Ziade Investments Pty Ltd & Anor v Welcome Homes Real Estate Pty Ltd & Ors [2006] NSWSC 457

Ziade Investments Pty Ltd & Anor v Welcome Homes Real Estate Pty Ltd & Ors [2006] NSWSC 457

The Court held that the grants of mortgages by Ziade Investments on 12 March 2004 were insolvent and uncommercial transactions as defined in the Corporations Act 2001 (Cth). The company was insolvent at that time, the mortgages provided no commercial benefit and caused detriment to the company, and certain debts secured were statute-barred. These transactions were voidable under s 588FE(3) as they occurred within two years prior to the relation-back day. Relief is available under s 588FF(1), declaring the mortgages unenforceable and directing repayment of amounts received. It was also established, in alternative, that creation of quarter interests in the mortgages in favour of close...

Parties
First Plaintiff: Ziade Investments Pty Ltd (in liq); Second Plaintiff: Richard James Porter; First Defendant: Welcome Homes Real Estate Pty Ltd; Second Defendant: Ritz Cinema Pty Ltd; Third Defendant: Janlz Constructions Pty Ltd; Fourth Defendant: Jack Ziade; Fifth Defendant: Jean Ziade
Jurisdiction
Australia
Judgment Date
18 May 2006
Procedural Posture
Civil / Judgment
Outcome
Relief granted; mortgages declared voidable as insolvent and uncommercial transactions. Court to hear parties on orders under s 588FF(1) and potentially refer debt determination to Associate Justice or liquidator.
Legal Topics
Winding Up, Voidable Transactions, Insolvent Transactions, Uncommercial Transactions, Director Related Transactions, Mortgages, Statute Barred Debts
Corporations Law Winding Up Voidable Transactions Insolvent Transactions Uncommercial Transactions Director Related Transactions Mortgages Statute Barred Debts

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Parties

Ziade Investments Pty Ltd (in liq)

First Plaintiff

Richard James Porter

Second Plaintiff

Welcome Homes Real Estate Pty Ltd

First Defendant

Ritz Cinema Pty Ltd

Second Defendant

Janlz Constructions Pty Ltd

Third Defendant

Jack Ziade

Fourth Defendant

Jean Ziade

Fifth Defendant

Procedural Posture

Civil / Judgment

Legal Issues

  1. 1 Whether mortgages granted by Ziade Investments Pty Ltd on 12 March 2004 are voidable as insolvent and uncommercial transactions under the Corporations Act 2001 (Cth)
  2. 2 Whether company was insolvent at the relevant time
  3. 3 Whether granting of mortgages constituted unreasonable director-related transactions

Ratio Decidendi

The Court held that the grants of mortgages by Ziade Investments on 12 March 2004 were insolvent and uncommercial transactions as defined in the Corporations Act 2001 (Cth). The company was insolvent at that time, the mortgages provided no commercial benefit and caused detriment to the company, and certain debts secured were statute-barred. These transactions were voidable under s 588FE(3) as they occurred within two years prior to the relation-back day. Relief is available under s 588FF(1), declaring the mortgages unenforceable and directing repayment of amounts received. It was also established, in alternative, that creation of quarter interests in the mortgages in favour of close...

Court Disposition

Relief granted; mortgages declared voidable as insolvent and uncommercial transactions. Court to hear parties on orders under s 588FF(1) and potentially refer debt determination to Associate Justice or liquidator.

Orders

  • Mortgages declared unenforceable under Corporations Act 2001 (Cth), s 588FF(1)
  • Court to hear parties on further orders under s 588FF(1)