In the matter of DJG Equities Pty Ltd [2014] NSWSC 36

In the matter of DJG Equities Pty Ltd [2014] NSWSC 36

The transfer of shares from DJG Securities Pty Ltd to Stephen Craig Hitchings was entered into for nominal consideration, at a time when DJG Securities was insolvent, and had the effect of removing assets from the liquidators' reach, providing no commercial benefit to the company and practical detriment to its creditors. Accordingly, the transfer constituted an uncommercial transaction and an insolvent transaction within the meaning of the Corporations Act 2001 (Cth) ss 588FB and 588FC, and the transaction was therefore voidable under s 588FE.

Parties
First Plaintiff: Antony Resnick and Brian Raymond Silvia in their capacity as liquidators of DJG Securities Pty Ltd (in liquidation); Second Plaintiff: Antony Resnick and Brian Raymond Silvia in their capacity as receivers of the assets of the D&T Family Discretionary Trust; First Defendant: DJG Equities Pty Ltd; Second Defendant: Stephen Craig Hitchings; Third Defendant: Argyle Investments & Securities Pty Ltd; Fourth Defendant: Autohaus Wholesalers Pty Ltd
Jurisdiction
Australia
Judgment Date
07 February 2014
Procedural Posture
Corporations/winding Up / Judgment on Liquidators' Application
Outcome
Orders made in favour of the plaintiffs; transfer declared void under Corporations Act provisions; costs awarded; ancillary orders per liquidators' draft.
Legal Topics
Winding Up, Uncommercial Transactions, Insolvent Transactions, Voidable Transactions
Corporations Winding Up Uncommercial Transactions Insolvent Transactions Voidable Transactions

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Parties

Antony Resnick and Brian Raymond Silvia in their capacity as liquidators of DJG Securities Pty Ltd (in liquidation)

First Plaintiff

Antony Resnick and Brian Raymond Silvia in their capacity as receivers of the assets of the D&T Family Discretionary Trust

Second Plaintiff

DJG Equities Pty Ltd

First Defendant

Stephen Craig Hitchings

Second Defendant

Argyle Investments & Securities Pty Ltd

Third Defendant

Autohaus Wholesalers Pty Ltd

Fourth Defendant

Procedural Posture

Corporations/winding Up / Judgment on Liquidators' Application

Legal Issues

  1. 1 Whether the transfer of 1,000 shares in DJG Equities Pty Ltd from DJG Securities Pty Ltd to Stephen Craig Hitchings was an uncommercial transaction under s 588FB of the Corporations Act 2001 (Cth)
  2. 2 Whether the transfer was an insolvent transaction under s 588FC of the Corporations Act 2001 (Cth)
  3. 3 Whether the transaction was voidable under s 588FE of the Corporations Act 2001 (Cth)

Ratio Decidendi

The transfer of shares from DJG Securities Pty Ltd to Stephen Craig Hitchings was entered into for nominal consideration, at a time when DJG Securities was insolvent, and had the effect of removing assets from the liquidators' reach, providing no commercial benefit to the company and practical detriment to its creditors. Accordingly, the transfer constituted an uncommercial transaction and an insolvent transaction within the meaning of the Corporations Act 2001 (Cth) ss 588FB and 588FC, and the transaction was therefore voidable under s 588FE.

Court Disposition

Orders made in favour of the plaintiffs; transfer declared void under Corporations Act provisions; costs awarded; ancillary orders per liquidators' draft.

Orders

  • Declare that the transfer of 1,000 shares in DJG Equities Pty Ltd by DJG Securities Pty Ltd to Stephen Craig Hitchings on or about 14 May 2013 is void as at, and after, the time it was made.
  • Order that DJG Equities Pty Ltd pay the Plaintiffs' costs in respect of the declaration as agreed or as assessed.