A Ballarat accounting firm, one of its directors, and an associated business have been ordered to pay $26 million in damages to former accounting clients after pursuing a business opportunity under consideration by those same clients.
In 2021, Supreme Court of Victoria Justice Jim Delany found Mulcahy & Co, director James Mulcahy, and BFMM Investments Pty Ltd, the company described as James Mulcahy’s corporate “alter ego”, had violated the trust of former clients considering the purchase of truck body fabricator in 2017.
The court found Mulcahy then formed a company, along with others, to buy a stake in the same body fabricating business.
“His actions went well beyond trivial breaches of fiduciary duty,” Justice Delany said at the time.
“As I have found, they were not motivated by altruism… they were not well-intentioned,” adding the claims fit the description of “a dishonest and fraudulent design.”
On Wednesday, Justice Delany ordered the offending parties to compensate the two former clients to the tune of $26.2 million, based on the profits the clients could have expected to earn through their planned purchase, plus interest.
As reported by ABC, Christopher Conheady, one of the two clients, told the press of his relief over the compensation ruling.
“Ultimately his betrayal meant we missed a significant business opportunity and we’re relieved the court has recognised this,” he told reporters.
Mulcahy has indicated he is planning to lodge an appeal, telling the ABC “the way we have been portrayed in this case is not the way we operate our business”.
Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
