In the matter of Auzhair Supplies Pty Ltd (In Liq) (No 2); In the matter of Auzhair 1 Pty Ltd [2013] NSWSC 353

In the matter of Auzhair Supplies Pty Ltd (In Liq) (No 2); In the matter of Auzhair 1 Pty Ltd [2013] NSWSC 353

Because Auzhair 1 held its assets and undertaking on trust for Auzhair Supplies and the directors had brought about the transfer of Auzhair Supplies' assets in breach of fiduciary duty, the directors were liable in equity for the deficiency between the transferred value, with interest, and the present value of the assets and undertaking recoverable from Auzhair 1. The directors' asserted beliefs, the Greenaways' consent, and later injections of funds into Auzhair 1 did not defeat the liquidator's claim. On the accepted figures, Auzhair 1 was to account by paying $2 and the directors were to pay $749,447.32.

Jurisdiction
Australia
Judgment Date
04 March 2013
Procedural Posture
Corporations; Consequential Orders / Ex Tempore Judgment Making Consequential Orders After the Substantive Judgment in in the Matter of Auzhair Supplies Pty Ltd (in Liq) [2013] NSWSC 1 and Related Orders in Proceedings 2010/17300
Outcome
Consequential orders made for the plaintiff, including a trust declaration, accounting order, judgment against the second to fourth defendants for $749,447.32, share valuation declarations, vacation of the stay, and costs orders.
Legal Topics
["directors' Fiduciary Obligations" 'equitable Compensation' 'assets Held on Trust' 'accounting for Assets and Undertaking' 'share Valuation' 'costs']
['corporations' 'equity' 'trusts'] ["directors' Fiduciary Obligations" 'equitable Compensation' 'assets Held on Trust' 'accounting for Assets and Undertaking' 'share Valuation' 'costs']

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Procedural Posture

Corporations; Consequential Orders / Ex Tempore Judgment Making Consequential Orders After the Substantive Judgment in in the Matter of Auzhair Supplies Pty Ltd (in Liq) [2013] NSWSC 1 and Related Orders in Proceedings 2010/17300

Legal Issues

  1. 1 ['Whether relief should be given against the directors personally or only against Auzhair 1 Pty Ltd.' "The amount of equitable compensation payable for assets and undertaking transferred in breach of directors' fiduciary obligations." "Whether the value of Auzhair 1 Pty Ltd's assets and undertaking and the transferred amount allowed final orders without a further inquiry." 'The value of each ordinary fully paid share in Auzhair 1 Pty Ltd.']

Ratio Decidendi

Because Auzhair 1 held its assets and undertaking on trust for Auzhair Supplies and the directors had brought about the transfer of Auzhair Supplies' assets in breach of fiduciary duty, the directors were liable in equity for the deficiency between the transferred value, with interest, and the present value of the assets and undertaking recoverable from Auzhair 1. The directors' asserted beliefs, the Greenaways' consent, and later injections of funds into Auzhair 1 did not defeat the liquidator's claim. On the accepted figures, Auzhair 1 was to account by paying $2 and the directors were to pay $749,447.32.

Court Disposition

Consequential orders made for the plaintiff, including a trust declaration, accounting order, judgment against the second to fourth defendants for $749,447.32, share valuation declarations, vacation of the stay, and costs orders.

Orders

  • ['Declare that the First defendant Auzhair 1 Pty Limited holds its assets and undertaking upon trust for the plaintiff Auzhair Supplies Pty Limited (in liquidation).' 'Order that Auzhair 1 account to Auzhair Supplies for such assets and undertaking by paying to Auzhair Supplies the sum of $2.' 'Certify that the...