iscover High Court rejects appeal application by Ballarat accounting firm
BusinessThe Court has refused a special leave application that sought to overturn previous findings of dishonesty and fraud against the director of an accounting firm.
An application to appeal a previous judgement which found that director Jamie Mulcahy and his firm, Mulcahy & Co Accounting Services, had breached their legal obligations has been refused by the High Court.
James Remington, director of Nevetts Lawyers, said the rejection of the special leave application brought one of the longest-running legal cases in Victoria to an end.
The case involved a dispute between Mulcahy and his former clients, Timothy Porter and Christopher Conheady.
Porter and Conheady had engaged Mulcahy to assist them in purchasing controlling shares in truck body manufacturing company Chris's Body Builders (CBB).
They launched legal action against Mulcahy after he used confidential information to purchase the controlling shares of CBB himself, sidelining Porter and Conheady’s business interests.
The Supreme Court of Victoria originally ordered Mulachy to pay Porter and Conheady over $26 million in damages.
However, the appeals court overturned Mulcahy’s obligation to repay the $6 million to Porter, finding that Mulcahy did not breach his fiduciary duties to Porter as the facts indicated they did not have a close, trusted relationship.
However, Mulcahy was still required to pay $20 million to Conheady.
With the High Court last week refusing the special leave application with costs, Mulachy, together with his firm and trustee company BFMM Investments, has been ordered to pay his former clients $21 million.
Remington, who has acted for Porter and Conheady since the case began in 2019, said his clients were pleased and relieved to receive the decision by the High Court.
The court had confirmed his clients’ strongly held belief that what had happened to them was “morally and fundamentally wrong”, he said.
“Although eight years is a long time to resolve a civil matter, our clients’ determination to pursue accountability in this case has been justified,” Remington said.
Remington said that while the compensation awarded was significant, Porter and Conheady were denied the opportunity to invest in a financially strong and resilient business that continues to trade successfully today.
BFMM Investment, which was incorporated by Mulachy and his business partners to purchase a controlling interest in CBB, is now in liquidation.
Remington said a lengthy process would need to play out before Conheady receives any of the money that BFMM was ordered to pay him.
"We don’t know how much of the full $21 million he will ultimately receive."
Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
