Merrag Pty Ltd (in liq) & Anor v Khoury & Anor [2009] NSWSC 915

Merrag Pty Ltd (in liq) & Anor v Khoury & Anor [2009] NSWSC 915

The 13 September 2004 document was not a binding contract and was a sham front page created for financing purposes. Mr Khoury failed to prove any concluded oral contract in 2006 for the sale of Unit 28. Merrag was insolvent by 30 June 2006 and at all relevant times thereafter. The October 2007 transfer of Unit 28 to Mr Khoury for $250,000, when the unit was worth $525,000, was an uncommercial transaction and an unreasonable director-related transaction, and was voidable under Corporations Act 2001 (Cth) s 588FE. If the alleged 2006 oral contract existed, it would also have been an uncommercial transaction, an insolvent transaction, an unreasonable director-related transaction, and an...

Jurisdiction
Australia
Judgment Date
08 September 2009
Procedural Posture
Corporations Insolvency Proceeding / Principal Judgment
Outcome
Plaintiffs' contract debt and director duty claims based on the alleged 13 September 2004 contract failed, but Corporations Act relief was granted against the First Defendant for the voidable transfer of Unit 28.
Legal Topics
['unfair Preference' 'uncommercial Transaction' 'unreasonable Director Related Transaction' 'director Duties' 'oral Contract for Sale of Land' 'part Performance' 'solvency']
['corporations Law' 'insolvency' 'equity' 'property'] ['unfair Preference' 'uncommercial Transaction' 'unreasonable Director Related Transaction' 'director Duties' 'oral Contract for Sale of Land' 'part Performance' 'solvency']

Case Brief

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Procedural Posture

Corporations Insolvency Proceeding / Principal Judgment

Legal Issues

  1. 1 ['Whether an enforceable contract for sale of Unit 28 came into existence on or about 13 September 2004.' 'Whether there was an oral agreement in March/April 2006 or August 2006 for Michael Khoury to buy Unit 28 from Merrag for $440,000 with set-off of his loan account.' 'Whether any oral agreement would be enforceable by reason of acts of part performance.' 'Whether Merrag was insolvent at the time of the alleged oral contract and at the time of the transfer of Unit 28.' 'Whether the relevant transaction was an uncommercial transaction, an unfair preference, or an unreasonable director-related transaction under the Corporations Act 2001 (Cth).' 'What relief should be ordered under Corporations Act 2001 (Cth) s 588FF.']

Ratio Decidendi

The 13 September 2004 document was not a binding contract and was a sham front page created for financing purposes. Mr Khoury failed to prove any concluded oral contract in 2006 for the sale of Unit 28. Merrag was insolvent by 30 June 2006 and at all relevant times thereafter. The October 2007 transfer of Unit 28 to Mr Khoury for $250,000, when the unit was worth $525,000, was an uncommercial transaction and an unreasonable director-related transaction, and was voidable under Corporations Act 2001 (Cth) s 588FE. If the alleged 2006 oral contract existed, it would also have been an uncommercial transaction, an insolvent transaction, an unreasonable director-related transaction, and an...

Court Disposition

Plaintiffs' contract debt and director duty claims based on the alleged 13 September 2004 contract failed, but Corporations Act relief was granted against the First Defendant for the voidable transfer of Unit 28.

Orders

  • ["Dismiss the Plaintiffs' Originating Process." 'Order pursuant to Corporations Act 2001 (Cth) s 588FF(1)(c) that the First Defendant pay to the First Plaintiff the sum of $275,000 together with interest thereon at Supreme Court rates calculated from 10 October 2007 until the time of payment.' 'Proceedings stood...