Vigliaroni v CPS Investment Holdings Pty Ltd

In the case of Vigliaroni v CPS Investment Holdings Pty Ltd, the parties were involved in a dispute concerning the ownership and management of a business, as well as the purchase and management of land by the company. The dispute was heard in the Federal Court of Australia. The primary issues for the court to decide involved whether certain actions taken by one of the owner/controllers of the business were unlawful, whether there was a breach of fiduciary duties, and if so, whether there was informed consent or ratification of those actions. Additionally, the court had to determine whether the actions of the director in relation to the purchase of land and the removal of another director from the company were within the scope of his authority, and if they constituted a breach of statutory and fiduciary duties.

The court examined the complex corporate structure of the business, which was operated through a corporate and unit trust structure, with each of the three owner/controllers holding a one-third interest in the business through their respective family trusts. The court found that the arrangement implemented by the financial controller, who was also one of the owner/controllers, to extinguish the interest of another unitholder was unlawful. The court held that the financial controller had a conflict of interest and breached his fiduciary duties by not disclosing the arrangement to the other unitholder, and that there was no informed consent or ratification of the conduct. In relation to the purchase of land by the company, the court found that the director had acted outside the scope of his authority and breached his statutory and fiduciary duties by transferring funds from the company and causing it to purchase land using the first portion as security without disclosing this to the other director.

The court ruled that the director's actions amounted to an excessive payment of fees for management services, and that he was in a position of conflict which deprived the company of the opportunity to take appropriate steps to ensure the fees were reasonable. The court further found that the director had not disclosed his personal interest in the matter, and that an account of profits was a proper remedy under section 181 of the Corporations Act 2001 (Cth). The court also addressed the issue of oppression, finding that a trustee company is a company to which section 232 of the Corporations Act 2001 (Cth) can apply. The court held that the alleged oppression arising out of exclusion from management, improper diversion of business, unauthorised payment of funds, and exclusion from information, warranted a remedy to be determined based on what is appropriate in relation to the company to ameliorate the oppression. The court found that it had the jurisdiction under section 233 of the Corporations Act 2001 (Cth) to order a buy-out of units in a unit trust, and that a buy-out was an appropriate remedy in this case.

The court made orders for the financial controller to account for profits made from the unlawful extinguishment of the other unitholder's interest, and for the director to pay compensation for the breach of his statutory and fiduciary duties. The court also ordered a buy-out of the other unitholder's units in the unit trust, and made orders for the disclosure of information and the payment of costs.