A dram of Laphroaig and a Lamborghini: Accountants make dodgy deal to extract $420k from client

A taxpayer has won his case against his accountants on the grounds that their financial advice breached their fiduciary duties towards him.

The accountants received $420,000 after he agreed to a development deal, despite it falling through.

Accountants Rajeev Agarwal and Xiao Lan Ju are husband and wife who were registered proprietors of a property on Annangrove Road in Annangrove, NSW, valued at $3.85 million.

Agarwal and Ju served as accountants and tax advisers for their client Gurbachan Singh Khaihra since 2020 after they were introduced to each other by a friend in 2017.

The Supreme Court of NSW noted that the pair also acted as business advisers to Khaihra and his wife from time to time.

Along with being an accountant, Agarwal was also involved in a number of property developments since 2017, giving evidence to the court of 10 property development projects that he has been involved in.

Since they met that year, the court heard that Agarwal told Khaihra of his investment activities, urging him to join in.

“He presented himself as a successful property developer and displayed significant outward signs of wealth. A ride in a Lamborghini, with a bottle of Laphroaig in the passenger footwell, was but one prominent example which was likely to convey such an impression,” the court said.

The Lamborghini ride

In late 2023, Khaihra was called to attend Agarwal and Ju’s house to discuss a business proposition. As he entered the property, Agarwal was already on the drink.

“He finished his glass, then poured himself another and also poured me a glass. During this time, we initially had what can be described as social chit-chat,” Khaihra said in his affidavit.

During the meeting, Agarwal pitched a business proposition where he would give Khaihra development consent to build a childcare or aged care centre on their Annangrove property, provided he buy a $525,000 stake in the property.

Agarwal proposed that they would then sell the property and divide the profits.

The agreement involved Khaihra contributing an amount equivalent to half of Agarwal and Ju’s $1,050,000 equity in the property ($3.85 million minus $2.8 million mortgage).

After the bottle of scotch was almost empty, Khaihra said that his accountant took him in his Lamborghini to view the Annangrove property.

During the drive, Agarwal tried to convince Khaihra to make the investment, while adding the disclaimer that he intended to put the property on the market for $3.9 million.

“This is another opportunity if you want to come and invest in the land. I recommend that you invest in it. It is a good investment. The property can be developed. If we keep it as it is, there is not going to be much appreciation in the value,” Khaihra said, recalling what Agarwal was saying during the drive.

“Look, if you are really interested, let me work out how much of a loan we can get on your liquor store. If the loan goes ahead and we get you a loan, then you have to make a commitment. I’m getting you the loan only for this project,” Agarwal allegedly said.

Agarwal brought up their friend who he previously also struck a deal with.

“Since I got him involved in my developments in Sydney and the Gold Coast, his life has totally changed. He now lives like a king,” Khaihra recalled Agarwal saying.

Agarwal and Khaihra eventually reached an agreement; however, Agarwal told him that he would not have his name on the property title to “avoid costs and complications”.

In late 2023, Agarwal and Ju arranged a loan for Khaihra with ANZ Bank, and it was approved with ANZ for $720,000. The court found that $420,000 of this loan, equating to a 40 per cent interest in the property, was to be invested in the property.

“At the time of advising Khaihra as to whether to enter into an agreement to develop the Property, there was a clear conflict of interest. Agarwal and Ju were to personally receive potentially $525,000 from Khaihra or, as it turned out, $420,000,” the court said.

The court found that Agarwal and Ju did not lodge a development application and two years later entered a sale agreement in respect of the Annangrove property for $3.3 million.

“Fast forward to the present day, no development application has been made. Agarwal and Ju contend that the agreement with Khaihra has come to an end because neither party had the money to contribute to the development of the Property,” the court found.

The court found that Agarwal and Ju applied Khaihra’s funds for their own benefit by selling the property without obtaining development approval for the proposed childcare centre or aged care facility development, and securing the early release of the deposit from the purchaser, paid entirely to themselves.

Fiduciary duties

The court found that Khaihra placed trust and confidence in Agarwal and Ju in relation to financial advice concerning their business activities.

“Khaihra clearly relied on Agarwal in giving him advice as to whether to proceed with the present transaction, and was vulnerable to Agarwal’s integrity in this regard,” the court said.

The court noted that as Khaihra’s accountants, Agarwal and Ju owed him the fiduciary duties to act honestly, in good faith and in the best interests of Khaihra, to avoid conflicts of interest and not to divert profits to themselves (breach of fiduciary duty claim).

“In the circumstances of the present case, Agarwal and Ju owed fiduciary duties to Khaihra at the time of the entry into the agreement to develop the Property,” the court said.

In light of the evidence, the court said that it was satisfied that Agarwal and Ju “breached their fiduciary duties by placing themselves in a position where their obligation to advise Khaihra conflicted with their personal financial interests”.

Upon consideration of all evidence, Justice Ian Pike determined that the parties: “should be given an opportunity to consider these reasons and confer as to the appropriate orders and declarations to be made to give effect to them. The parties should also confer as to the appropriate next steps in the proceedings to progress the second stage as to relief.”

The case citation: Khaihra v Agarwal [2026] NSWSC 1334 (27 October 2026)