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Litigation and Dispute Resolution case update: Morgan Stanley breaches confidence, client wins over $1 million

Sep 19, 2014

On 17 September 2014, Kliger Partners won a case in the Supreme Court of Victoria for an investment management firm against Morgan Stanley Australia Limited (Morgan Stanley). The judgment was for over $1 million, excluding costs and interest.

The Court held that the Plaintiff had provided confidential information to Morgan Stanley, which it then used.  The Court accepted that there was a reasonable expectation the Plaintiff would be paid for the confidential information, but Morgan Stanley refused to pay up and denied the information was confidential.  

Justice Vickery, however, disagreed and after holding Morgan Stanley liable for breach of confidence he required it to make restitution by way of a success fee that the Plaintiff established through expert evidence.


Morgan Stanley is the Australian branch of an international investment bank.  The Plaintiff was a real estate investment management firm located in Australia and based in Melbourne.

From April to June 2011, the Plaintiff presented a plan to the Executive Director of Morgan Stanley for the recapitalisation of the Orchard Group and the funds managed by Orchard Group.  The Orchard Group is a large property funds management business that was financially distressed following the Global Financial Crisis.

During these negotiations the Plaintiff proposed terms on which it would be remunerated if the proposed plan was successful, and Morgan Stanley assured the Plaintiff that it would be paid. In November 2011, Morgan Stanley successfully recapitalised Orchard and denied any liability to pay the Plaintiff. Proceedings were promptly issued.

Confidential information

In the judgment, Justice Vickery determined that the cause of action for breach of confidence had been established. He determined that the plan given to Morgan Stanley was “sufficiently developed” and had the necessary quality of confidence. Morgan Stanley should have known that the plan imported an obligation of confidence, and it did not have consent to use the plan without paying the Plaintiff. Morgan Stanley therefore made unauthorised use of the Plaintiff’s confidential information in the recapitalisation of the Orchard Group.


The Court found the principles of quantum meruit had been satisfied and that Morgan Stanley:

  1. Accepted the benefit of the services performed by the Plaintiff;
  2. Realised that the Plaintiff expected to be paid for its services; and that it was
  3. Unjust for Morgan Stanley to accept those services without payment.

Through expert evidence the Plaintiff established that in the investment banking industry it is customary for services to be paid on a success fee, which is calculated on the aggregate purchase for the transaction.

Justice Vickery relied on the Plaintiff’s expert who determined a success fee should be between 0.5% to 1.0%. Using 0.5% of the aggregate purchase price, which was $207.45 million, the Court ordered that Morgan Stanley pay the sum of $1,037,250.00 to the Plaintiff.  Significantly, this award was made without any agreement, and instead the Court based its holding on the principle of restitution which looks at what is fair and reasonable compensation for the services performed, requested and accepted by the recipient, in this case Morgan Stanley.

The firm’s Litigation and Dispute Resolution team regularly conducts trials in the Supreme, Federal, County and Magistrates Courts. While most commercial disputes are settled, sometimes a trial is required and we have the experience, skill and capability to deliver results for our clients.