastics Applications (Swansea) Ltd v Swansea Plastics & Engineering Co Ltd [1979] FSR 182 at 182 (Whitford J); and Pioneer Concrete Services Ltd v Galli [1985] VR 675 at 711 (Crockett, Murphy and Ormiston JJ) (“What is important … is that the Court should be able both to define the precise nature of the confidential information which it is sought to protect and to identify with some particularity the disclosure or use which is alleged against the defendants”).

72    The reasons for that insistence include avoiding the bringing of actions that are merely speculative in character and preventing a former employer from using a generally worded claim to stifle the right of an employee to use his or her accumulated knowledge, skill and experience (or know-how) from which he or she cannot be divorced. As Harper J said in Liberty Financial Pty Ltd v Scott (No 4) (2005) 11 VR 629 at 633–634 [12]–[13]:

In many instances (especially in cases such as the present) the line dividing specialised, protectable knowledge and information on the one hand from accumulated know-how on the other would be difficult to draw. The task is nevertheless central. The court must, if disputes of the kind illustrated by the present litigation are to be resolved in accordance with law, distinguish between the two categories of knowledge. For where, as here, the net is cast widely across a commercial endeavour, both will necessarily be present. In this sense, as Mr Macaw for the second defendant submitted, it is wrong and therefore impermissible for plaintiffs in the position of Liberty and Mr Ma to allege that all the information which might bear upon Liberty’s commercial activities is capable of being protected. At least some of it cannot and will not be protected because it forms part of the accumulated knowledge, skill and experience of the employee and is therefore information from which the employee cannot be divorced. This being so, the court must determine where the line is to be drawn. But that task will in most instances be impossible unless there is to be found set out in the pleadings the actual information said to have been misused. A mere description of the information will not generally be sufficient.

There is another, albeit related, reason why particularity in pleading is, in this area, especially important. An allegation that a former employee has stolen confidential information belonging to his or her former employer is of the utmost seriousness (and in considering an allegation of this kind a civil court must bear in mind the principles enunciated in Briginshaw v Briginshaw [(1938) 60 CLR 336]). It ought not be made on behalf of a client unless the legal practitioner is satisfied that there is an adequate foundation for it. Of course, in many cases in the past the charge has ultimately been proved. In others, on the other hand, the former employees have in truth done no more than that which is positively encouraged by the law as being for the general good — they have exploited their stock of talent and experience. As often when crucial facts are hotly in dispute, the decision whether the ex-employee has or has not wrongfully breached a confidence may be very difficult to reach. If a court is to be placed in a position from which the distinction in a particular case can be properly drawn between information the confidentiality of which can be protected and information the confidentiality of which cannot, the pleadings must identify the information in question. And that identification must be in more than general terms. In at least the great majority of cases the pleading must disclose and identify the information itself. That is, the pleading must employ words that are more than merely descriptive. Those words must set out the actual information that is said to be protected, or at least point to a repository of it where it is set out with that degree of particularity.

(Footnotes omitted.)

73    But in any event, both Mr Wollermann and Mr Lyle denied having used Fortrend-sourced StoneX account information and Fortrend Securities brokerage account statements. They swore, and I accept, that in each case they obtained that information from the clients themselves.

74    Accepting that the rest of the alleged confidential information was identified with sufficient specificity, the questions that then arise are (i) whether Messrs Wollermann and Lyle retained any of it when they left employment and used it to contact clients and facilitate their transfer to Shaw, and (ii) if so, whether that information was truly confidential (such that it is to be protected as confidential in equity) or whether it is rather part of their accumulated knowledge, skill and experience from which they cannot be divorced.

75    Courts have identified various factors which may assist in assessing whether information ought to be protected as confidential in equity. See Del Casale v Artedomus (Aust) Pty Ltd [2007] NSWCA 172 at 160 [40] (Hodgson JA) and Wright v Gasweld Pty Ltd (1991) 39 IR 256 at 271 (Kirby P). The factors include relevantly:

(a)    the extent to which the information is known outside the business;

(b)    the extent of measures taken to guard the secrecy of the information;

(c)    the ease or difficulty with which the information could be properly acquired or duplicated by others;

(d)    whether it was plainly made known to the employee that the material was regarded by the employer as confidential;

(e)    the fact that the usages and practices of the industry support the assertions of confidentiality; and

(f)    the fact that the employee has been permitted to share the information only by reason of his or her seniority or high responsibility.

76    As McDougall J said in Manildra Laboratories Pty Ltd v Campbell [2009] NSWSC 987 at [84]:

… Where confidential information acquired by an employee during or in the course of his or her employment becomes part of the general know-how of the employee, or cannot realistically be separated from that know-how, equity will not protect it unless it is of the nature of a secret formula or process, or, more generally, something that is unlikely to be ascertained by independent inquiry or experience.

77    As to the first question, Mr Wollermann and Mr Lyle agreed that when they left employment at Fortrend they retained and used the following information to contact clients and facilitate their transfer to Shaw:

(a)    the identity of their clients (including as described in the ranking list);

(b)    company names, director and beneficiary details, trust names and superannuation fund names;

(c)    the asset value ranking of their clients (but not the asset values themselves);

(d)    the companies that their clients were invested in; and

(e)    the fact that their clients were investing in companies listed on stock exchanges in the United States.

78    Mr Wollermann and Mr Lyle say that these species of information are not protected by law or equity because such information forms part of their accumulated knowledge or know-how and was readily ascertainable from the clients themselves or the ACATS transfer forms.

79    As Dodds-Streeton J said in IF Asia Pacific Pty Ltd v Galbally [2003] VSC 192; (2003) 59 IPR 43 at [227]:

Applying the [relevant] principles to the plaintiff’s claims to confidentiality in the present case, I do not consider that the information included in the Tracker and Knowledge Bank data bases constituted a trade secret. Access to the data bases was not confined to senior employees. There is no evidence that it was “jealously guarded” or not readily made available to all employees. While effort was expended in compiling the data bases, there is no evidence that significant skill would be required to replicate them. In all the circumstances, I consider that, at its highest, the Tracker data base, as a compendium, falls within the second category of Goulding J’s classification. Constituents taken in isolation, such as names or addresses remembered by the employee, are not, in my opinion, protected following termination of employment, whether pursuant to general law or an express covenant.

80    Here, as the respondents submitted:

(1)    the contact details of clients formed part of the general know-how of Mr Wollermann and Mr Lyle, and they were stored by them in an ordinary manner on their mobile phones;

(2)    the contact details constituted information that was known outside of Fortrend and could easily and properly have been acquired by the respondents;

(3)    Mr Wollermann and Mr Lyle could have used their general know-how to contact the clients through other means, including social media, addresses publicly available through ASIC and contact details on websites associated with the clients;

(4)    it was not plainly made known to Mr Wollermann and Mr Lyle that the names and contact details of the clients were regarded by Fortrend as confidential;

(5)    there was no evidence of any measures in place to guard within Fortrend the names and contact details of the clients as confidential; and

(6)    Fortrend did not share the contact details of clients with Mr Wollermann and Mr Lyle only by reason of their seniority or high responsibility.

81    As I have said earlier, Mr Wollermann and Mr Lyle also admit to using another species of information which might be claimed to fall within [11] and [11A] of the FASOC, viz the ranking list, which as I have explained contained a list of abbreviated client names ordered by portfolio size but not the actual asset values. That is not the same thing as the pleaded information. In contrast to the categories of information contained in [11], the ranking list did not detail the makeup of their clients’ stock trading portfolios or their clients’ trading or investment histories. Similarly, and in contrast to the categories contained in [11A], it did not disclose “the size of their [clients’] investments”. The ranking list therefore falls outside the pleaded case. In any event, such information could have been readily ascertained from the clients or the ACATS transfer forms.

82    In five of the 63 cases relied on in the applicants’ schedule dated 14 October 2024, it is asserted that the confidential information included the client’s tax identification number. But that was not pleaded and there is not a shred of evidence to suggest that that information was taken from Fortrend’s documents.

INTERLOCUTORY HEARING BEFORE ANDERSON J

83    I should at this point deal with one other issue upon which the applicants placed some considerable reliance. It concerns an admission made by senior counsel then acting for the respondents at an interlocutory hearing before Anderson J on 1 February 2023.

84    On that date, Mr R Dalton KC appeared for, among others, Shaw, Mr Wollerman and Mr Lyle.

85    The following exchange occurred between Mr Dalton and his Honour (see transcript at pages 51–52):

HIS HONOUR: … So [Mr Wollermann] says [at paragraph 75 of his affidavit] he viewed, but did not download, a report on the StoneX system.

MR DALTON: Correct.

HIS HONOUR: So he has accessed the confidential information. He has used that confidential information to produce a list which had the abbreviated client names together with the asset value ranking, not the asset values themselves. The handwritten numbers on some of the ACATS documentation is referable to the ranking in this list. He no longer has the list in his possession, custody or control “as I destroyed it in or about 26 December 2022”:

Lyle and I oversaw the completion of the ACATS documents in respect of the clients that transferred to Shaw. Together with Shaw’s administrative staff, we used the handwritten numbers to prioritise the processing of the ACATS.

MR DALTON: Yes, and - - -

HIS HONOUR: So why - - -

MR DALTON: And for completeness, your Honour - - -

HIS HONOUR: Isn’t that an admission of use of confidential information of the applicant?

MR DALTON: It is.

HIS HONOUR: It is, isn’t it?

MR DALTON: Yes, your Honour, it is. And just for completeness, paragraph 97 of Mr Lyle’s affidavit.

HIS HONOUR: Yes. Let’s – Mr Associate, can you bring up Mr Lyle’s affidavit, paragraph 97. Thank you. Paragraph 97 doesn’t travel beyond what Mr Wollermann says.

MR DALTON: No. I Just [sic] wanted to make sure that you had them both.

HIS HONOUR: Yes. Thank you.

MR DALTON: So, your Honour, the concession – and it’s reflected in our written submissions – is that there’s evidence there that supports a prima facie case that Wollermann, Lyle breached their contractual obligation of confidence by making use of a list ranking clients on the basis of the size of their portfolio, such list having earlier been prepared by Wollermann having reviewed the StoneX database.

86    In the applicants’ written closing submissions, the following paragraph appears (at [9]):

The Court has declined to rule on the admissions already made by the Respondents in the Interlocutory Proceeding and the trial proceeded on the basis that this Court was not bound by the admissions made nor the findings of Anderson J in his reasons.

(Footnotes omitted.)

87    Later in those submissions, this submission was made (at [248]–[249]):

The Court’s task in finding the scope and content of the confidential information and its use ought to be reduced by the previous admissions which have already been made (the Interlocutory Proceedings, the Interlocutory Judgment) in hearing before … Anderson J.

The Applicants have squarely raised the admissions, and what ought to be made of them in this Court, on the first day of trial. The Applicants again insist that the facts admitted on that occasion bind this Court.

(Footnotes omitted.)

88    After citing s 87(1)(a) of the Evidence Act 1995 (Cth) (Evidence Act), the submission continued (at [251] and following):

The Court has not been minded to rule on the scope of those admissions and their import to the issues now before the Court for final determination, but took judicial notice of the reasons of Anderson J as well as taking in the transcript of the proceedings before him in which the admissions were made.

Those admissions were significantly more contemporaneous with the events of breach that are the subject of the proceeding.

The Respondents have sought to try to direct the Court away from those admissions, or to re-cast them. The Court should not permit this to take place. There is no legal or factual reason for the Court to now fully re-open the question of facts and allegations which were admitted.

The Respondents have not sought leave to withdraw the admissions. …

The information appropriated by Mr Wollermann and Mr Lyle, the confidentiality of that information and its use were admitted before Anderson J by Mr Dalton K.C on 1 February 2023.

(Footnotes omitted.)

89    The relevant part of the transcript relied on is set out at paragraph 85 of these reasons.

90    There is nothing in this point. As the respondents submitted, the concession was only in relation to the question of whether there was a prima facie case that Mr Wollermann and Mr Lyle breached the confidentiality term of their respective employment contracts. Moreover, the concession was only that the list contained the information set out in [75] of Mr Wollermann’s affidavit dated 30 January 2023, which is set out in full at paragraph 17 of these reasons.

DESTRUCTION OF THE RANKING LIST

91    As to the destruction of the ranking list, the applicants pleaded at [58E] of the FASOC that “[i]t is, in all the circumstances, to be properly inferred that Wollermann and Lyle destroyed the [ranking] list so as to deny Fortrend relevant evidence of their wrongful provision of [it] to Shaw”. In [257] of their written closing submissions, the applicants contended that “the Respondents as a whole ought to be precluded from their denials of breach at paragraphs 11(e) and 11(f) of their Defences by reason of abuse of process due to the destruction of documents”. Those sub-paragraphs say that the pleaded confidential information is not confidential. The applicants asserted (at [258]) that:

Those documents would otherwise, had they not been destroyed, be discoverable, and are directly relevant to the questions of:

i.    any more precise identification of the confidential information accessed and recorded by Mr Lyle and Wollermnn [sic] and transmitted to Shaw;

ii.    the use to which the confidential information was put by the First and Second Respondents; and

iii.    The transmission of that information to others.

92    It is next asserted that “[t]he evidence of Mr Wollermann’s deliberate course of conduct in destroying relevant information (in concert with Mr Lyle) is made out” (at [256]) and that “[i]t is clear from the records provided by Seyfarth Shaw that the Respondents contemplated legal proceedings at the time that Mr Wollermann destroyed his list, and that devices were ‘wiped’ or destroyed by Mr Lyle and Mr Wollermann” (at [259]).

93    That submission was made without reference to any evidence to justify it. The actual evidence is to the contrary.

94    First, Mr Wollermann was aware that Fortrend’s then-solicitors had demanded that Mr Lyle destroy any Fortrend confidential information in his possession.

95    The letter of demand sent to Mr Lyle was dated 12 December 2022, and relevantly provided:

We are instructed to request that by 4pm on 15 December 2022:

•    you return to Fortrend your mobile telephone and laptop (with all emails and text messages intact and not deleted and password details), your building pass and key and any other Fortrend material in your possession including but not limited to hard and soft copies of all files that include Fortrend client information;

•    you delete from your personal email account all Fortrend emails that have been forwarded to your personal email account such as the letter addressed to Fortrend about credit towards your FASEA qualifications that we are instructed you forwarded to your private email account;

•    you delete from any other computer or cloud storage any Fortrend material in your possession; and

•    you provide written confirmation that you have returned all Fortrend property in your possession to Fortrend and have not retained any Fortrend property.

96    Mr Wollermann’s evidence was that because he knew that Mr Lyle had been instructed to dispose of any confidential information in his possession, he “thought it was a reasonable approach” to destroy the ranking list. See transcript at page 880. I asked him about the issue as follows (see transcript at pages 880–881):

HIS HONOUR: So you say, Mr Wollermann, that Mr Lyle told you about the letter he received, did he?---Yes.

When I said the letter he received, the letter from Corrs that’s dated 12 December?---Yes. Yes, your Honour.

Did he tell you what it said, the letter?---Insofar as it instructed him to dispose or delete or words to that effect of any information that he had.

Yes, all right.

97    Secondly, s 48(4)(b) of the Evidence Act provides that a party may adduce evidence of the contents of a document in question that is not available to the party by adducing, from a witness, evidence of the contents of the document in question. (A document is taken to be unavailable if it was destroyed by the party, or by a person on behalf of the party, otherwise than in bad faith. See Evidence Act, Clause 5 of Part 2 of the Dictionary.) Consistently with that provision, Mr Wollermann gave evidence about the contents of the ranking list at [53] of his main affidavit (set out at paragraph 63 of these reasons) and in cross-examination, including in the following exchange with me (see transcript at pages 790–791):

HIS HONOUR: But just so I understand, this list that you destroyed on Boxing Day: you say, do you, that it did not contain the StoneX numbers of the names of the customers that you had written on the list?---Correct.

But it had what other information on it, their names and addresses?---No. It had a – the short name that I described. So if – if – if a client had a super fund, the client were Mr and Mrs Smith, it would have “Smith SF” as a shorthand reference – short name, and it would have the – the contact details in terms of who Steve and I would know to contact in relation to that. So it might be Mrs and Mrs Smith – Mr and Mrs Smith, in that instance, or, yes, for corporate structures and family offices and things of that nature, it might not – the contact person might - - -

Be different?---Might be different, correct.

And were there phone numbers on the list?---No.

…

HIS HONOUR: And how many names were on the list?---200.

So other than the name – the shorthand name of the client, did you say Smith SF or Smith?---Yes.

And some contact name – and did you say number or not, telephone number or not telephone number? --- No.

What other information was given with respect to each of the shorthand names? ---Nothing.

98    I accept that evidence.

99    The applicants’ case involves the (unstated) proposition that Mr Wollermann acted in an attempt to pervert the course of justice. I do not accept that he so acted.

100    Further, as the respondents submitted, apart from asset values, it was not put to Mr Wollermann that the ranking list contained any of the other information pleaded in [11] and [11A] of the FASOC.

101    I therefore reject the applicants’ assertion (because it is really no more than that) that it is to be inferred that Messrs Wollermann and Lyle destroyed the ranking list so as to deny Fortrend relevant evidence of their wrongful provision of it to Shaw.

SHAW

102    Having determined that Mr Lyle and Mr Wollermann did not use confidential information of Fortrend in breach of their duties or in breach of contract, the case against Shaw that it is liable as an accessory or was knowingly involved in the breach by Mr Lyle and Mr Wollermann of their fiduciary duties falls away. (Tellingly, although the applicants’ written closing submissions briefly address some evidence upon which they apparently rely to address the issue of breach by Mr Lyle and Mr Wollermann, they do not address the question of the breaches alleged in the FASOC in relation to Shaw. See [115]–[128] under the heading “Breach”.)

DAMAGES

103    Because the applicants failed to establish that either Mr Wollermann or Mr Lyle misused confidential information, the claim for damages founded on the premise that they did also falls away. The question of loss or damage does not arise.

OTHER ISSUES

104    A considerable part of the hearing was occupied with issues that need not be resolved.

105    One such issue was the respondents’ claim that the applicants (through Mr Forster) “engaged in a coordinated course of conduct designed to demean and embarrass Mr Wollermann, Mr Lyle and Shaw” and that I should find that the applicants’ “vindictive campaign was designed to destroy any prospect the transferring clients would stay with the Respondents, even if there was no prospect they would return to the Applicants”. See respondents’ written closing submissions at [260]. It was contended that even if the applicants would otherwise have been entitled to equitable relief, it should be declined as a matter of discretion due to their “lack of clean hands”. See respondents’ written closing submissions at [255]–[264]. Mr Forster’s conduct, which was the conduct of the applicants, included (but was not limited to):

(a)    making various allegations that Mr Wollermann and Mr Lyle have engaged in criminal activity (including by circulating a letter from their former solicitors to that effect) and would go to jail;

(b)    falsely telling clients that Mr Lyle was unable to perform work duties at FSA because he had had a mental breakdown;

(c)    using the FSA email addresses and phone numbers of Mr Wollermann and Mr Lyle after their employment with FSA had ceased, including to obtain details of paperwork provided by Shaw to transferring clients;

(d)    making social media posts about Shaw which were intended to bring Shaw into disrepute or otherwise be demeaning to Shaw. This included one post in which Mr Forster posted a photo of Arlington National Cemetery in Virginia, USA on an International Women’s Day post by David Louie, the CEO and Head of North Asia for EFG International, a global financial group that wholly owns Shaw; and

(e)    making a false report to a US regulator that Mr Lyle had left FSA with customer information and violated his non-compete agreement by soliciting FSA’s customers.

106    At one point in July 2023, the respondents were compelled to approach me as the docket judge to make orders restraining Mr Forster’s behaviour. In the events that occurred, and to avoid a contested hearing, the applicants gave the following undertakings:

… the Applicants (whether by themselves, their officers (including Mr Joseph Burke Forster) employees or otherwise howsoever) will not make any statement or representation in any manner whatsoever that the Respondents (or any of them):

(a)    have engaged in criminal conduct;

(b)    are subject to any criminal charges or proceedings;

(c)    have engaged in conduct that has resulted in them being banned from providing financial advice;

(d)    are subject to any application to be punished for contempt of court, unless such an application has been filed with the Court,

unless any such statement or representation is made by the Applicants:

(e)    in communications with their lawyers; or

(f)    to employees or officers of the Applicants for the purposes of this proceeding, …

107    Despite giving those undertakings, Mr Forster continued to engage in improper conduct, culminating in a further application by the respondents and orders, accompanied by a penal notice in the usual form, which I made on 8 December 2023 as follows:

1.    Subject to order 2, the Applicants and any officer or employee of the Applicants (including Mr Joseph Burke Forster) until the hearing and determination of this proceeding or further order be restrained from:

a.    communicating with any former client of the Applicants (or either of them) who has transferred their business to Shaw and Partners Limited (Former Client) in relation to this proceeding in a manner that:

i.    is calculated to intimidate or otherwise bring improper pressure to bear on the Respondents (or any of them) by making statements which are:

A.    derogatory or demeaning of the Respondents (or any of them);

B.    pejorative as to the Respondents’ position or prospects of success in this proceeding.

2.    Nothing in order 1 restrains or otherwise prevents:

a.    the Applicants and any officer or employee of the Applicants (including Mr Joseph Burke Forster) from communicating with a Former Client in relation to matters unrelated to the conduct of this proceeding (including by communicating with Former Clients about the business or services of the Applicants in a way that is not inconsistent with order 1); or

b.    the solicitors or counsel for the Applicants from contacting Former Client with respect to the conduct of the proceeding.

3.    The Applicants pay the Respondents’ costs of the application dated 29 November 2023 on an indemnity basis.

108    Had the applicants’ case not failed for the reasons I have given and the applicants were otherwise entitled to succeed, a strong case was made that they should be denied any relief as a matter of discretion because of Mr Forster’s outrageous conduct, some of which is summarised above.

DISPOSITION

109    The case against each of the respondents will be dismissed. I will hear from the parties about costs.

Associate:

Dated:    21 February 2025