Capital Finance Australia Ltd; v Cheung and Burness and Anor As Trustees v Cheung and Cheung; v Burness and Anor As Trustees and Anor

In the Supreme Court of New South Wales, the dispute involved Capital Finance Australia Ltd (CFA) and the trustees of the Cheung Family Trust, Mr. and Mrs. Cheung, and Mr. and Mrs. Burness. The core of the disagreement concerned the enforceability of certain loan agreements and guarantees, particularly in light of allegations of misleading and deceptive conduct and breaches of director's duties by CFA. The proceedings were initiated by CFA seeking to recover outstanding loan amounts, with the trustees counter-claiming and seeking declarations regarding the validity of the agreements.

The primary legal issues before the Court were whether CFA had engaged in misleading or deceptive conduct in contravention of the *Trade Practices Act 1974* (Cth) and the *Contracts Review Act 1980* (NSW), and whether the loan agreements and guarantees were therefore void or unenforceable. Additionally, the Court had to consider whether the directors of CFA had breached their fiduciary duties to the Cheung Family Trust, and if so, what remedies were available. The trustees also sought to establish that the agreements were unjust and should be set aside or varied.

Judge Burchardt found that CFA had engaged in misleading and deceptive conduct by misrepresenting the nature and risks of the investment products and loan facilities offered to the trustees. This conduct was found to be a significant factor in the trustees' decision to enter into the agreements. Consequently, the Court held that the loan agreements and guarantees were voidable at the option of the trustees due to the contraventions of the *Trade Practices Act*. The Court also found that the directors of CFA had breached their fiduciary duties owed to the Cheung Family Trust, and that the agreements were unjust under the *Contracts Review Act*.

The Court ordered that the loan agreements and guarantees entered into by the trustees with CFA be set aside and declared void. CFA was ordered to pay damages to the trustees to compensate them for losses incurred as a result of the misleading conduct and breaches of duty.