Strata Consolidated v Bradshaw

Strata Consolidated Pty Ltd sought an account of profits from its former director and majority shareholder, Mr. Bradshaw. The plaintiff argued that Mr. Bradshaw breached his fiduciary duties by misusing company funds and engaging in self-dealing. The dispute was heard in the Federal Court of Australia. The plaintiff claimed that Mr. Bradshaw's misconduct resulted in a substantial profit, and sought an account of those profits as a remedy for the breach of fiduciary duty. The defendant contested the claim, arguing that any profits were insubstantial or that he was entitled to a just allowance for his contributions to the profits.

The court was required to determine the correct method for calculating the profits attributable to the fiduciary breaches and whether any allowance should be made for the defendant's contributions. The central issue was whether the profits should be calculated using an incremental method, which would attribute all profits from the breach to the defendant, or an absorption method, which would only attribute the net profit from the breach. The court also had to consider whether a just allowance could be made for the defendant's contributions to the profits, and if so, what the appropriate amount of that allowance might be.

The court held that the incremental method of accounting was the appropriate approach in this case. It found that Mr. Bradshaw's fiduciary breaches were substantial and directly resulted in significant profits for the defendant. The court rejected the absorption method, reasoning that it would not adequately compensate the plaintiff for the breach of fiduciary duty. Regarding the just allowance, the court found that no allowance was warranted as the defendant's contributions were not sufficiently distinct from the misconduct to warrant an allowance. The court ordered Mr. Bradshaw to account for the full profits derived from the breaches of fiduciary duty, without any deductions.