Murdoch v Mudgee Dolomite & Lime Pty Ltd (in liq)

The appeal concerned alleged breaches of fiduciary duties by directors and an employee of Mudgee Dolomite & Lime Pty Ltd (in liq) ("MDL"). The dispute arose from the fact that companies controlled by these individuals, RK Murdoch Pty Limited ("RKM") and Tilecote Farm Pty Limited (previously known as Bright Pear Pty Limited) ("BPPL"), performed crushing services for a mine that MDL had contracted to provide. The primary judge had found that the performance of MDL's existing contracts by RKM and BPPL constituted a breach of fiduciary duty, but that the acquisition of a separate quarry in Victoria did not.

The court was required to determine the scope of the fiduciary duties owed by the directors and employee to MDL, and whether the performance of MDL's contracts by their associated companies constituted a breach. It also had to consider the availability of remedies, specifically an account of profits, and whether the principles established in *Peninsular and Oriental Steam Navigation Co v Johnson* precluded such an account in this context. Furthermore, the court had to assess whether any relief should be withheld on discretionary grounds, particularly in light of MDL's knowledge of the ongoing profits derived by RKM and BPPL. Finally, the court considered an appeal concerning procedural fairness and the application of coincidence evidence rules.

The appellate court affirmed the primary judge's finding that the performance of MDL's existing contracts by RKM and BPPL was a breach of fiduciary duty. The court reasoned that the scope of the fiduciary duty was to be identified by MDL's actual course of conduct, which included its existing contracts. The court distinguished *Peninsular and Oriental Steam Navigation Co v Johnson*, holding that its principles, which limit accounts of profits to cases where a fiduciary acquires property on behalf of a principal, were inapplicable to contracts for the supply of services. However, the court found that MDL had sufficient information after October 2011 to make it inequitable to seek an account of profits thereafter, applying a "stand by" principle. The court also dismissed the procedural fairness and evidence grounds of appeal.

The appeal was allowed in part, with the order for an account of profits being varied to apply only until 31 October 2011. One of the original orders was set aside, and MDL was ordered to pay 50% of the appellants' costs of the appeal. Directions were given for the parties to file agreed minutes of order or proposed minutes regarding the quantification and form of the profit order, and costs in the Equity Division. Leave was granted to MDL to file a limited cross-appeal, which was subsequently dismissed.