Takalu KF Pty Ltd v Property Management Corporation Pty Ltd & Ilgun; sub nom Fairfield City Council v Property Management Corporation Pty Ltd

Takalu KF Pty Ltd, the plaintiff, brought an action against Property Management Corporation Pty Ltd and Ilgun, the defendants, before the Supreme Court of New South Wales. The plaintiff sought compensation for funds that were allegedly misappropriated by Ilgun, who had been authorised by the defendant company to sign cheques on its account. Ilgun signed cheques in his own name, his wife’s name, and a company associated with him, without any benefit to the company and without any debt being owed. The plaintiff claimed that the recipients of these cheques were knowingly participating in the breach of fiduciary duty by Ilgun and sought recovery of the funds from them.

The court was required to determine whether Ilgun breached his fiduciary duties owed to the defendant company by signing cheques in this manner, and if so, whether the recipients of the cheques were liable for knowingly participating in this breach. The court needed to assess whether the recipients had the requisite knowledge to be held liable as knowing recipients of trust property obtained by breach of fiduciary duty.

The court held that Ilgun did indeed breach his fiduciary duties to the defendant company by signing the cheques in the described manner. His actions amounted to a breach of trust, and he was liable to compensate the company for the loss incurred. The court found that the requisite knowledge on the part of the other recipients was not established, and as such, they were not liable for knowingly participating in the breach of fiduciary duty.

The court ordered Ilgun to compensate the defendant company for the loss incurred due to his breach of fiduciary duty. No orders were made against the other recipients of the cheques.