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Employment Law – Client Information Posted on Facebook Confidential

Employment Law – Background

The Supreme Court has rejected a mortgage broker’s argument that the client list he took from his old employer and provided to a competitor was no longer confidential because his old employer posted some of their clients names on Facebook.

Employment Law – Facts

In essence:

  • the mortgage broker worked for Home Loan Experts as an independent contractor, however terminated his agreement with them in November 2016
  • he was still bound by restraint clauses which prevented him from distributing Home Loan Experts confidential information for 10 years and a non-solicit provision which forbade him from engaging in similar business activities for 18 months
  • soon after he started working for competitor, RAMS Financial Group Pty Ltd
  • whilst he was allowed to provide services to family and friends, he was not allowed to lure former clients to RAMS or contact them within the 18-month restriction period
  • the broker downloaded a list containing over 100 of Home Loan Expert’s clients’ names and addresses from their system to his computer and provided it to a RAMS receptionist so she could send Christmas cards
  • however he claimed that client list was not confidential as his old employer had publically posted some of their clients’ names of their Facebook Page

Employment Law – Decision

The NSW Supreme Court:

  • rejected the broker’s argument that the list was not confidential because it was posted on Facebook, as nothing but the clients’ names appeared on the posts and the privacy settings of the client  prevented people from accessing information beyond their Facebook name or making contact
  • was satisfied that the client list “have not entered the public domain so as to be stripped of the necessary quality of confidence”
  • found that the broker had breached his non-compete and confidentiality obligations when he approached and accepted approaches from up to nine Home Loan Expert clients’ whilst working for RAMS
  • determined that the sharing of the client list also breached his agreement with Home Loan Experts as it constituted confidential information because it contained “more intimate” details about clients’ assets and liabilities, and thus remained the intellectual property of Home Loan Experts
  • also found that the broker had breached his equitable duty of confidence by using and retaining its client list and accepting clients’ approaches
  • ordered an injunction restraining the broker from continuing to breach his obligations
  • ordered parties to agree on damages and account for the loss of opportunity that resulted from 8 clients switching to RAMS

The decision is available for you to read through the hyperlink:

Dargan Financial Pty Ltd ATF the Dargan Financial Discretionary Trust (trading under “Home Loan Experts”) v Nassif Isaac [2017] NSWSC 1077 (16 August 2017) [...]  READ MORE →

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Employment Law – New Employer Liable in Confidential Information Case

Employment Law – Background

The following is a recent example of where a new employer was stung for the wrongs a new employee committed against their former employer …

Employment Law – The Case

In essence:

  • Lifeplan and Foresters were competitors in the business of funds management and the provision of investment products, principally for the purpose of funeral plans
  • whilst employed by Lifeplan, a manager emailed confidential Lifeplan documents to his personal email address and used these documents to prepare a business plan which he then presented to Foresters with the assistance of another manager
  • at the same time, both managers solicited the business of several funeral companies and service providers in order to secure business for Foresters and themselves
  • the managers used Lifeplan contracts, brochures and other marketing materials to prepare similar documents for themselves, and utilised Lifeplan’s printing company to generate this material
  • Lifeplan commenced proceedings against the managers and Foresters (who by this time employed the managers)

Employment Law – The Decision

The court on appeal held:

  • there could be “no doubt that the board of Foresters was actually aware, had actual knowledge, of the taking and using in breach of duty of confidential information”
  • the managers, “with the full knowledge of Foresters, dishonestly breached their duty by, amongst other things utilising confidential information to prepare a business plan for the consideration of the board of Foresters”
  • the Board of Foresters actively used the business plan in its decision-making process and, subsequently, to monitor the performance of the joint venture
  • the business plan disclosed “detailed information, some of which expressly and plainly came from Lifeplan’s records… No honest and reasonable person, not shutting his or her eyes to the obvious, could conclude other than that the document was based on Lifeplan’s confidential information brought by current employees of Lifeplan”

Employment Law – The Sting

Foresters’ knowledge and even participation in the manager’s breaches (contrary to the manager’s statutory and fiduciary duties under the Corporations Act), rendered it accessorily liable for the breaches pursuant to section 79 of that legislation. [...]  READ MORE →

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Misuse of Confidential Information – Evidence relied upon after the fact

In the recent decision of Finemore v CMIB Insurance Services Pty Limited [2016] FWC 8517, an employer successfully relied upon evidence of misuse of its confidential information discovered following the termination of employment, in order to defend itself from an unfair dismissal claim.

The Facts

The Applicant had been employed by the Respondent (a small business employer) for approximately six years, most recently in the role of Account Executive. The Applicant was employed under a written employment contract containing several post-employment obligations including an obligation to preserve the Respondent’s confidential information [...]  READ MORE →