CASE STUDY

In 2015, Claire Mose worked as a luxury fashion designer in a company name Kloe Pty Ltd located in the City of Perth, Western Australia. Claire Mose signed an employment contract and a non-disclosure agreement with Kloe Pty Ltd, and Claire has expressly promised the following provision:

Provision 1: It is agreed that any business opportunity relating to or similar to Kloe's Pty Ltd current or future business opportunity is an opportunity that belongs to Kloe Pty Ltd. It is further agreed that Claire will not directly or indirectly, engage or participate in any business activities similar to Kloe Pty Ltd. This provision will continue to be effective up to 5 years after termination of the employment contract.

In June 2020, Claire terminated her employment contract with Kloe Pty Ltd. On the 31^st of January 2021, being aware of the non-disclosure agreement that she had previously signed with Kloe Pty Ltd, Claire arranged for her sister, Minnie Mose, to incorporate a company named Chance Ltd. Chance Ltd uses a combination of the Replaceable Rules and constitution.

"The provisions of the Corporations Act 2001 (Cth) shall apply to this company except for the following:

Clause 1: The sole object of the company is to design and sell luxury bags.

Clause 2: Daisy Dutch shall be employed as the senior legal consultant until 2025 with remuneration of $50,000 per annum.

Clause 3: Minnie Mose shall be one of the 3 directors for life.

NOTE: A discussion on Contract Law is not required.

Question 1 - 7 Marks

Chance Ltd has become famous and its sales have surpassed Kloe Pty ltd. The director of Kloe Pty Ltd, Mickey, has realised that the design of the bags' of Chance Ltd are very similar to his previous employee Claire Mose's designs. Mickey conducts a company search of Chance Ltd and discovers that the founder of the company is Claire's sister Minnie. Mickey arranges a meeting with Claire and informs her that she has breached their non-disclosure agreement, but Claire claims that it is Minnie her sister, who is in competition with Kloe Pty ltd, not her.

With reference to the relevant sections of the Corporations Act 2001 (Cth) and case law if any, please discuss this scenario using the 4-step process.