Firmtech Aluminium Pty Ltd v Xie; Zhang v Xu; Xie v Auschn Conveyancing & Associates Pty Ltd

The case involved multiple parties, including Firmtech Aluminium Pty Ltd, its directors, employees, and third parties involved in the management and settlement of the company's affairs. The dispute centred around allegations of breaches of directors' and employees' duties under the Corporations Act 2001, including ss 180 (duty of care and diligence), 181 (duty to act in good faith), and 182 (use of position for improper purpose). The court was also required to consider whether certain business opportunities were diverted from Firmtech Aluminium to companies controlled by the directors and employees, and whether any third parties were liable under the rule in Barnes v Addy for their involvement in the alleged breaches. Furthermore, the court had to determine whether the directors' and employees' fiduciary duties were modified by an agreement to "close down" the corporation, and what remedies, if any, were available under equity.

The legal issues before the court included whether the directors and employees breached their fiduciary duties and statutory obligations, whether they diverted business opportunities from Firmtech Aluminium to companies they controlled, and whether third parties were liable for their involvement. The court also had to consider whether the conveyancer made payments from settlement proceeds without authorisation, and the scope of liability for any breach of fiduciary duties, including whether it was on a "whole of business" basis or by reference to specific business opportunities. Additionally, the court needed to decide on the appropriate remedies, including whether a constructive trust or account of profits was warranted, and whether the conveyancer's actions discharged the principal's liabilities.

In resolving these issues, the court examined the evidence and arguments presented by the parties, focusing on the directors' and employees' conduct and the terms of any agreements in place. The court found that the directors and employees had breached their fiduciary and statutory duties by diverting business opportunities to companies they controlled, and that the conveyancer had made payments without authorisation. The court held that the third parties were liable under the rule in Barnes v Addy for their involvement in the breaches. Regarding remedies, the court determined that an account of profits was appropriate, but not on a "whole of business" basis. Instead, the liability was by reference to the specific business opportunities that were diverted. The conveyancer's unauthorised payments did not discharge the principal's liabilities.

The court ordered the directors, employees, and third parties to account for the profits made from the diverted business opportunities. The conveyancer was also ordered to repay the unauthorised payments made from the settlement proceeds. Additionally, the court made orders for costs and directed that further particulars be provided regarding the scope of the relief to be granted.