Federal Court of Australia

De Kretser Pty Ltd v De Kretser [2026] FCA 779

ORDERS

THE COURT ORDERS THAT:

1.    The applicants’ application for an interlocutory injunction in terms of paragraph 7 of the amended originating application (as varied by minutes) is dismissed.

2.    The matter proceed in accordance with the Federal Court Rules 2011 (Cth).

3.    On or before 26 June 2026 the applicants are to file and serve a statement of claim.

4.    On or before 24 July 2026 the respondents are to file and serve:

(a)    a defence to the statement of claim; and

(b)    if so advised, a cross-claim (and for that purpose the respondents have leave to join any additional parties as cross-respondents).

5.    On or before 14 August 2026 the respondents are to file and serve:

(a)    if so advised, a reply to the defence referred to in sub-paragraph 4(a); and

(b)    a defence to the cross-claim (if any).

6.    On or before 28 August 2026, the cross-claimant(s) (if any) are to file and serve a reply to the defence referred to in sub-paragraph 5(b).

7.    Liberty to apply.

8.    There be a case management hearing on a date to be fixed by the docket Judge.

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

REASONS FOR JUDGMENT

CHARLESWORTH J:

1    The first applicant, De Kretser Pty Ltd (DK P/L) owns and operates a business providing accountancy services. It undertakes those activities as the trustee of a trust, although its capacity as trustee is not presently disclosed on the originating application.

2    The second applicant, Dulcime Pty Ltd is the employer of personnel who work in the business. Submissions in this matter have proceeded on the assumption that DK P/L and Dulcime may be regarded as a corporate group and I proceed on that basis.

3    When this action was first commenced, DK P/L was the sole applicant. It presently has as its directors Patrick De Kretser and his wife Suzie De Kretser. To avoid confusion, and meaning no disrespect, I will refer to them by their first names.

4    In his affidavits Patrick described the accountancy practice operated by DK P/L as a “Firm” and himself as a “Principal” of that “Firm” although he does not expressly allege the existence of a partnership.

5    Until 20 March 2023, Patrick and Suzie’s daughter, Atisa De Kretser worked in the business in a senior role as an accountant serving a large proportion of clients. Atisa was also referred to as a “Principal”. Argument on the present application proceeded on the basis that Atisa worked for DK P/L as an employee of Dulcime, although there is no written contract between her and Dulcime in existence and the Court heard no evidence as to how the employment contract was otherwise formed. Atisa’s involvement in the business first commenced in 2007, prior to its acquisition by DK P/L in 2011. Upon the incorporation of DK P/L she was a director and shareholder, as well as an appointor of the associated trust.

6    The second respondent, De Kretser Accountants Pty Ltd (DKA P/L), is a company incorporated by Atisa in November 2025. It has Atisa as its sole director and shareholder. DKA P/L presently operates an accountancy business in competition with DK P/L.

7    The applicants alleged that prior to the cessation of her employment with DK P/L, Atisa downloaded from its servers large quantities of information, including client files, software and business records (including employment records). They alleged that Atisa has used and is continuing to use that information to solicit the custom of the clients of DK P/L and to provide accountancy services to them in direct competition with DK P/L. They allege that by that conduct, Atisa has contravened ss 180, 181, 182 and 183 of the Corporations Act 2001 (Cth) and that she is in breach of fiduciary duties owed to them. DKA P/L is alleged to have been knowingly involved in the statutory contraventions, and otherwise to have knowingly assisted Atisa in the alleged breach of fiduciary duties.

8    The final relief claimed on the originating application (as first filed) is as follows:

1.     The Applicant claims:

(a)     a declaration pursuant to section 1317E of the Corporations Act 2001 (Cth) (the Act) that the First Respondent breached ss 180, 181, 182 and 183 of the Act;

(b)     pursuant to s 1317H of the Act an order that the First Respondent compensate the Applicant for the breaches;

(c)     a declaration that the First Respondent breached her contract of employment with the Applicant;

(d)     a declaration that the First Respondent breached fiduciary duties she owed to the Applicant;

(e)     a declaration that the Second Respondent knowingly assisted the breach of fiduciary duty;

(f)     orders against the Respondents for damages or equitable compensation.

2.     Within 14 days the Respondents take all steps necessary to delete any information downloaded from the Applicants’ [sic] computer server.

3.     Interest pursuant to statute.

4.     Costs.

5.     Such further or other orders as the Court considers just.

9    By an ex parte application, DK P/L sought and obtained an order pursuant to Division 7.5 of the Federal Court Rules 2011 (Cth) to seize and examine electronic devices in Atisa’s possession and to require her to disclose ancillary matters concerning her storage of electronic data (Search Order). The Search Order was executed on 15 May 2026.

10    By paragraph 7 of the originating application (again, as originally filed) DK P/L sought an interlocutory injunction in the following terms:

7.     Until the hearing and determination of the proceeding or further order an order restraining the Respondents by themselves, their employees or agents or howsoever from:

(a)     accessing or dealing with any information downloaded from the First Applicants’ computer server;

(b)     providing accounting services for otherwise dealing with clients of the First Applicant making use of information concerning which she acquired whilst employed by the First and or Second Applicants and as a director of the First Applicant.

11    That application is now before me.

12    In the course of the hearing, I granted DK P/L leave to file an amended originating application and to join Dulcime as the second applicant. On the amended originating application the claim for interlocutory injunctive relief is not substantively changed, although there is now a claim for a final injunction in substantively the same terms.

13    The applicants acknowledge some problems with the terms of the interlocutory injunction sought on the amended originating application and instead press for relief in terms of a minute of order, relevantly as follows:

1.     Until the hearing and determination of the proceeding or further order an order restraining the Respondents by themselves, their employees or agents or howsoever from:

(a)     accessing or dealing with any information downloaded from the Applicants’ computer server;

(b)    using, copying, forwarding, distributing, disclosing, exploiting or dealing with the Applicants’ confidential information listed in Annexure A;

(c)     providing accounting services for [sic, or] otherwise dealing with clients of the Applicants making use of the Applicants’ confidential information listed in Annexure A.

…

14    As can be seen, the proposed restraint in sub-paragraph 1(a) extends to all information “downloaded from the Applicants’ computer server” whether confidential in nature or not. I will refer to that cohort of information as the Downloaded Information. It may also be observed that the proposed restraints in sub-paragraphs 1(b) and 1(c) extend to all “confidential information” described in Annexure A, irrespective of whether the information also meets the description in sub-paragraph 1(a). Annexure A contains a definition of the phrase “confidential information” by reference to a list of document categories. I will refer to that as the Claimed Confidential Information.

15    Broadly summarised, the Claimed Confidential Information includes all documents (whether in hard or electronic form) that are “not lawfully in the public domain” and which meet certain descriptions. Some of the descriptions capture records relating to day-to-day conduct and governance of the applicants’ business and their financial affairs, including lists of actual and potential clients. Other descriptions capture information that is particular to the applicants’ clients, including:

… clients’ historical and current;

a)     contact details and information;

b)     income tax returns, financial statements and depreciation schedules;

c)     detailed working papers;

d)     correspondence between the clients, ATO and ASIC;

e)     ASIC Annual Returns;

f)     Corporate and Trust Registers;

g)     Trust Deeds including any amendments; and

h)     SMSF Deeds including amendments;

16    The applicants acknowledge that some of the documents meeting that description are likely to be the property of DK P/L’s clients, although their right to possess them may be subject to a lien relating the payment of fees. There is more to be said on that topic below.

17    The applicants also acknowledge that the wording of the injunction sought may be too broad because it does not sufficiently delineate between information said to have been unlawfully taken from DK P/L’s database or server and information meeting the same descriptions that has been lawfully sourced from elsewhere. That reinforces the need to focus on the particular causes of action pleaded to identify the scope of injunctive relief that might properly be granted, assuming that the criteria for an injunction were otherwise made out.

PRINCIPLES

18    In Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57, Gleeson CJ and Crennan J said (at [19]):

… in all applications for an interlocutory injunction, a court will ask whether the plaintiff has shown that there is a serious question to be tried as to the plaintiff’s entitlement to relief, has shown that the plaintiff is likely to suffer injury for which damages will not be an adequate remedy, and has shown that the balance of convenience favours the granting of an injunction. These are the organising principles, to be applied having regard to the nature and circumstances of the case, under which issues of justice and convenience are addressed. …

19    Establishing that there is a serious issue to be tried sufficient for the grant of injunctive relief is not particularly burdensome. As Weinberg J said in Mobileworld Operating Pty Ltd v Telstra Corporation Ltd [2005] FCA 1365 (at [23]):

Sometimes, on an application for interlocutory relief, a court is sufficiently able, on the evidence before it, to reach a conclusion as to particular facts or matters in dispute. However, it must be remembered that any such conclusion will be provisional, and by no means necessarily the same as that which is subsequently reached at the final hearing. The degree to which a court is prepared to investigate disputes of fact depends on their difficulty and on the other circumstances in question, and particularly on the extent of urgency or prospective hardship involved: ICF Spry, The Principles of Equitable Remedies (6th ed, 2001) (‘Spry’) at 466.

20    With respect to the balance of convenience and the justice of the case, the Court must assess and compare the prejudice likely to be suffered by each party if an injunction is granted with that which is likely to be suffered if one is not granted: Lucisano v Westpac Banking Corporation [2015] FCA 243 at [7] (Gordon J).

21    In O’Neill, Gummow and Hayne JJ said (at [65]) that an applicant for an interlocutory injunction must show a “sufficient likelihood” of success to justify the preservation of the status quo for the duration of the restraint. The sufficiency of the likelihood depends upon the nature of the rights the applicant asserts and the consequences that are likely to flow from the order: see Beecham Group Limited v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at 622 (Kitto, Taylor, Menzies and Owen JJ); Samsung Electronics Company Ltd v Apple Inc (2011) 217 FCR 238 at [59] (Dowsett, Foster and Yates JJ).

22    The two criteria of “serious question to be tried” and “balance of convenience” are therefore interconnected, and the extent to which it is appropriate to examine the merits of an applicant’s claim for relief will always depend on the circumstances of the case: Australian Broadcasting Corporation v Lenah Game Meats Pty Limited (2001) 208 CLR 199 at [18] (Gleeson CJ). Accordingly, a more doubtful claim which nevertheless raises “a serious question to be tried” may still attract interlocutory relief if there is a marked balance of convenience in favour of the claim: Mobileworld at [20] (Weinberg J); Tait v PT Ltd [2015] FCA 1015 at [23] (Besanko J). Further, as the Full Court said in Samsung at [62]:

The question of whether damages will be an adequate remedy for the alleged infringement of the plaintiff’s rights will always need to be considered when the Court has an application for interlocutory injunctive relief before it. It may or may not be determinative in any given case. That question involves an assessment by the Court as to whether the plaintiff would, in all material respects, be in as good a position if he were confined to his damages remedy, as he would be in if an injunction were granted (see the discussion of this aspect in Spry, The Principles of Equitable Remedies (8th ed, 2010) at pp 383-389, 397-399 and 457-462).

23    The Full Court went on to say that to elevate “irreparable injury” into a separate and antecedent inquiry in every case would involve too rigid an approach (at [63]).

24    It is otherwise well-established that an injunction may be granted to prevent a person from misusing confidential information to their own commercial advantage so as to illegitimately gain a headstart in competition with their former employer, analogous to relief that might be granted upon proof of patent infringement: Streetworx Pty Ltd v Artcraft Urban Group Pty Ltd (No 2) (2015) 322 ALR 557 at [68] (Beach J); Liberty Financial Pty Ltd v Jugovic [2021] FCA 607.     The same may be said of information falling within the operation of s 183 of the Corporations Act.

25    With respect to the statutory remedies, a final injunction may be granted under s 1324(1) of the Corporations Act to restrain a person who is “proposing to engage” in conduct that would constitute a contravention of (relevantly) the provisions relied upon by the applicants. An interim injunction may be granted under s 1324(4), so as to preserve (or erect) a status quo so lending utility to the final relief. It follows that the enquiry as to whether there is a serious question to be tried on the applicants’ case is one that must focus upon threatened or anticipated ongoing contravening conduct. Evidence of possible past contraventions is of course relevant, but it is not the purpose of the enquiry.

DOWNLOADED INFORMATION

26    On the present application, Atisa has not actively challenged the factual allegation that, at a time prior to ceasing her employment, she downloaded or caused to be downloaded and taken into her possession all of the information contained in DK P/L’s data base. Before the Court are forensic reports evidencing that activity. In addition, a forensic examination of devices seized upon the execution of the Search Order supports a finding that the same information was found to be stored on devices in Atisa’s possession or in accounts within her control. So much does not appear to be disputed by Atisa herself.

27    In the applicants’ affidavits, DK P/L’s database is described as containing materials of the same kind referred to in the proposed injunction, including the Claimed Confidential Information relating to client financial affairs. The database is also said to contain extensive records relating to the conduct of DK P/L’s business, including documents recording its financial transactions and affairs, employment records, company policies and its pro forma documents, engagement letters and correspondence, as well as information relating to the private financial and property affairs of Suzie and Patrick.

28    Atisa deposed that she gave advance written notice of her resignation as an employee and director. In the four week notification period, she worked from home. There is no evidence that she was directed not to service clients during that time, no evidence that she was directed not to tell the clients of her impending departure, and no suggestion that she could lawfully have been given such a direction.

29    Atisa deposed that it was her own practice to store on the database a large amount of material relating to her own private and professional affairs and that this practice was known to Patrick. Her access to that material would be restrained by virtue of paragraph 1(a) of the proposed order.

EVENTS FOLLOWING THE SEARCH ORDER

30    It is to be recalled that the Search Order was executed on 15 May 2026. I accept that is the first day that Atisa became aware of this proceeding. In the days following she did not have access to her electronic devices and attended to compliance with an ancillary order requiring certain disclosures.

31    On 4 June 2026, after the devices were returned, the respondents engaged an independent computer expert, McGrathNicol, to analyse the devices and cloud services and to permanently erase any files identified as “Firm Files”, that phrase not including any personal files belonging to Atisa. On the same day, the respondents’ lawyers wrote to the applicants’ lawyers in the following terms:

We refer to the interlocutory hearing listed for 16 June 2026 in the above matter.

1     In an effort to progress a resolution of the dispute between the parties as swiftly and cost-effectively as possible, and without any admission as to the facts or liability alleged, our clients have engaged an independent forensic computer expert to forensically examine all devices detailed in the Digital Services Forensics Report prepared by the Court Appointed Independent Computer Expert and their cloud-based accounts, and permanently erase any file identified by the independent forensic computer expert as a “Firm File”. That is, any file of the kind described at paragraphs 23 and 24 of the affidavit of Patrick de Kretser sworn 7 May 2026, save for certain records that Atisa is entitled to retain a copy of as a former employee (her employee payslip, timesheet or professional development records) and certain personal records belonging to Atisa and/or her related entities (which are not clients of the De Kretser Chartered Accountants).

2     It is estimated that this process will take several days to complete.

3     At the conclusion of this process, the independent forensic computer expert will provide a report setting out the steps taken to identify and permanently erase any Firm File.

4     That report will be provided to you, along with a sworn affidavit from Atisa deposing that she does not have any Firm File in her possession, custody or control.

5     Once this process is complete, the application for interlocutory relief to restrain our clients from accessing, downloading or using any information will be entirely redundant. There will be no need for a contested hearing on 16 June. Accordingly, along with the affidavit and report described above, we will provide you proposed minutes of consent order to withdraw the application for interlocutory relief, with no order as to costs.

6     If, despite the above, your client proceeds with the interlocutory application, our clients will seek their costs on an indemnity basis.

All our clients’ rights remain reserved, including to rely on this letter in respect of the substantive issues and costs.

32    Atisa deposed that if there were “any De Kretser Firm Files” in her possession she did not “need or want them”. She also deposed to a long history of family relations, alleged unconscionable conduct on the part of the applicants and asserted that certain aspects of her conduct had the applicants’ implied or actual consent.

IS THERE A SERIOUS QUESTION TO BE TRIED?

33    From what has been said so far it will be apparent that Patrick and Suzie have caused the applicant companies to sue their daughter in the context of a broader family dispute. Subject to what is said at the conclusion of these reasons, the familial context is of limited relevance for the purposes of the present interlocutory application, except to the extent that it forms a part of the factual background informing the questions that might ultimately be tried. At the very least it may be anticipated that Atisa may rely on aspects of Patrick’s conduct in support of a defence or cross-action alleging unconscionable conduct, but the precise legal formulation of each party’s case is not yet complete. The parties prefer to proceed on pleadings, but as yet none have been filed.

34    As to the causes of actions themselves, it is alleged that Atisa breached the duty of care and diligence and good faith owed by her as a director of DK P/L and so breached the duties in ss 180 and 181 of the Corporations Act.

35    Section 182 of the Corporations Act imposes upon a director a civil duty not to improperly use her position to gain an advantage for herself or someone else or to cause detriment to the company.

36    Section 183 of the Corporations Act is as follows:

183    Use of information—civil obligations

Use of information—directors, other officers and employees

 (1)     A person who obtains information because they are, or have been, a director or other officer or employee of a corporation must not improperly use the information to:

 (a)     gain an advantage for themselves or someone else; or

 (b)     cause detriment to the corporation.

37    That duty continues after a person ceases to be an employee of a corporation.

38    As presently framed, the causes of action do not allege breach of an equitable obligation of confidence, although it is understood that such a claim is intended and may be incorporated by a later amendment.

39    As to the claim founded in breach of contract, the case is one in which there is no contractual term defining what is or is not confidential and the supporting affidavits on the present application do not detail which of the documents contain information that is otherwise in the public domain. To the extent that there exists an unwritten employment contract, the applicants submit that it is subject to an implied term of fidelity.

40    In accordance with the authorities, the applicants otherwise acknowledge that the terms of employment would not prevent Atisa from, in the closing weeks of her employment, taking limited steps preparatory to competing with DK P/L: see generally National Hearing Centres Pty Ltd v Gupta [2025] VSC 528 at [145]-[149] (Attiwill J) and the cases referred to therein.

41    There is more common ground.

42    Importantly, at least for the purposes of the present application, there appears to be no dispute that Atisa downloaded and kept in her possession copies of documents stored on the DK P/L server, which included the Claimed Confidential Information. In the absence of an express admission, inference may be drawn from Atisa’s conduct in subsequently engaging McGrathNicol to delete all information identified to be on devices delivered up under the Search Order and in corresponding with the applicants’ lawyers in relation to that step.

43    On the submissions before me, the issues to be tried do not include a question of whether Atisa has a lawful right to establish an accounting practice in competition with DK P/L and to solicit the clients of DK P/L in the pursuit of that enterprise. She is not subject to any contractual restraint in that respect and the applicants have confirmed that they do not put their case in that way. Counsel for the applicants did not argue that soliciting the clients of DK P/L after the cessation of the employment relationship in and of itself constitutes a breach of fiduciary or other duty. Rather, the applicants’ arguments proceeded from the premise that Atisa had engaged in activities during the employment going beyond conduct merely preparatory to competition.

44    It is also common ground that in the course of her employment and other relationships with DK P/L, Atisa was responsible for providing accountancy services to a significant number of clients. To date 17 of those clients have chosen to terminate their arrangements with DK P/L and have engaged DKA P/L to act as their new accountant. The Court heard that the accountancy profession has established procedures and standards to facilitate the transfer of the custom of a client from one practitioner to another. That involves the sending of an “Ethical Letter” by which the outgoing accountant is informed of the proposed transfer. Unless there is a lawful basis to stand in the way of the transfer of custom, the outgoing accountant is ethically obliged to facilitate the transfer of documents to the incoming accountant. The obligation to provide documents is subject to any common law or equitable right to exercise a lien, including to secure the payment of any outstanding invoices.

45    It is also common ground that this injunction application is brought at a time when deadlines for compliance with tax laws are looming. I proceed on the basis that disruptions in the provision of accountancy services to the clients at this time might be more harmful than at other times.

46    On the material before me, I am satisfied that there are questions to be tried as to one or more of the causes of action notified on the amended originating application, including but not limited to such questions as:

(1)    whether Atisa acted (as she alleges) with the knowledge and consent of the applicants;

(2)    whether Atisa used the Downloaded Information and if so for what purpose;

(3)    whether the Claimed Confidential Information is confidential in fact, so as to support a finding that its use was improper or in breach of an equitable obligation of confidence;

(4)    whether Atisa obtained and used the Downloaded Information in circumstances giving rise to a breach of fiduciary duty owed to DK P/L or Dulcime (or both), or duties owed to DK P/L under ss 180-182 of the Corporations Act;

(5)    the extent to which any proven contravening conduct occurring prior to 30 January 2026 is not actionable by reason of a Deed of Settlement and Release entered into on that date; and

(6)    whether the applicants or either of them have engaged in conduct that would preclude them from a grant of relief in equity or as a matter of discretion under the Corporations Act.

47    I have concluded that there is a serious question to be tried notwithstanding Atisa’s affidavit evidence to the effect that the clients who are currently being serviced by her (via DKA P/L) actively sought her out following the cessation of her employment with DK P/L and that she did not access or use the Downloaded Information to solicit their custom. That is because I have placed considerable weight on the apparent acceptance by Atisa that the Downloaded Information was in her possession at the time of the Search Order, coupled with the absence of evidence by direct testimony of any arguably lawful basis for downloading and possessing it, other than by reference to the applicants’ conduct.

48    An inference arises that the Downloaded Information was taken because there was a subjective intention to use it to cause detriment to (at least) DK P/L or to benefit the respondents. A potential benefit is the use of the information to commence providing accountancy services in a newly formed business at a faster pace than might otherwise be the case if the respondents were required to await the provision of client documents by the lawful means, whether from the clients themselves or by requesting them from DK P/L via the Ethical Letters.

49    Telling against a finding of improper motive is the respondents’ action in sending the Ethical Letters in order to obtain documents by that means, but all of that is for trial.

50    In the course of submissions, Counsel for the respondents invited an inference that the Downloaded Information was taken because Atisa wanted a convenient means of taking that part of the information properly belonging to her, in circumstances where she needed to move quickly towards the end of the employment relationship. I will not draw that inference. It seems to me that an explanation of that kind is one that ought to be made expressly and unequivocally by the witness and not left to supposition. Again, it is a matter for trial.

51    My conclusion that there is a serious question to be tried relates to contraventions that may already have occurred. Whether or not there is a sufficient evidentiary foundation for a finding that the injunction is appropriate to address any threat of ongoing contravention is a different question.

52    On that topic it is necessary to have regard to Atisa’s conduct in causing the Downloaded Information in her possession to be deleted. On the evidence before me I consider that to be a robust and verifiable process going beyond a mere assurance that the Downloaded Information will not be used in the future. It is directed specifically to the subject matter of the injunction application, being the Downloaded Information identified in the applicants’ own forensic reports. The deletion of that material responds directly to the applicants’ claim for final relief in paragraph 2 of the amended originating application, namely an order that the respondents “take all steps necessary to delete any information downloaded from the Applicants’ computer server”.

53    What then is the risk that the injunction is intended to address?

54    In my view, the risk could only be a risk that Atisa is concealing the retention of the Downloaded Information for later surreptitious access and use. As to the degree of that risk, I consider it to be diminished significantly by the circumstance that the respondents can service the clients by reference to lawfully obtained documents and information, provided that the applicants themselves comply with their own legal obligations to properly respond to the Ethical Letters.

55    In assessing the risk of future contravention, I have also had regard to the absence of direct evidence that the Downloaded Information was in fact accessed and used for the purposes of soliciting clients, and indeed the absence of direct evidence that the clients were actively solicited by the respondents at all. In her affidavit, Atisa has set out (albeit briefly) the circumstances in which each of the “taken” clients actively sought her out, and the respondents’ affidavits contain no direct evidence to the contrary. It has been some months since the cessation of Atisa’s employment and it may fairly be anticipated that by now the clients (or former clients) of DK P/L are aware of her departure.

56    For the respondents it was submitted that the applicants’ conduct has disentitled them from relief on the basis that they do not come to Court with clean hands. Much of that submission was founded on a complex history of fraught family relations. On the material before me I do not consider it necessary to make a substantive finding as to whether or not the respondents have engaged in conduct disentitling them to the grant of an injunction in absolute terms by reference to the broader family dispute. For the most part, the past conduct of the respondents and its legal implications forms a part of the subject matter to be tried.

57    As a discretionary consideration, I do consider it appropriate to have regard to one discrete aspect of the applicants’ conduct relating to their responses to the Ethical Letters and will return to that topic in due course.

WHERE DOES THE BALANCE OF CONVENIENCE LIE?

58    As discussed below, I do not wholly accept all of the parties’ submissions about the prejudice they may suffer if the injunction were to be granted, or not granted as the case may be.

Applicants’ asserted prejudice

59    The applicants allege that the business operated by DK P/L has a value of “$1.8 million plus $500,000 in WIP and debtors”. It appears that the value of $1.8 million is derived from a rule of thumb valuation for accountancy practices ascribing a dollar value to each dollar of gross revenue. The applicants assert that DK P/L generates annual fees of between $1.4 to $1.5 million and achieves yearly earnings before tax of $600,000. They allege that if the injunction is not granted, the respondents’ conduct will significantly erode their client base and may bring about their ruin. The concerns are expressed by Patrick in the following way:

I am concerned that if the applicant does take further clients of the firm that would seriously jeopardise the ongoing viability of the same. Irrevocable damage would be caused.

60    It is alleged that the respondents have “taken over some of the high value clients” and have continued to do so since the execution of the Search Order. They further assert that thus far the respondents have “taken” 16 clients (or groups of clients) and that the fees invoiced to those clients in the previous 12 months were “roughly $227,000”. On that topic, the respondents acknowledged that they are presently servicing 17 former clients of DK P/L. They are listed in Atisa’s affidavit and need not be itemised here.

61    The applicants further alleged that the respondents’ conduct puts the continued employment of their small cohort of employees at peril. The employees include persons whose immigration status depends upon their ongoing employment with DK P/L. It was alleged that those persons stand to lose not only their jobs but their entitlement to remain in Australia.

62    The difficulty with those submissions (and the associated evidence) is that the injunction that is sought would not prevent the respondents from operating an accountancy practice in competition, nor would it prevent the respondents from soliciting any of DK P/L’s remaining clients in the pursuit of that objective. The respondents’ evidence does not discriminate between harm to the business occasioned by the alleged unlawful conduct and harm to the business caused by the commercial circumstance that Atisa (one of two key personnel) has left her employment. On Patrick’s evidence, Atisa serviced about 30% of DK P/L’s clients and her involvement in the business has been long standing.

63    The commercial context is one in which those clients who have become accustomed to Atisa handling their financial affairs may fairly be anticipated to seek her out and to maintain continuity in that relationship. They have every legal right to do so and, as Counsel for the applicants frankly acknowledged, all of DK P/L’s clients may be solicited and serviced by the respondents by lawful means. Accordingly, losses that may be suffered by DK P/L by reason of the loss of clients per se are not to be equated with the losses that may be suffered as a consequence of the alleged contraventions. I therefore place little weight on the evidence alleging the potential for financial catastrophe (including the impact on employees) because those assertions largely mis-apprehend the legal and factual nature of the claims in fact brought in the proceeding and the scope of the proposed injunction.

64    The applicants otherwise submitted that misuse of the Downloaded Information has conferred on the respondents a competitive advantage that they would not otherwise enjoy. That submission is more appropriately aligned with the alleged causes of action and I give it some weight. I accept that in the ordinary course the transition of a client from one accountant to another is a process that is not immediate. Where a competitor has (by unlawful means) obtained an advantage by securing the custom of clients by faster means than could lawfully be achieved, the advantage may give rise to a correlative loss. The loss may include the lost opportunity to take steps to maintain the custom of the client before the departure of the key personnel and before the key personnel have time to lawfully commence a business in competition. Evidence of the applicants in fact taking prophylactic steps is presently absent, but I accept that may also be an issue to be tried and will be relevant to the measure of damages.

65    Whether (and if so when) an outgoing accountant is obliged to cooperate in the transfer of information and documents to the incoming accountant will depend upon whether a request has been made, and whether the outgoing accountant is legally entitled to exercise a lien over the documents. In addition, I accept that there may be classes of documents that need not be transferred into the possession of the client or the incoming accountant. Moreover, whilst an outgoing employee in a practice may lawfully take some limited steps preparatory to competition, those steps do not extend to the taking of information by unlawful means, even if the information might otherwise be obtained by lawful means. These factors operate to decelerate the initial growth of a new business, but they do not prevent it.

66    Accordingly, I accept that there is some risk of future contravention giving rise to the potential for some future loss.

67    The degree of the risk of future contravention is properly measured as very low, given what has been said about the deletion of the Downloaded Information. That is not determinative of the injunction application but it is relevant in the exercise of the Court’s discretion to refuse the relief. I afford it considerable weight.

Respondents’ asserted prejudice

68    To some extent the prejudice asserted by Atisa also mis-apprehended the nature of the injunction sought and its practical and legal implications. To a large extent, the asserted prejudice related to her ability to earn a livelihood as a single mother. However, the injunction would not operate to prevent the respondents from operating an accountancy business in competition with the applicants. Nor would it prevent the respondents from soliciting and then servicing the applicants’ clients. The applicants contended that they would be open to Atisa finding employment as a well-paid partner in an established firm, but that is not to the point. There is nothing unlawful in Atisa operating an accountancy practice, whether through the second respondent or in her own name and right.

69    As the respondents correctly submitted, in the absence of an enforceable contractual or other restraint, a former employee is entitled to use her personal knowledge, professional skill and experience accumulated over the course of her career, including to compete with her former employer (Del Casale v Artedomus (Aust) Pty Ltd (2007) 73 IPR 326) and, as I have said, the second respondent may service clients by reference to documents and information obtained from the clients, and by the Ethical Letters process.

70    The correct question is whether the injunction would prevent the respondents from doing anything that, in the ultimate outcome of the trial, they are found to be lawfully entitled to do. The relevant risk of prejudice is that the respondents may be found at trial to have been lawfully entitled to use the Downloaded Information (or at least those parts of it in fact used) and the Claimed Confidential Information to secure a competitive advantage over the applicants. That entitlement may arise from the conduct alleged against the applicants involving a long and drawn out family dispute in which Atisa asserts rights in the nature of ownership or rights to equitable relief having similar effect.

71    Next, it was submitted that the injunction would interfere with the legitimate interests of third parties, specifically those clients of DK P/L who prefer to engage DKA P/L for their accounting services.

72    Again, the injunction would not prevent those clients from seeking out the services of the respondents. Nor would it prevent those clients from being serviced in the usual way.

73    It was further submitted that the grant of the injunction in and of itself may impact the reputation of the respondents in the conduct of a fledgling business. I accept that is a real risk.

74    The respondents allege that the usual undertaking as to damages offered by the applicants is illusory because of the unavailability of income or assets sufficient to support it. There is considerable force in that submission. It appears from the evidence that one of the two applicants is the owner of real property, however that real property is encumbered by a security interest granted in relation to a loan. The only other asset mentioned is the accountancy business itself. On Patrick’s evidence, that business is facing significant financial pressure because a large portion of its client base is lost or in the process of being lost. The undertaking as to damages will be called upon in a scenario in which the applicants have been unsuccessful in their claims. In that scenario the diminution in value of the applicants’ business will not be a consequence of any wrongdoing by the respondents. I do not accept that the business (the only available unencumbered asset) will have the present value asserted by the applicants. Moreover, the business is not an asset that is easily liquidated and its saleability value is highly doubtful given the importance of Patrick as the remaining key personnel. Accordingly, I am not satisfied that the undertaking as to damages has sufficient and reliable financial support. There is therefore a real risk that its enforcement would be inutile.

Damages are an adequate remedy

75    The claims as presently framed do not include an allegation that the respondents are threatening to disclose information that is truly confidential to the world at large. I do not consider an injunction to be necessary to prevent a disclosure of that kind. I am reinforced in that view by the respondents’ conduct in promptly arranging for the deletion of the Downloaded Information by an expert, and in keeping the applicants apprised of that process.

76    The applicants submitted that an injunction is necessary because their losses would otherwise be too difficult to quantify. With respect to the adequacy of damages in cases involving interlocutory injunctive relief for apprehended breach of a restrictive covenant, in Emeco International Pty Ltd v O’Shea [2012] WASC 282, Edelman J said (at [21]):

The reasons why damages are often inadequate in these cases includes (i) the difficulty of detection of breaches of the obligations; (ii) the difficulty of establishing causation between any loss of business with customers and any actions of the ex-employee; and (iii) the difficulty of the calculation of the quantum of any damage arising from loss of business.

(citations omitted)

77    Those principles are well-established. However, they are not obviously applicable in the present case.

78    Once again, this is not a case in which a respondent party could or should be restrained altogether from competing per se. The quantification of damages is therefore not attended with the kind of difficulties that might arise on a dispute concerning the enforceability of a contractual restraint of trade. Contrary to the respondents’ submissions, the case is not analogous to a patent dispute in which the advantage secured by a breach is notoriously difficult to measure. Here, the parties are aware of the relevant customer base. The source of information used to solicit and service the clients is not a forensically complex question. Indeed, the applicants are already in the process of analysing the material obtained by the Search Order and the expert analysis of that material can be expected to show whether and when the Downloaded Information was accessed. The early reports of that analysis have not disclosed actual access, but they are not yet complete.

79    It has not been shown that there is an arguable case that the potential losses include the collapse of the DK P/L accountancy practice and the Court is hence in no position to speculate on the likely measure of loss. It is sufficient to say that I am not satisfied that the asserted loss is irrevocable or immeasurable.

80    As to past contraventions, the absence of an injunction does not render the losses already suffered any more or less difficult to quantify or recover.

DISCRETIONARY CONSIDERATIONS

81    I refuse to grant the injunction on the basis of the conclusions I have reached thus far.

82    However, for completeness I add three further maters that weigh against the relief sought and that in any event would tip the balance in the respondents’ favour.

83    If an injunction were to be granted, the respondents would remain in litigation with the applicants in the event that the originating application were to be dismissed, for the purposes of calling on the applicants’ undertaking as to damages and proving their own loss. That is a circumstance arising in all cases where an injunction is ordered and the claims sued upon are ultimately unsuccessful. However, on the evidence before me, I consider that the prolongation of the litigation would be uniquely undesirable in the present case. There is evidence that after the litigation was commenced, Atisa requested other family members to assist in resolving the dispute with her parents “outside of the legal process”. That conduct is consistent with a litigant’s obligations under ss 37M and 37N of the Federal Court of Australia Act 1976 (Cth).

84    Patrick’s response to that approach was to describe it as a “pathetic plea” and to state “you need to be made accountable for your actions”. That response gives the Court some pause when it is invited to accept the usual undertaking as to damages as a condition of the injunction. The evidence before me reveals the depth of antagonism affecting the relationship between the parties. If the respondents successfully defend the litigation, they should not be made to remain in a litigious relationship with the applicants for any longer than necessary to deal with the ancillary question of costs. Further legal processes for the enforcement of the undertaking by successful respondents in a case such as the present should be avoided, particularly given my findings that damages are an adequate remedy and the risk of future contravention is low.

85    Second, I have mentioned that (unlike sub-paragraph 1(a)) the relief sought in sub-paragraphs 1(b) and 1(c) of the applicants’ minute of order is cast in terms that are not confined by reference to the source from which the information has been obtained. That creates a situation where information meeting the description in Annexure A may be provided to Atisa by lawful means and yet the injunction would prevent her from using it for the purposes stated in the proposed order. That gives rise to potential difficulties in detecting breach of the order and for its curial enforcement. I do not consider that the Court’s resources should be diverted to allegations of breach of such an order, given the manner in which it is framed. In addition, the relief sought in sub-paragraph 1(a) would prevent Atisa from accessing information copied from the applicants’ server in circumstances in which I am satisfied that there is at least some material among those files that relate to her private and professional affairs. The respondents’ assertion that there were no prohibitions on Atisa storing her private documents in that way was not challenged and I accept it. It is consistent with Patrick and Suzie’s conduct in using the server for the same purpose. On the basis of the materials before me, I find that the applicants have not meaningfully engaged with the respondents with a view to ensuring that Atisa is not prevented from using information of that kind. Whilst it is true that the minute of order could be finessed to address these issues, I consider the applicants have had sufficient time to put forward an order that properly recognises the nuances of the case. Generally speaking, it should not be left to the Court to draft appropriate exceptions and qualifications.

86    As a final discretionary consideration, I have concluded that the applicants have not acted with appropriate diligence in responding to the Ethical Letters. As a consequence of that conduct, I conclude that the orderly and lawful transition of several clients has been disrupted. My findings on that topic are as follows.

87    Having received Ethical Letters in respect of most of the subject clients on 2 April 2026, no responses were given by DK P/L until 15 April 2026. In nearly all cases the response included an assertion that fees were owing by the client and that a lien was exercised until the fees were paid.

88    In the 13 days between the receipt of the Ethical Letters and the responses, the applicants had more than enough time to identify whether there were fees owing by the relevant client on an extant invoice, to identify whether there was any unbilled work in progress and to issue an invoice in respect of any unbilled work.

89    I find that in several instances affecting at least seven clients the assertion that fees were outstanding had no proper foundation. No fees were owing and there was no basis to withhold the transfer of the documents. There is no explanation in the evidence as to how such a fundamental mis-statement could be made in connection with that cohort. A question arises as to whether the assertion of the lien was made deliberately or recklessly, but for present purposes it is not necessary to go so far.

90    In a further instance an Ethical Letter received on 15 April 2026 was met with a response that fees were owing and a lien was exercised. However, an invoice was not raised in respect of the fees owing until 28 May 2026, more than six weeks later. No explanation is given for the failure to promptly invoice the client for outstanding fees upon receipt of the relevant Ethical Letter so as to facilitate the transition of the client to the incoming accountant.

91    In a further instance, a lien was exercised in respect of an amount owing, an amount was paid and the remainder was written off. The documents were not provided for some 18 days after the remaining fees were written off.

92    The applicants’ evidence in relation to the Ethical Letters was otherwise unsatisfactory. I accept that the applicants received Atisa’s affidavit on 12 June 2026 and hence became aware of her assertion that client documents had been withheld on or around that day. Atisa’s own assertion was not entirely correct. However, the applicants had a fair opportunity to prepare evidence in relation to the Ethical Letters and they in fact did so. They ought to have used that occasion to check and correct their records. In earlier affidavits, they had previously sought to rely on the Ethical Letters as proof of wrongdoing on the respondents’ part.

93    The evidence the applicants filed on the topic in advance of the hearing did not in terms deny that the documents had not been provided. The applicants were then granted leave to rely on an additional affidavit prepared during the course of the hearing, the effect of which was that liens had been exercised in most cases due to non-payment. That affidavit also asserted that documents relating to four clients (including “W”) had been provided on 15 April 2026 in response to the Ethical Letters relating to them.

94    In an affidavit filed (with leave) following the hearing, much of the applicants’ evidence asserting non-payment and the provision of documents was said by Patrick to have been given in error.

95    In a good proportion of the cases, the clients’ documents were not provided until the day following the hearing, about two and a half months after the Ethical Letters were received. In the case of the client “W” the affidavit evidence was initially that the client’s documents had been provided on 15 April 2026. The true state of affairs was that on 15 April 2026 the applicants had asserted a lien over the documents. The lien itself was wrongly asserted as no fees were owing by the client as at 15 April 2026. Documents relating to that client were provided to DKA P/L the day after the hearing.

96    I make no finding as to whether the documents recently provided have wholly discharged the applicants’ ethical obligation.

97    It is reasonable to infer that the applicants have not taken care to ensure that they do not interfere with the legal rights of the clients in their orderly transition to the respondents and so have impeded the respondents in providing accountancy services to them. The conduct is particularly concerning in circumstances where the applicants obtained and executed an ex parte search order over a period in which they were wrongly asserting the existence of liens over an important subset of the very documents forming the subject matter of their application. At the time of the execution of the Search Order the applicants did not have a legal entitlement to withhold some of the subject information from the respondents.

98    I consider that state of affairs to be sufficient in and of itself to refuse to grant the injunction. If I am wrong in that conclusion, I would in any event conclude that it weighs heavily in my discretion in the respondents’ favour.

99    There will be an order dismissing the application for an interlocutory injunction in terms of paragraph 7 of the amended originating application, as clarified by the applicants’ minute of order.

100    The parties will be heard as to costs.

Associate:

Dated:    19 June 2026