Philip Cardaci loses appeal against brother’s widow

The state's highest court has slammed Philip Cardaci in his failed bid to take back control the estate of his late brother Marc, reportedly worth more than $40 million.

Mr Cardaci and his former sister-in-law, Mae Cardaci, have been in a lengthy and costly legal battle after the death of CFC Group boss Marc Cardaci in 2015.

Ms Cardaci took Philip Cardaci to court over the control of two trusts in her deceased husband’s name, known as Washburn and Marco Cardaci Testamentary Trusts.

The Supreme Court of Western Australia ousted the companies controlled by Mr Cardaci as trustee and appointed Ms Cardaci as trustee over Marc's trusts in December 2021.

The WA Supreme Court of Appeal today upheld the 2021 decision, dismissing Mr Cardaci’s appeal and criticising his actions during the legal proceedings.

In its judgment, the appellate court said the way Mr Cardaci defended the legal proceedings was outside the norms of what would be expected of a trustee in a litigation of this kind.

"The fact that Philip was willing to defend the proceedings in such a belligerent, combative and uncompromising manner as to waste over $4.6 million in trust funds in the defendants' costs alone is inconsistent with him conducting himself in the best interests of the trusts or Marc's estate," the judgment said.

"It demonstrates a degree of hostility and an unsuitability to manage funds in which Mae has an interest.

"Mae was subjected to a cross-examination over six days, in which no stone, however remotely connected with the issues, was left unturned.

"The trial judge described the cross-examination as vigorous, thorough, challenging and at times intense. That cross-examination attacked Mae's personal integrity."

A spokesperson for Mr Cardaci said they were reviewing the judgment.

"Importantly, it has no impact on the ongoing operations of the CFC Group, or the companies that it comprises," the spokesperson said. 

"For more than 50 years managing the continued success and safety of our businesses, our employees and continuing the growth of the group has been a priority, and this continues unchanged."

In another blow to Mr Cardaci, the court allowed Ms Cardaci’s cross-appeal after finding he breached his duty when he was the executor of his brother’s estate.

“There is no proper basis for relieving Philip of his liability for that breach of duty,” the appellate court said in its judgment.

"The fact that Marc chose Philip as executor of his estate is a relevant factor but, in the circumstances of the present case, is of limited weight.

"Marc's Memorandum of Wishes indicated that he trusted his brother to apply funds Marc controlled for the benefit of his widow after Marc's death.

"Philip's conduct since May 2016 demonstrates that his brother's trust in him to do so was misplaced. There is nothing to indicate that Marc contemplated that Philip would act in this manner."

The court was told Mr Cardaci, as executor of his brother's estate, was paying Ms Cardaci funds from one of Marc's trusts for a limited time.

According to the judgment, Mr Cardaci's attitude towards Ms Cardaci changed in May 2016 when he discovered the latter in a new relationship.

"Philip contended that the payments to Mae were loans repayable by Mae," the judgment said.

"Philip also decided that the Washburn Trust and Marc's Testamentary Trust would make no distributions to Mae for the 2015-2016 financial year."

Mr Cardaci told Ms Cardaci that as trustee of the Washburn trust, he would never distribute anything from the trust and all the wealth would go to a charitable foundation established in Marc's name, the judgment said.

The court was told Ms Cardaci refused a settlement offer of $2 million in exchange of relinquishing interest in the trusts, and launched legal proceedings in late 2016.

Ms Cardaci was largely successful in her court actions to remove the Mr Cardaci-controlled companies as trustee.

In 2022, the court also ordered Mr Cardaci to repay the money taken out from Marc's trusts, being $4.6 million, that were used to fund his legal fees.

Supreme Court WA registrar Brendyn Nelson's decision revealed more than $1.79 million from the Washburn Trust and about $2.2 million from Marco's Testamentary Trust were used for legal fees mostly paid to law firm Bennett and accountants EY and Brentnalls.