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Melbourne-based Oakwood Partners has told a court that an ex-director from the firm called their clients offering discounted tax services.
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Judge blocks accountant from poaching former firm’s clients
02 September 2024
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A Victorian accounting firm has won a temporary injunction to prevent an ex-director who set up a rival practice from poaching their clients.
Mount Waverley-based Oakwood Partners told the Federal Court it could face irreparable injury unless a accountant that worked at the firm was barred from soliciting long-term clients offering them cheaper tax services.
In a recent judgment, Federal Court Justice Craig Dowling granted the injunction to “preserve the status quo pending trial”.
At trial, Oakwood will allege that a former senior accountant and director at the firm from 2021–24, abused her position by using confidential information to set up rival practice.
To receive a temporary injunction, Oakwood also had to prove there was a “serious question” to be tried, they were entitled to relief, and the balance of convenience favours the grant of an injunction.
It tendered evidence, the senior accountant gave notice of her resignation on 29 January 2024 and registered her practice on the same day, though her resignation was not effective until 19 February “because there was some deficiency with her first resignation”.
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But between February and April, she allegedly contacted several of Oakwood’s clients, using confidential information such as records of their contact details, business needs and pricing information.
Affidavits showed that she told clients she could prepare tax returns for “half price” and that “she would do a better job” than Oakwood.
Grant Fraser, an Oakwood client, deposed that “[the ex-director] offered to provide him with accounting services at a 20 per cent discount on what Mr Fraser was currently paying for services”.
The ex-director argued that Oakwood’s clients were her personal intellectual property and that without her, the firm “was only a shell”.
She said she “did not acquire the confidential information while she was a director of [Oakwood], instead they say she acquired the information prior to her directorship and while she was employed by a predecessor of Oakwood”.
The reduced rates she offered were also comparable to the fees commonly charged by accounting firms in Melbourne, she said.
In his ruling, Justice Dowling said Oakwood proved there were serious questions that she had breached her statutory, fiduciary, and contractual duties and that her firm, which was also named in the complaint, knowingly assisted and was accessorily liable.
“I am satisfied that there is a serious question that [she] was a director … and placed herself in a position of conflict between interest and duty,” he said.
“I am satisfied that there is a serious question that [she] owed a fiduciary duty to act in the best interests of [Oakwood] and not to promote her own interests or the interests of the firm.
“I am satisfied that there is a serious question that by her communications with clients … she breached that obligation.”
The injunction prohibits her from soliciting or dealing with a list of specified clients and from using or disclosing confidential information obtained during her directorship.
The order also requires her to keep detailed records of all accounting business conducted since 19 February 2024.
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