Firmtech Aluminium Pty Ltd v Xie; Zhang v Xu; Xie v Auschn Conveyancing & Associates Pty Ltd (No 3)

1. [1]

   On 17 October 2024, I delivered reasons for judgment in these three related proceedings: Firmtech Aluminium Pty Ltd v Xie [2024] NSWSC 1293 (Primary Judgment).

2. [2]

   In the Principal Proceeding (2022/221710), I found that each of the First Defendant, Ms Xiaoyan Xie, and the Second Defendant, Mr Jiamin Zhang, breached their statutory and fiduciary duties to the First Plaintiff, Firmtech Aluminium Pty Ltd, by diverting various business opportunities to two companies which they controlled, namely, the Third Defendant, Firmtech Aluminum Pty Ltd, and the Fourth Defendant, Logikal Facade Pty Ltd.

3. [3]

   I did not accept the Plaintiffs’ submission that Firmtech was entitled to a constructive trust over the whole of the business of Aluminum and Logikal. Instead, I determined Firmtech was entitled, at its election, to an account of profits or equitable compensation in respect of a number of specific projects which were diverted to Aluminum or Logikal prior to Firmtech ceasing operations (but not in respect of those projects which were sought and obtained by Aluminum or Logikal after Firmtech ceased operations).

4. [4]

   The relevant projects were identified as follows at paragraph [598] of the Primary Judgment:

   1. (1)

      the Campbell 5 Project (Primary Judgment, [86]-[130]);

   2. (2)

      Embark on Northbourne (Primary Judgment, [131]-[154]);

   3. (3)

      the Founders Lane Project (Primary Judgment, [155]-[167]);

   4. (4)

      the Epping Apartment Project (Primary Judgment, [213]-[225]);

   5. (5)

      the Elara Shopping Centre (Primary Judgment, [226]-[237]);

   6. (6)

      Akora Residences and Altair No 1 (Primary Judgment, [238]-[239]);

   7. (7)

      the Aire Project (Primary Judgment, [326]-[353]);

   8. (8)

      St Dominic’s College Project (Primary Judgment, [354]-[365]);

   9. (9)

      the Spring Square Project (Primary Judgment, [366]-[389]);

   10. (10)

       the Koko Molongo Project (Primary Judgment, [391]-[394]);

   11. (11)

       the Ingleburn Project (Primary Judgment, [395(1)]);

   12. (12)

       the project at 45 Ainslie Avenue, Canberra, ACT (Primary Judgment, [395(2)]);

   13. (13)

       the project at 121-123 Haig Street, Maroubra, NSW (Primary Judgment, [395(3)]);

   14. (14)

       the project at 25 Ney Street, Mascot, NSW (Primary Judgment, [395(4)]); and

   15. (15)

       the project at 32 Picton Street, Mascot, NSW (Primary Judgment, [395(5)]).

5. [5]

   Although there were 15 relevant projects identified in the Primary Judgment, the parties agreed, at the November 2025 hearing, that the project at 45 Ainslie Avenue, Canberra was part of the Founders Lane Project. Accordingly, there are a total of fourteen Relevant Projects.

6. [6]

   In the Primary Judgment, I indicated that the parties would have an opportunity to make submissions on the appropriate orders for the resolution of the outstanding issues of relief, including any consequential relief.

7. [7]

   There was a further hearing regarding the appropriate form of orders, following which I gave reasons for judgment in Firmtech Aluminium Pty Ltd v Xie (No 2) [2024] NSWSC 1427. In that judgment, I rejected the Defendants’ submission that the Plaintiffs were required, at that point in time, to make an election between equitable compensation or an account of profits in respect of the Relevant Projects. Instead, I accepted the Plaintiffs’ submission that they did not have, and should be permitted to obtain, the material which they required in order to make an informed election between an account of profits and equitable compensation. Further, I determined that, in circumstances where the parties had briefed experts, who were familiar with the case and had already given evidence in the Principal Proceeding, the most efficient way to proceed, following the production of further documents, was by an exchange of supplementary expert reports, with the matter then returning to the Court for determination of all outstanding issues.

8. [8]

   During the course of this year, each of the parties filed expert reports regarding these matters and, in addition, the Defendants filed a number of affidavits from Mr Zhang, in which he gave evidence, on a line-item basis, of income and expenses on each of the Relevant Projects.

9. [9]

   When the Principal Proceeding returned for a further hearing in respect of these matters on 6 and 7 November 2025, Mr Zhang was cross-examined at some length. Following this, the parties conferred and agreed on the amount of the profit (or loss) for each of the Relevant Projects.

10. [10]

    In particular, the parties agreed the following figures for the net profits of the Relevant Projects, on a project-by-project basis:

11. [11]

    As set out above, each of the Relevant Projects is agreed to have resulted in a net profit, other than the Spring Square Project, which resulted in a net loss of $2,639,241.

12. [12]

    It was agreed that:

    1. (1)

       the total of the net profit for all of those Relevant Projects which were profitable (that is, all except the Spring Square Project) was $2,863,485; and

    2. (2)

       the total of the net profit for all of the Relevant Projects (including the loss for the Spring Square Project) was $224,244.

13. [13]

    Following the parties’ agreement on these figures, the Plaintiffs indicated that they elected for an account of profits in respect of each of the Relevant Projects, other than the Spring Square Project (in respect of which they did not seek any relief). I refer to the thirteen Relevant Projects in respect of which the Plaintiffs sought an account of profits as the Thirteen Profitable Projects.

14. [14]

    There were two main issues that were addressed at the hearing on 20 November 2025:

    1. (1)

       first, whether the loss from the Spring Square Project must be taken into account in calculating the quantum of profits to which Firmtech is entitled; and

    2. (2)

       secondly, whether Firmtech is entitled to interest (and, if so, whether simple or compound interest).

The Loss on the Spring Square Project

1. [15]

   The Plaintiffs pleaded separate wrongs in respect of each of the Relevant Projects.

2. [16]

   Section E1 of the Amended Statement of Claim (ASC) was headed “Diversion of income and business opportunities to Aluminum and Logikal”. Within this section, separate allegations of material fact were advanced in respect of each of the Relevant Projects.

3. [17]

   For example:

   1. (1)

      having pleaded the matters said to give rise to a claim in respect of the Campbell 5 Project (ASC, [89]-[96]), the Plaintiffs pleaded as follows (ASC, [96A]):

   2. (2)

      having pleaded the matters said to give rise to a claim in respect of the Aire Project (ASC, [97]-[102B]), the Plaintiffs pleaded as follows (ASC, [103A]):

4. [18]

   A similar form of pleading was adopted with respect to each of the other Relevant Projects, including the Spring Square Project. After pleading the material facts said to give rise to a claim in respect of the Spring Square Project (ASC, [110B]-[110F]), the Plaintiffs pleaded as follows (ASC, [110G]):

5. [19]

   Having pleaded those individual wrongs in respect of each of the Relevant Projects, the Plaintiffs then added the following allegation in a section headed “Ongoing diversion of Firmtech’s business as a whole” (ASC, [110AK]) (the Whole of Business Allegation):

6. [20]

   As set out above, the Whole of Business Allegation relied on the allegations of the wrongful diversion of each of “the specific projects pleaded in paragraphs 78-110AJ in part E”, which included each of the Relevant Projects.

7. [21]

   The allegations that Ms Xie and Mr Zhang breached their statutory and fiduciary duties to Firmtech were set out in the ASC at [143]-[148]. In particular, it was alleged that Ms Xie and Mr Zhang breached their duties “[b]y reason of the matters pleaded” at, respectively, ASC, [135(a)]-[135(p)], [136(a)]-[136(n)], [137(a)]-[137(p)] and [138(a)]-[138(n)]. By way of example, the allegations at [135(a)]-[135(p)] included, relevantly, the following matters:

8. [22]

   The Plaintiffs were plainly not contending that it was necessary for all of the matters in the subparagraphs of [135] to be established in order for a breach to arise (or they would have failed to establish breach). Instead, the Plaintiffs relied on each of the matters set out in those subparagraphs as giving rise to a breach of duty.

9. [23]

   The evidence, cross-examination and submissions at trial also proceeded on a project-by-project basis.

10. [24]

    The Defendants contended, in their closing written submissions at trial, that, if the Court found that there had been any breach of duty, the Court should reject the Whole of Business Allegation and instead make individual findings of wrongful diversion in respect of specific projects (emphasis added):

11. [25]

    In closing oral address at trial, Counsel for the Defendants developed the submission that “only certain projects” that were found to be “wrongfully diverted … should be the subject of relief”, submitting as follows (emphasis added):

12. [26]

    Accordingly, it was the position of the Defendants at trial that, in the event that the Court was satisfied that a specific project had been wrongfully diverted, it would be open to the Court to order an account of profits in relation to that specific project.

13. [27]

    In the Primary Judgment, I addressed liability and relief in a manner consistent with the Defendants’ contentions set out above. In particular, I separately addressed, and made findings in respect of, each of the Relevant Projects (see the references to the Primary Judgment at paragraph [4] above), and determined that, “in taking steps … to divert each of [those] valuable commercial opportunities … from Firmtech to either Aluminum or Logikal”, each of Ms Xie and Mr Zhang breached their duties to Firmtech (Primary Judgment, [488], [510]-[511]). In addition, I found (at Primary Judgment [537]-[544]) that Aluminum and Logikal knowingly assisted in Ms Xie’s and Mr Zhang’s breaches of their fiduciary duties to Firmtech, and were involved in the contraventions of their statutory duties, on the basis that “Aluminum and Logikal had (through Ms Xie) actual knowledge of the essential acts constituting the contraventions, namely, the steps taken by Ms Xie to divert each of the relevant projects from Firmtech to Aluminum or Logikal” (emphasis added).

14. [28]

    Accordingly, I found that there was a separate breach of duty by Ms Xie and Mr Zhang in respect of the wrongful diversion of each of the Relevant Projects, and that (depending on the entity to which the Relevant Project was diverted) Aluminum and/or Logikal had accessorial liability in respect of each such separate breach.

15. [29]

    Having made those findings, I rejected the Whole of Business Allegation and instead determined that Firmtech was entitled to an account of profits in respect of each of the Relevant Projects that was wrongfully diverted from Firmtech to Aluminum or Logikal (see Primary Judgment, [597]-[598]). In making that finding, I noted that the Defendants had “accepted that it was open to the Court to order an account of profits in relation to specific projects” (Primary Judgment, [599] ; and see paragraphs [25] and [26] above).

16. [30]

    The parties subsequently filed evidence dealing with the profits of each of the Relevant Projects, on a project-by-project basis; and, as set out in paragraph [10] above, reached agreement on 7 November 2025 regarding the amount of the net profit for each individual project.

17. [31]

    The Plaintiffs had, in their written submissions in advance of the hearing on 6 and 7 November 2025, indicated that they were electing for:

    1. (1)

       an account of profits in respect of those Relevant Projects which were found to have resulted in a net profit for Aluminum and/or Logikal; and

    2. (2)

       equitable compensation in respect of those Relevant Projects which were found to be loss-making (in circumstances where there is no evidence that Firmtech has suffered any loss by the diversion of any of those Projects, and therefore there will be no remedy in respect of those Projects).

18. [32]

    In response, the Defendants submitted that this amounted to a “split election” which was contrary to the following statement of principle in Xiao v BCEG International (Australia) Pty Ltd (2023) 111 NSWLR 132; [2023] NSWCA 48 at [68] per Gleeson JA (with whom Mitchelmore JA and Griffiths AJA agreed):

19. [33]

    Following the parties’ agreement on the net profit for each of the Relevant Projects, the Plaintiffs stated, in their written submissions in advance of the 20 November 2025 hearing, that they elected for an account of profits for each of the Thirteen Profitable Projects; and that, as regards the Spring Square Project, they did not seek any relief (in light of the agreed position that no profit was obtained).

20. [34]

    It follows that the Plaintiffs could no longer be said to be making a “split” election. Instead, they are electing for a single remedy, against the same Defendants, but only in respect of thirteen of the Relevant Projects, and are not seeking any relief from the Court in respect of the remaining Project. In any case, I doubt whether the comments in Xiao v BCEG at [68] have any application in circumstances where a single defendant has engaged in two separate transactions, each of which gives rise to a separate breach of his or her fiduciary duties, and the plaintiff seeks an account of profits in respect of one, and equitable compensation in respect of the other. In such a situation, it could not be said that “the liability of the defendant founding the availability of the relief is the same” for the two transactions. However, it is unnecessary to express any concluded view on this issue.

21. [35]

    In response to the Plaintiffs’ claim that the Court should award an account of profits in respect of the Thirteen Profitable Projects (without bringing to account the loss on the Spring Square Project), the Defendants submitted that the decisions of the High Court in Dart Industries Inc v Décor Corporation Pty Ltd (1993) 179 CLR 101; [1993] HCA 54 and Warman International Ltd v Dwyer (1995) 182 CLR 544; [1995] HCA 18 set out a number of “binding principles which do not permit the arguments advanced by the Plaintiffs in respect of the Spring Square Loss to succeed”. In particular, the Defendants contended that, in order to determine the “true measure of the profit” received by them, it was necessary to take into account the loss on the Spring Square Project, otherwise Firmtech would be “unjustly enriched”, and the Defendants would be “unfairly punished”.

22. [36]

    Further, the Defendants stated at the hearing on 20 November 2025 that, if the Plaintiffs were now electing not to press their claim in respect of the Spring Square Project, the Defendants would seek leave to amend their defence to plead that they were entitled to set-off any liability to account for profit against the loss that was incurred on the Spring Square Project.

23. [37]

    The Plaintiffs accepted that such an amendment was unnecessary, as issue had already been joined on this question of “set-off”. The Plaintiffs submitted that any such set-off was contrary to principle.

24. [38]

    I address below:

    1. (1)

       first, the “binding principles” from Dart Industries and Warman International which, on the Defendants’ submission, led to the conclusion that the loss on the Spring Square Project must be taken into account when determining the quantum of the relief to which the Plaintiffs are entitled; and

    2. (2)

       secondly, the “no set-off principle” which, on the Plaintiffs’ submission, led to the conclusion that the Defendants could not rely on the loss from the wrongful diversion of the Spring Square Project to reduce their liability to account for the profits from the wrongful diversion of the Thirteen Profitable Projects.

25. [39]

    The first principle which the Defendants identified as emerging from Dart Industries and Warman International is that the purpose of the remedy of an account is directed at ensuring that a defendant disgorge the actual profit which it has dishonestly made.

26. [40]

    In Dart Industries (at 111), Mason CJ, Deane, Dawson and Toohey JJ observed as follows (emphasis added):

27. [41]

    Their Honours said (at 116) that the “guiding principle” is that “an account of profits aims to have the defendant account for the actual profit, no more and no less, which it has gained from the infringement”; and emphasised (at 117) the importance of “bearing in mind always that the aim of the exercise is to arrive as closely as possible at the true profit”.

28. [42]

    Similarly, in Warman International, the Court (Mason CJ, Brennan, Deane, Dawson and Gaudron JJ) observed as follows (at 558, emphasis added):

29. [43]

    The Defendants submitted that, having regard to the agreement between the parties (see paragraphs [10]-[12] above), “there can be no dispute that, consistently with the principles set out in Dart Industries and Warman, the actual profit earned by Aluminum and Logikal limited to the [Relevant] Projects was $224,244 and that this is [the] sum which must be paid in accordance with the [Primary] Judgment”.

30. [44]

    However, as set out above, Warman International directs attention to “the true measure of the profit … obtained by the fiduciary in breach of his duty”; and Dart Industries directs attention to “the actual profit … which [the defendant] has gained from the infringement” (emphasis added). That is, both authorities direct attention to the actual gain made by the defendant from the specific wrong.

31. [45]

    In the present case, I have found the wrongful diversion of each of the Relevant Projects constituted a separate breach of the fiduciary duties owed by Ms Xie and Mr Zhang, and that Aluminum and/or Logikal knowingly assisted in each of those breaches. It follows, consistently with the principles stated in Warman International and Dart Industries that in order to determine, for each such breach, the “true” or “actual” profit gained by the fiduciary, it is necessary to determine, separately, the “true” or “actual” profit obtained from each diverted Project.

32. [46]

    Further, the references in Dart Industries to the need to determine the “actual profit” arose in circumstances where there was a dispute regarding the manner in which overheads were to be treated, or allocated, in determining the “actual profit”. There is no such issue here. The experts took into account direct expenses and overheads in determining the net profit for each Relevant Project, and there is now agreement between the parties regarding the net profit figures for each Relevant Project. It follows that there is no outstanding issue regarding the assessment of the “actual profit” for any of the Relevant Projects.

33. [47]

    Instead, the issue which arises in this proceeding (and which is addressed below) is whether the Court should set off against the Defendants’ liability to account for the “actual profit” which they have made as a result of the wrongful diversion of each of the Thirteen Profitable Projects, the “actual loss” which they have made as a result of the wrongful diversion of the Spring Square Project.

34. [48]

    A further principle from Dart Industries on which the Defendants relied was that, in determining the “profits actually made”, “some assistance may be derived from the principles and practices of commercial accounting” (at 111). The Defendants submitted that “both experts agreed that the appropriate way to calculate the actual profit earned by Aluminum and Logikal limited to the [Relevant] Projects, was to treat Aluminum and Logikal on a consolidated basis and then add up all the revenue earned from the Projects and then subtract all of the direct and indirect costs incurred in undertaking the Projects”.

35. [49]

    It is difficult to see the relevance of the methodology said to have been adopted by the experts, in circumstances where the parties have agreed figures for the net profit for each of the Relevant Projects which do not match the figures arrived at by either of the experts in any of their reports. In any case, the Plaintiffs’ expert, Mr Cairns, provided, in his report, separate net profit figures for each of the Relevant Projects, as well as alternative figures for the total net profit of the Projects which, respectively, included and excluded the loss on the Spring Square Project. Mr Cairns did not express any view on the issue whether the loss on the Spring Square Project should be brought to account in determining the relief to which Firmtech is entitled and, in any case, this is a question of law, rather than accounting.

36. [50]

    The second proposition which was said to emerge from Dart Industries and Warman International was that the purpose of an account of profits is to prevent the defendant’s “unjust enrichment” (Dart Industries, at 111). The Defendants also relied on the observations in Warman International (at 561) that “the stringent rule requiring a fiduciary to account for profits can be carried to extremes” and that “the liability of the fiduciary should not be transformed into a vehicle for the unjust enrichment of the plaintiff”.

37. [51]

    The Defendants submitted that, if Firmtech were awarded an account of profits by reference only to the Thirteen Profitable Projects, it would be unjustly enriched “by avoiding the loss on the Spring Square Project, which it would have incurred, and recovering substantially more than it would have if it had undertaken the [Relevant] Projects”.

38. [52]

    As a preliminary matter, it is important to note that the observation in Dart Industries at 111 that the “purpose” of an account of profits is “to prevent [the defendant’s] unjust enrichment” was made in the context of a patent infringement case. In Warman International at 557, the High Court confirmed that this was the purpose of ordering an account in such a context, but said that: “the liability of a fiduciary to account differs from that of an infringer in an intellectual property case”. In particular, the “objectives which the rule seeks to achieve are to preclude the fiduciary from being swayed by considerations of personal interest and from accordingly misusing the fiduciary position for personal advantage” (at 557-558). The Court observed (at 561) that although the doctrine of unjust enrichment “may well have a useful part to play”, the liability of a fiduciary to account is not governed by that doctrine.

39. [53]

    The Defendants’ contention that it is necessary to bring to account the loss on the Spring Square Project in order to prevent Firmtech’s “unjust enrichment” depends on a submission that, if the Defendants had not wrongfully diverted the Spring Square Project, then Firmtech would have suffered a similar loss on that Project. This submission was put as follows: (subs [37])

40. [54]

    However, there is no sufficient basis for such a conclusion. It cannot simply be assumed that, if the Spring Square Project had not been wrongfully diverted and had instead been obtained and performed by Firmtech, the contract price would have been the same, the direct expenses would have been the same, and the overheads would have been the same (and therefore, the net profit would have been the same). In particular, there was some suggestion in Mr Zhang’s evidence that the Spring Square Project ran longer than expected by reason of the need to rectify various defects, which led to further costs being incurred. There is no reason to assume that, if Firmtech had performed the same Project, there would have been the same defects in its performance, with the same consequences in terms of delay and cost.

41. [55]

    The Defendants are, in effect, seeking to shift to Firmtech both the loss flowing from their own wrong in diverting the Spring Square Project to Aluminum and/or Logikal, and the loss flowing from their own defective performance of that project (with the result that the award in favour of Firmtech in respect of the Thirteen Profitable Projects is reduced by over 92%). I do not accept that such a result is required by, or consistent with, the doctrine of unjust enrichment. In circumstances where a fiduciary has dishonestly breached his or her duties, and has made a loss as a result of that breach, it is difficult to see in what sense the wronged principal is “enriched”, or there is any “injustice”, in the fiduciary being left to bear that loss.

42. [56]

    The third proposition on which the Defendants relied was that the purpose of an account of profits is “not to punish the defendant” (Dart Industries at 111).

43. [57]

    In this regard, Defendants also referred to:

    1. (1)

       the observation of Heydon JA (with whom Spigelman CJ and Hodgson JA agreed) in Cole v Miles [2002] NSWCA 150 at [63] that the fashioning, in equity, of an appropriate remedial response is “controlled by the need to avoid injustice even to the wrongdoer”; and

    2. (2)

       the observation by Leeming JA (with whom Macfarlan and Gleeson JJA agreed) in Murdoch v Mudgee Dolomite & Lime Pty Ltd (in liq) [2022] NSWCA 12 at [196] that the need “to fashion the account so as to achieve its purpose of taking from the fiduciary the profit or benefit derived by reason of the breach of duty, but avoiding punishing the fiduciary” was “at the forefront of the reasoning in Warman International Ltd v Dwyer itself”.

44. [58]

    The Defendants submitted that Aluminum and Logikal would be “unfairly punished”, by being required to pay Firmtech substantially more than they actually received both at a “Projects level” and at a “whole of business” level.

45. [59]

    In advancing this submission, the Defendants focussed on the fact that the agreed total amount of the net profits of the Thirteen Profitable Projects was $2,863,485, and that this amount, which was sought by Firmtech by way of an account of profits, exceeded:

    1. (1)

       the total amount of the net profits from all Relevant Projects, including the Spring Square Project, being $224,244; and

    2. (2)

       the total EBITDA of Aluminum and Logikal since FY2020, which was said to be $1,712,315.

46. [60]

    The Plaintiffs disputed the asserted EBITDA figure for the whole of the business of Aluminum and Logikal, but it is unnecessary to resolve this issue. The Defendants’ contention regarding “unfair punishment” can be addressed on the assumption that the quoted EBITDA figure is accurate.

47. [61]

    The overall EBITDA for the business is of limited significance, since it includes both the Relevant Projects and other, unrelated projects (which were not diverted from Firmtech). The Defendants did not refer to any principle to the effect that a plaintiff’s entitlement to an account of profits from business opportunities which have been wrongfully diverted to a defendant in breach of fiduciary duties can be reduced by having regard to the losses which the defendant has made from other, unrelated work undertaken in the same period.

48. [62]

    The Defendants submitted, by reference to the EBITDA figures, that the Plaintiffs, having failed to establish the Whole of Business Allegation at trial and having been confined to relief in respect of the Relevant Projects, were now trying to “obtain more [from the Relevant Projects] than they would have got on an account basis in respect of the whole of business approach”. I do not accept this submission. I did not, in the Primary Judgment, make any finding regarding the quantum of relief to which the Plaintiffs would have been entitled on a “whole of business approach”, in circumstances where there were a number of disputes between the parties relevant to any such determination which were addressed in the Primary Judgment (at [620]-[691]). Nonetheless, it should be noted that in the experts’ joint report at trial, the value of the whole of the business of Aluminum and Logikal was estimated, by the Plaintiffs’ expert, to be $15.96m and, by the Defendants’ expert, to be $3.90m. Accordingly, if the Whole of Business Allegation had been established, it is likely that the value of the relief obtained by the Plaintiffs would have been significantly greater than the total of the net profits of the Thirteen Profitable Projects (being an amount of $2,863,485).

49. [63]

    The Defendants’ submissions regarding “unfair punishment” rely, in essence, on the fact that the Spring Square Project made a very substantial loss of $2,639,241, which is only $0.224m less than the profit made from all of the other Relevant Projects ($2.863m), and that this loss had a significant impact on the EBITDA of Aluminum and Logikal.

50. [64]

    Implicit in the Defendants’ submission is the proposition that where a fiduciary engages in two separate breaches of his duties, and earns a significant profit from one, and a significant loss from the other, it would be “unfair” to the fiduciary, and amount to “punishment”, not to allow the fiduciary to set off, against the obligation to account for the profit from the one wrong, the loss from the other.

51. [65]

    However, the Defendants’ submission does not explain in what way they would be “punished” by being left to bear a loss which they suffered from their own wrongdoing in respect of the Spring Square Project.

52. [66]

    A “punishment” normally involves the imposition of some burden or sanction on a wrongdoer by reason of their wrong, rather than leaving a wrongdoer to bear the consequences of their own wrong.

53. [67]

    As noted above, Dart Industries, upon which the Defendants relied for the proposition that the purpose of an account of profits was “not to punish the defendant”, was a patent infringement case. It has been held, in respect of such claims, that where a defendant has made profits from some infringing products, and losses from others, the defendant should be required to account for those profits without any set-off or reduction for the losses.

54. [68]

    In Leplastrier & Co Ltd v Armstrong-Holland Ltd (1926) 26 SR (NSW) 585, the Court found that a patent which had been taken out by the defendant was really the property of the plaintiff, and that the defendant must account to the plaintiff for the profits made by the defendant from the sale of machines made in accordance with the patent or the invention embodied therein. When the matter came before the Master for the taking of accounts, a question arose as to how the profits were to be ascertained. Harvey CJ in Eq held (at 591) that “the fundamental fallacy” of the account filed by the defendant was that “he assumes that what he has got to show are the profits of a business”. His Honour noted that every sale of a machine gives the plaintiff a separate right to recover profits made on the sale of that machine, and continued as follows (at 591-592):

55. [69]

    This decision was followed by Heerey J in Black & Decker Inc v GMCA Pty Ltd (No 5) [2008] FCA 1738. In that case, the respondent (GMCA) had sold a manual power saw in two models. The first, designated “T1”, was superseded by the second, “T2”. The Court found that the sale of each of T1 and T2 infringed Black & Decker’s standard and innovation patents in respect of power tools. GMCA had made a net profit from the sales of T1, and a loss from the sales of T2 (see at [6]). Heerey J held (at [13]) as follows:

56. [70]

    His Honour noted (at [14]-[15]) that this point had been “specifically dealt with by Harvey CJ in Equity in Leplastrier” and that, while Leplastrier was the subject of some criticism by the majority of the High Court in Dart Industries, that was on a quite different point, namely, the allowance of a proportion of overhead expenses. Such an issue did not arise in Black & Decker, and does not arise here (as the parties have agreed on the figures for the net profit achieved in respect of each individual Relevant Project).

57. [71]

    Further, the conclusion in Leplastrier and Black & Decker that there should be no reduction in the plaintiff’s entitlement to the profits made by the defendant from selling products in infringement of the patent, by reason that the defendant made losses from selling other infringing products, is consistent with the “guiding principle” stated in Dart Industries at 116, namely, that the defendant is required to “account for the actual profit, no more and no less, which it has gained from the infringement” (emphasis added).

58. [72]

    The Defendants submitted that, in circumstances where the total profit for the Thirteen Profitable Projects was more than twelve times the amount of the total profit for all of the Relevant Projects (including the Spring Square Project), it would be “clearly unjust and inequitable” to accept the Plaintiffs’ argument that the loss on the Spring Square Project should not be brought to account.

59. [73]

    As the High Court observed in Warman International at 559, although an account of profits is, like other equitable remedies, said to be discretionary, “it is granted or withheld according to settled principles”.

60. [74]

    It is therefore necessary, in considering whether the loss on the Spring Square Project should be brought to account, to have regard to the principles governing whether, and if so in what circumstances, the Court will set off, against a fiduciary’s liability to account for the profit from one breach of duty, the loss suffered from another such breach.

61. [75]

    In Bartlett v Barclays Bank Trust Co Ltd [1980] 1 Ch 515 at 538, Brightman J observed that:

62. [76]

    This “general rule” is similarly referred to in Australian textbooks: see, for example, Jacob’s Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths) at [22.05], and Ford and Lee: The Law of Trusts (4th ed, Thomson Reuters, Looseleaf) at [17.2400].

63. [77]

    Brightman J noted (at 538) that, while this general principle is “stated in all the textbooks”, the relevant cases are all “centenarians” and “not altogether easy to reconcile”. (As noted below, there has been a recent decision of the United Kingdom Supreme Court, in which Lord Briggs has undertaken a detailed review of those authorities.)

64. [78]

    Bartlett was an action by the beneficiaries of a trust against the trustee. The trust property was more than 99% of the shares in a company which owned property. The trustee was found to have breached its duty by failing to stop the directors of the company from expanding the business of the company into property development. One such speculative property development was the “Old Bailey” project (so named as it involved the acquisition of a site opposite the Central Criminal Court in London), which was described in the judgment as a “disaster”. The beneficiaries claimed that the trustee was liable to make good to the trust fund all loss accruing by reason of the company having engaged in the Old Bailey project. The trustee pleaded that the company had engaged in another property development in Guildford, which had resulted in a net profit of some £271,000, and that, if it was liable for breach of trust by reason of having failed to prevent the company from engaging in the Old Bailey project, it was entitled to bring to account, in reduction of its liability to make good the loss from that development, the profit which the company had made from engaging in the Guildford development.

65. [79]

    Brightman J upheld this defence, stating as follows (at 538):

66. [80]

    The Defendants submitted that this “is precisely the position of the Defendants in this matter”. However, there are a number of points of distinction between the present case and Bartlett.

    1. (1)

       First, this is not a case where the Defendants have, by their wrongful conduct, made a substantial profit for Firmtech, which they contend should be taken into account when determining the extent of their liability in respect of losses from similar wrongful conduct. Instead, in this case, Aluminum and Logikal have made substantial profits from the wrongful diversion of the Thirteen Profitable Projects, and seek to reduce their liability to account for those profits on the basis that they happened to make a loss from the wrongful diversion of the Spring Square Project.

    2. (2)

       Secondly, in Bartlett, Brightman J found that the trustee had not acted dishonestly, but had acted unreasonably. In contrast, I have found that Ms Xie and Mr Zhang dishonestly breached their fiduciary duties in diverting the Relevant Projects to Aluminum and Logikal, and that those entities knowingly assisted in those breaches (Primary Judgment, [481]-[511] and [537]-[544]).

    3. (3)

       Thirdly, doubt has been expressed as to whether Bartlett in fact involved two separate breaches or a single breach by the trustee. In Brown v KMR Services Ltd [1995] 4 All ER 598 at 641, Hobhouse LJ (with whom Peter Gibson LJ agreed) expressed the view that the trustee in Bartlett committed one breach only, namely, failing to exercise proper supervision over the directors by stopping them from engaging in improper speculations, and that the issue which arose for determination was the true measure of the loss from that breach. In contrast, I have determined that there was a separate breach of duty in respect of the diversion of each individual Relevant Project.

67. [81]

    The statement in Bartlett of the no set-off principle has been referred to and applied in this Court.

68. [82]

    In Hagan v Waterhouse (No 2) (1991) 34 NSWLR 308, trustees had used trust assets for their own personal advantage, granting various mortgages to the bank to secure overdraft advances which were used in the pursuit of a bookmaking business. This conduct had extended over a fifteen-year period, from 1967 to 1982. In some years, the bookmaking business had made profits, and, in others, losses. The trustees submitted that the profit for which they should be liable to account “should be the profit over the whole of the period from February 1967 ascertained by setting off losses against profits” and, in this regard, relied on the passage from Bartlett quoted at paragraph [75] above.

69. [83]

    Kearney J rejected this submission, stating as follows (at 356-357):

70. [84]

    Although his Honour observed that it was “just and equitable” to conflate “profits and losses of individual transactions” within particular accounting years, that was in a context where the profits and losses within particular years arose from the same contravening conduct (namely, the use of trust assets to secure and extend the overdraft used by the bookmaking business). That is distinct from the situation here, where there was a separate breach of duty in the diversion of each Relevant Project, and the profits from each separate breach can be, and have been, calculated.

71. [85]

    The Defendants contrasted the outcome in Hagan v Waterhouse with the outcome in Cameron v Murdoch (No 2) [1984] WAR 278. In the latter case, one of the partners in a farming business had died and the surviving partners had continued to conduct the business for a period of over four decades, using the deceased partner’s share without accounting to his estate. A question arose as to whether losses incurred by the partnership in that period should be taken into account in determining the entitlement of the deceased partner’s estate and, if so, in what manner.

72. [86]

    Brinsden J quoted (at 279) the passage from Bartlett set out at paragraph [75] above regarding the setting off of profits and losses. His Honour found (at 280) that the utilisation of the deceased partner’s share without any settlement of accounts represented a “course of conduct … in pursuance of a common policy” which “can be treated as one transaction” for the purpose of the principle in Bartlett. It followed that losses incurred in the course of that “one transaction” were to be taken into account.

73. [87]

    Again, Cameron v Murdoch can be distinguished from the present case, as the wrongful diversion of each of the Relevant Projects to Aluminum or Logikal was a separate transaction, which gave rise to a separate breach of the fiduciary duties which Ms Xie and Mr Zhang owed to Firmtech. Further, as the Plaintiffs noted, there was no suggestion in Cameron v Murdoch that the surviving trustees had engaged in any dishonest conduct.

74. [88]

    In Hotel Portfolio II UK Ltd (in liquidation) v Stevens [2025] 3 WLR 293 (HPII v Stevens), the United Kingdom Supreme Court considered both the “general principle” referred to by Brightman J in Bartlett and the scope of any “exception” to that principle. The issue of law arising in that case was described (at [1]) as follows:

75. [89]

    Lord Briggs (with whom Lord Reed, Lord Hamblen and Lord Richards agreed) observed that the answer to this question required, inter alia, “an in-depth examination, for the first time, of the principle that a trustee may not set off gains and losses incurred in the course of multiple breaches of trust, together with a possible exception to it where the breaches occur in the same or connected transactions” (at [2]). This examination was undertaken from paragraph [63] of the judgment onwards, under the heading “Equitable set-off”.

76. [90]

    The context in which this issue arose was as follows. A dividend of £95m, representing a secretive and unauthorised profit made by Mr Ruhan, in breach of his fiduciary duty as a director of the appellant (HPII), was paid into the bank account of Mr Ruhan’s nominee. Mr Ruhan held this sum on constructive trust for HPII. He subsequently spent the whole of that sum on speculative projects in Qatar, and lost all of it, such that no part of it could be traced or recovered by HPII. Mr Stevens was found to have dishonestly assisted Mr Ruhan in the dissipation of the dividend. The Court of Appeal accepted an argument that, insofar as the dissipation of the dividend caused a loss to HPII, its earlier receipt was an equivalent gain which was caused by a related breach of fiduciary duty by Mr Ruhan, such that Mr Ruhan and Mr Stevens could set off the gain against the loss, producing a nil return for HPII. The Supreme Court allowed HPII’s appeal.

77. [91]

    Lord Briggs described “the general rule that a trustee is not permitted to set off gains caused by one breach of trust against losses incurred by another” as the “no set-off principle” (at [63]).

78. [92]

    His Lordship noted that there was “surprisingly little authority, other than Bartlett itself”, for an “exception” to the set-off principle, which permits such set-off “when the two breaches arise in the same transaction” (at [63], [65]). His Lordship observed (at [64]) that:

79. [93]

    Lord Briggs undertook (at [65]-[73]) a review of the texts and authorities regarding the no set-off principle and any exception to that principle.

80. [94]

    His Lordship further observed (at [75]-[77]) that Brightman J dealt with the set-off issue “summarily at the end of a long judgment following a 40 day trial”, and that:

    1. (1)

       the result in Bartlett cannot be explained by any “same transaction” exception since the Guildford development and the Old Bailey project were “clearly separate transactions, albeit animated by the same foolhardy policy”; and

    2. (2)

       Brightman J’s reasoning, when viewed in the round, appears to have been to the effect that “the particular facts about the case before him simply made it unjust to apply the no set-off principle in the circumstances”.

81. [95]

    Having reviewed the authorities, Lord Briggs concluded (at [82]) that “the true principle (a label which I prefer to a rule) is better expressed as follows”:

82. [96]

    His Lordship offered the following further observations, “[b]y way of amplification” (at [83]):

83. [97]

    Lord Briggs determined (at [91]) that there was, on the facts of HPII v Stevens, no basis for concluding that the no set-off principle would, because of a particular type of connection between the breaches concerned, produce a clearly inequitable result. His Lordship commented that the “only connecting factors which may be said to bind together all three transactions can best be described as dishonesty and greed”, with each of those transactions being “dishonestly concealed under the same cloak of secrecy” and the fiduciary seeking “to enrich himself”. His Lordship said that:

84. [98]

    The Defendants drew attention to Lord Briggs’ recognition that the application of the no set-off principle “may seem tough” (at [82]). The Defendants submitted that this “strongly supports the argument that it does not apply in the context of an account of profits because its application would clearly be inconsistent with the principles set out in Dart Industries and Warman”. In particular, the Defendants contended that the acknowledged harshness of the “no set-off principle” was inconsistent with the recognition in those High Court authorities that the purpose of an account of profits was not to punish the defendant, but to prevent unjust enrichment.

85. [99]

    I do not accept the submission that there is any inconsistency between the “no set-off principle” as enunciated in HPII v Stevens and the principles set out in the leading Australian authorities regarding an account of profits. In acknowledging that the application of the no set-off principle “may seem tough”, Lord Briggs observed that “equity is habitually strict in compelling the discharge of fiduciary obligation”. Similarly, the Australian authorities recognise that the account of profits is “stringent” in its application, and is intended to have a “deterrent” effect.

86. [100]

    In Warman International at 557-558, the High Court observed that:

87. [101]

    In Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1; [2018] HCA 43 at [9], Kiefel CJ, Keane and Edelman JJ referred to “the deterrent effect of an order for disgorgement of profits” in observing that “a defendant cannot avoid liability to disgorge profits dishonestly made by showing that those profits might have been made honestly”.

88. [102]

    Similarly, Gageler J (at [78]) stated that holding the fiduciary to account has been said to serve two purposes: namely, preventing the unjust enrichment of the fiduciary, and “removing the incentive for the fiduciary to act other than in the sole interests of the principal”. In this regard, his Honour quoted (at [79]) the following observation of Gibbs J in Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 at 397; [1975] HCA 8 (emphasis added):

89. [103]

    I acknowledge that, as observed in Warman International, it “is necessary to keep steadily in mind the cardinal principle of equity that the remedy must be fashioned to fit the nature of the case and the particular facts” (at 559); and that “the stringent rule requiring a fiduciary to account for profits can be carried to extremes” (at 561). However, the enunciation of the “no set-off principle” in HPII v Stevens is not inconsistent with those observations. In particular, Lord Briggs stated that the Court may decline to apply this principle where its application would “produce a clearly inequitable result” (at [82]). This will usually involve “asking the often fact-intensive question whether the ordinary application or the disapplication of the no set-off principle better serves the objective of equity in the particular circumstances” (at [83]).

90. [104]

    Accordingly, the key issue for determination in this case is whether, as the Defendants asserted, the failure to bring to account the loss on the Spring Square Project would lead to a “clearly inequitable” result. Since “the no set-off principle is itself there to serve a purpose of equity”, it is for “the person seeking to demonstrate an inequitable result” (namely, the Defendants) to “demonstrate that the underlying purpose of the principle is outweighed by other weightier considerations of an equitable nature” (HPII v Stevens at [83]).

91. [105]

    The Defendants did not identify, in their evidence or submissions, any connecting factors between the Spring Square Project and the Thirteen Profitable Projects, which would make it “clearly inequitable” for the loss on the Spring Square Project not to be taken into account in determining the relief to which Firmtech is entitled.

92. [106]

    For example, there was no suggestion that the Spring Square Project formed, in combination with one or more of the Thirteen Profitable Projects, a single business opportunity, such that the Defendants were unable to earn the profits from those other Projects unless they also took on the Spring Square Project.

93. [107]

    The Plaintiffs made the following submission regarding the lack of any relevant connecting factors in the circumstances of this case:

94. [108]

    The Defendants did not, in their submissions in response, dispute any of those matters.

95. [109]

    Instead, the Defendants submitted that “the wrongful diversion of the [Relevant] Projects was the result of a continuing course of conduct arising from the desire of Mr Zhang and Ms Xie to part ways with Mr Xu and a common policy to profit by carrying on the same business [as Firmtech] and undertaking the [Relevant] Projects”.

96. [110]

    Accordingly, the only connection relied on by the Defendants appeared to be (as in HPII v Stevens) that the Spring Square Project was, like each of the Thirteen Profitable Projects, dishonestly and secretly diverted by Ms Xie and Mr Zhang to Aluminum and/or Logikal, so that any profits made on that project would be retained by them, rather than shared with their co-owner of Firmtech (Mr Xu).

97. [111]

    Such a connection does not make it inequitable that, in circumstances where the Spring Square Project (unlike the Thirteen Profitable Projects) happened to make a loss rather than a profit, the Defendants should bear that loss.

98. [112]

    For those reasons, I have determined that the loss on the Spring Square Project should not be set off against the Defendants’ liability to account for the profits of The Thirteen Profitable Projects (which are agreed to total $2,863,485).

Interest

1. [113]

   The Plaintiffs submitted that the calculation of interest should occur on the basis of compound interest, not simple interest (as occurs for pre-judgment interest under s 100 of the Civil Procedure Act 2005 (NSW)). The Plaintiffs noted, in their written submissions, that on their calculations as at the date of the hearing, the difference between an award of compound interest and an award of simple interest was around $100,000.

2. [114]

   The Defendants submitted that there should not be any award of interest.

3. [115]

   The Court’s power to award interest under s 100 of the Civil Procedure Act is discretionary: Screenco Pty Ltd v RL Dew Pty Ltd (2003) 58 NSWLR 720; [2003] NSWCA 319 at [41] (Handley JA) and [81] (Tobias JA) (Sheller JA agreeing with both).

4. [116]

   Similarly, in the Court’s equitable jurisdiction, “whether an order for interest ought to be made is a matter which remains entirely within the discretion of the court”: BCEG International (Australia) Pty Ltd v Xiao [2022] NSWSC 972 at [394] (Rees J).

5. [117]

   The Defendants submitted that the Court should refuse to award interest in the present case, by reason of the following matters.

6. [118]

   First, the Defendants contended that the performance by Aluminum and Logikal of the Relevant Projects yielded a total profit of only $224,244, which was “a very small return”, and there was “no evidence that Aluminum and Logikal used this profit for any commercial gain”.

7. [119]

   This submission assumes (contrary to the findings made above) that the loss on the Spring Square Project should be taken into account in determining Firmtech’s entitlement to interest. If, instead, the focus is on the Thirteen Profitable Projects, the performance of those particular Projects by Aluminum and Logikal yielded a total net profit of $2,863,485. Aluminum and Logikal plainly derived a significant commercial benefit from those diverted Projects since, having regard to the EBITDA figures upon which the Defendants relied, Aluminum and Logikal were able to achieve significant profits in the period from FY2020 to FY2024 only by reason of performing those Thirteen Profitable Projects.

8. [120]

   Secondly, the Defendants referred to findings in the Primary Judgment (at [605] to [607]) that, from about July 2021, Mr Xu stood by and permitted Aluminum and Logikal to make profits from new projects of a type previously performed by Firmtech, while he himself was undertaking similar projects on his own account through another entity.

9. [121]

   In the Primary Judgment (at [607]), I stated that there was force in the Defendants’ submission that, having regard to Mr Xu’s conduct in the period from July 2021 onwards, it would be inequitable for him to claim an account of profits in respect of new projects which were sought and obtained by Aluminum or Logikal after that point in time, but that it was unnecessary to express any concluded view on this issue (as I had determined that there was no entitlement to relief in respect of those later projects). I do not consider that those matters provide a basis for denying Firmtech any award of interest in respect of the Thirteen Profitable Projects, all of which were wrongfully diverted to Aluminum or Logikal in the period up to July 2021.

10. [122]

    Thirdly, the Defendants submitted that the conduct of the Plaintiffs materially delayed the progress of the matter. In particular, the Defendants noted that the Plaintiffs’ expert evidence, at trial, had only addressed the Whole of Business Allegation such that, when the Court rejected that claim, the matter had to be adjourned so that evidence could be prepared for an account of profits in respect of each of the Relevant Projects.

11. [123]

    This submission ignores that I found, in Firmtech Aluminium Pty Ltd v Xie (No 2) [2024] NSWSC 1427 at [17]-[18], that the Plaintiffs chose to lead expert evidence on a “whole of business” basis in circumstances where:

    1. (1)

       there was late production, or a lack of production, of documentary material in relation to a number of the Relevant Projects, with the result that the Plaintiffs first became aware of the diversion of a number of those Projects only shortly before the hearing; and

    2. (2)

       the Plaintiffs were therefore not in a position, as at the time of the hearing in July 2024, to lead evidence of the profits earned from, or loss or damage suffered in respect of, each of the Relevant Projects that was diverted to Aluminum and Logikal.

12. [124]

    For those reasons, I am not satisfied that any basis has been established for refusing to make an award of interest in favour of Firmtech.

13. [125]

    In Hungerfords v Walker (1989) 171 CLR 125 at 148; [1989] HCA 8, Mason CJ and Wilson J observed as follows (citations omitted, emphasis added):

14. [126]

    In BCEG International at [394], Rees J said that:

15. [127]

    Her Honour proceeded to award compound interest in that matter. None of the grounds of appeal considered in Xiao v BCEG was directed at this award of interest.

16. [128]

    In the recent decision of Chu v Lin, in the matter of Gold Stone Capital Pty Ltd [2024] FCA 766 at [251], Jackman J referred to the extensive analysis of the question of the availability of compound interest in relation to breaches of trust or fiduciary duty which was undertaken by Muir JA (with whom Gotterson JA and Applegarth J agreed) in Herrod v Johnston [2012] 2 Qd R 102; [2012] QCA 360 at [25]-[50]. Jackman J observed that Muir JA’s analysis identified two main circumstances relevant to Chu v Lin in which compound interest may be awarded: namely, “(a) where the trustee is guilty of fraud, serious misconduct or contumelious disregard of the interests of beneficiaries, and (b) where the trustee or fiduciary has wrongfully made a profit out of the breach.” Jackman J observed that:

17. [129]

    Jackman J held (at [252]) that the conduct of the first to third defendants in that case – which involved knowingly and dishonestly procuring or inducing breaches of trust, and knowingly assisting in the trustee’s dishonest and fraudulent design in committing those breaches of trust – rendered it appropriate for compound interest to be paid at yearly rests. (An appeal by those defendants from Jackman J’s judgment was dismissed: Lin v Chu (2025) 312 FCR 1; [2025] FCAFC 130. None of the appeal grounds was directed at the award of interest.)

18. [130]

    Similarly, in Bullhead Pty Ltd v Brickmakers Place Pty Ltd (in liq) (No 2) (2019) 58 VR 129; [2019] VSCA 7 at [53], the Victorian Court of Appeal (Kyrou, McLeish and Hargrave JJA) observed that compound interest with yearly rests may be awarded where, for example, “the defaulting fiduciary has used the money for commercial purposes, or where the defaulting fiduciary ‘has been guilty of fraud or serious misconduct’”.

19. [131]

    The Defendants noted that in Bullhead at [53(6)-(7)] their Honours observed that:

20. [132]

    Reference was made, in respect of these propositions, to the decision in Talacko v Talacko [2009] VSC 579 at, respectively, [16] and [25]. In the first of those passages, Kyrou J observed that compound interest should generally be awarded only in cases where a gain is being disgorged, rather than in cases where there is an award of equitable compensation (citing Fico v O'Leary [2004] WASC 215). In the second of those passages, Kyrou J said as follows:

21. [133]

    In the present case:

    1. (1)

       Ms Xie and Mr Zhang breached their fiduciary duties in diverting each of the Thirteen Profitable Projects from Firmtech to Aluminum and/or Logikal (Primary Judgment, [481]-[511]);

    2. (2)

       those breaches of duty were dishonest (Primary Judgment, [542]);

    3. (3)

       Aluminum and Logikal knowingly assisted in those dishonest breaches of duty by the fiduciaries (Primary Judgment, [543]);

    4. (4)

       it is agreed that Aluminum and Logikal made substantial net profits as a result of this wrongful conduct and, in particular, it is agreed that Aluminum and Logikal have made an “actual” gain from the Thirteen Profitable Projects totalling more than $2.864m; and

    5. (5)

       I have determined that Aluminum and Logikal are required to disgorge this actual gain.

22. [134]

    Having regard to the principles outlined above, I am satisfied that those matters justify an award of compound interest to be paid at yearly rests.

23. [135]

    There remains an issue as to the rate of interest. The Defendants noted that, in Bullhead at [53(2)-(3)], the Victorian Court of Appeal observed that:

24. [136]

    In this Court, orders for compound interest are typically made at the rates set out in the Court’s Practice Note applicable at the time: see BCEG International at [394], where Rees J referred to Hagan v Waterhouse at 393 (Kearney J) and Lewis v Nortex Pty Ltd (in liq); Lamru Pty Ltd v Kation Pty Ltd [2006] NSWSC 480 at [13] (Hamilton J). The same approach was adopted by Jackman J in Chu v Lin at [252]. I accept the Plaintiff’s submission that the same approach should be applied in this case.

25. [137]

    For the reasons given above, I have determined that the Plaintiffs are entitled to an account of profits in respect of the Thirteen Profitable Projects, fixed in the sum of $2,863,485, together with compound interest to be calculated at yearly rests, at the rates set out in the Practice Note at the applicable time.

26. [138]

    The Plaintiffs served, on the eve of the hearing, a further report of their expert, Mr Cairns, which provided a calculation for an award of compound interest. I indicated that, in circumstances where the Defendants had not had an opportunity to review and respond to that calculation, I would not (in the event that I accepted the Plaintiffs’ submissions on interest) determine, at this time, the quantum of interest. Instead, I will give the parties an opportunity to confer regarding the calculation of interest. In the event that the quantum of interest is not agreed, I will determine any dispute regarding this issue on the papers (unless any of the parties requests an oral hearing to deal with this matter).

27. [139]

    The resolution of these issues will leave only the question of costs in all three related proceedings. The parties have sought, and will be given, an opportunity to make submissions on the appropriate form of costs orders.

28. [140]

    Accordingly, I make the following orders.

    1. (1)

       Direct that the parties are to bring in short minutes of order by 4.00pm on 19 December 2025 to give effect to these reasons for judgment, including the calculation of interest up to 19 December 2025 (if such calculation can be agreed).

    2. (2)

       Direct that, in the event the parties are unable to agree on orders to give effect to these reasons for judgment, including the calculation of interest, the parties are to exchange and provide to the Associate to Nixon J, by 4.00pm on 7 February 2026, the orders which each party proposes, any evidence regarding the calculation of interest, and submissions (limited to 5 pages) on those matters, with the intent that, unless any party requests otherwise, the matter be determined on the papers.

    3. (3)

       Direct that the parties file and serve any submissions and evidence on the question of costs, and provide a copy to the Associate to Nixon J, by 5.00pm on 14 February 2026.

    4. (4)

       The proceedings be listed for a hearing on costs (and, if required, the issue of the calculation of interest) on 2 March 2026 at 10.00am, or at such other time as may be arranged with the Associate to Nixon J.