CellOS Software Ltd v Huber (No 2)

CellOS Software Ltd sought equitable remedies against Huber and others for breaches of fiduciary duties and director’s duties under the Corporations Act 2001 (Cth). The dispute involved a share scheme and payments made by CellOS to Huber and related entities. The Federal Court was required to determine the appropriate quantum of the account of profits and whether further equitable remedies, including equitable compensation and declarations, were warranted.

The court held that the profits made by Huber and related entities from the share scheme were the result of breaches of fiduciary duties. The court rejected Huber’s argument that the profits should not be accounted for in full, finding that he had failed to discharge the onus of proving inequity in ordering him to account for the entirety of the profits. The court accepted the lower scenario estimate of profits, amounting to AU$42,000,000, as a conservative measure. The court also found it appropriate to declare that shares held by Huber controlled entities be held on a constructive trust in favour of CellOS and that CellOS has no outstanding indebtedness to Pized. The court did not award equitable compensation or interest, noting that the subsequent drop in CellOS' share price did not negate the profits made at the time of the breaches.

The court made several declarations, including that the Huber controlled entities and Huber should account for AU$42,000,000 and that CellOS has no outstanding indebtedness to Pized. The court ordered Huber and related entities to pay CellOS AU$42,000,000 and the costs of the proceeding. The orders were to be entered in accordance with Rule 39.32 of the Federal Court Rules 2011.