Australian Careers Institute Pty Ltd v Australian Institute of Fitness Pty Ltd

The appeal in *Australian Careers Institute Pty Ltd v Australian Institute of Fitness Pty Ltd* concerned a dispute between a national company established to promote the interests of shareholders in the fitness training industry and one of its directors. The national company operated on a non-profit basis, with its expenses met by its shareholders, who were businesses operating in different states. The director in question operated a business in Victoria that was promoted by the national company, but he also established and promoted a competing business in Victoria. The national company alleged that the director had breached his fiduciary duties owed to it.

The Court of Appeal was required to determine the scope of the director's fiduciary duties to the national company, and whether the Shareholders Agreement could be taken into account in defining these duties. Additionally, the court had to consider whether the director's company had knowingly participated in the director's breach of fiduciary duties and whether it had received property derived from that breach, specifically in the form of goodwill.

The court found that the director had breached his fiduciary duties. It reasoned that the Shareholders Agreement was relevant in defining the scope of those duties, particularly in light of the non-profit nature of the national company and the mutual obligations of the shareholders. The court also held the director's company liable for knowingly assisting in the breach and for receiving profits derived from that breach. The appeal was allowed in part, with declarations and orders amended to reflect the findings of knowing assistance and entitlement to an account of profits, including an inquiry into profits derived from the competing business.