Tang v Roths Holdings Australia Pty Ltd, in the matter of AXL Financial Pty Limited (in liq) [2023] FCA 492

Tang v Roths Holdings Australia Pty Ltd, in the matter of AXL Financial Pty Limited (in liq) [2023] FCA 492

The transfer of mortgage was an uncommercial, insolvent, and unreasonable director-related transaction, and thus a voidable transaction under the Corporations Act 2001 (Cth). The transfer conferred no benefit on AXL and was entered into at a time when AXL was insolvent; it was effected to related parties without proper consideration and for the purpose of defeating creditor claims. The plaintiffs were entitled to a declaration that the transfer is unenforceable and to payment of the funds paid into Court.

Jurisdiction
Australia
Judgment Date
19 May 2023
Procedural Posture
Corporations/insolvency / Default Judgment Application
Outcome
Application granted; declaration of unenforceability; payment of sums to plaintiffs; costs ordered against first defendant.
Legal Topics
['uncommercial Transactions' 'voidable Transactions' 'insolvent Transactions' 'unreasonable Director Related Transactions' 'default Judgment']
['insolvency' 'corporations Law' 'practice and Procedure'] ['uncommercial Transactions' 'voidable Transactions' 'insolvent Transactions' 'unreasonable Director Related Transactions' 'default Judgment']

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Procedural Posture

Corporations/insolvency / Default Judgment Application

Legal Issues

  1. 1 ['Whether the transfer of mortgage was an uncommercial transaction within the meaning of s 588FB of the Corporations Act 2001 (Cth)' 'Whether the transfer was an insolvent transaction or an unreasonable director-related transaction within the meaning of the Act' 'Whether the transfer was a voidable transaction under s 588FE' "Entitlement to payment of funds paid into Court on the basis of the transaction's voidability" 'Appropriateness of default judgment where no defence was filed']

Ratio Decidendi

The transfer of mortgage was an uncommercial, insolvent, and unreasonable director-related transaction, and thus a voidable transaction under the Corporations Act 2001 (Cth). The transfer conferred no benefit on AXL and was entered into at a time when AXL was insolvent; it was effected to related parties without proper consideration and for the purpose of defeating creditor claims. The plaintiffs were entitled to a declaration that the transfer is unenforceable and to payment of the funds paid into Court.

Court Disposition

Application granted; declaration of unenforceability; payment of sums to plaintiffs; costs ordered against first defendant.

Orders

  • ['The transfer of mortgage executed by the second plaintiff and the defendants on 1 July 2019 with Dealing No. AP368638Q is unenforceable.' 'The sum of $139,000 paid into Court pursuant to the orders made by Farrell J on 15 November 2022, together with accrued interest thereon, be paid to the plaintiffs forthwith.'...