In the Matter of Lesvos Pty Ltd [2012] NSWSC 1288

In the Matter of Lesvos Pty Ltd [2012] NSWSC 1288

The transaction comprising the payment of $70,000 made by Lesvos Enterprises Pty Limited to an account connected with its directors was found to be for the sole benefit of the directors, with no corresponding benefit to the company. A reasonable person in the company's circumstances would not have entered into the transaction, rendering it an unreasonable director-related transaction and voidable. Repayment, with interest, was ordered.

Parties
First Plaintiff: Lesvos Enterprises Pty Limited (In Liquidation) ACN 078 840 338; Second Plaintiff: Mitchell Warren Ball; First Defendant: Maria Alexiou; Second Defendant: Arthur Alexiou
Jurisdiction
Australia
Judgment Date
25 September 2012
Procedural Posture
Civil (corporations Voidable Transaction Application) / Final Judgment
Outcome
Plaintiffs succeed in part; declaration made and order for repayment with interest and costs.
Legal Topics
Unreasonable Director Related Transactions, Voidable Transactions, Liquidator Remedies, Company Funds and Director Benefit
Corporations Law Unreasonable Director Related Transactions Voidable Transactions Liquidator Remedies Company Funds and Director Benefit

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Parties

Lesvos Enterprises Pty Limited (In Liquidation) ACN 078 840 338

First Plaintiff

Mitchell Warren Ball

Second Plaintiff

Maria Alexiou

First Defendant

Arthur Alexiou

Second Defendant

Procedural Posture

Civil (corporations Voidable Transaction Application) / Final Judgment

Legal Issues

  1. 1 Whether certain transactions by Lesvos Enterprises Pty Ltd were unreasonable director-related transactions within the meaning of the Corporations Act 2001, s 588FDA
  2. 2 Whether the implicated transactions conferred benefit on the company or solely on the directors or their associates
  3. 3 Whether the transactions were voidable under s 588FE

Ratio Decidendi

The transaction comprising the payment of $70,000 made by Lesvos Enterprises Pty Limited to an account connected with its directors was found to be for the sole benefit of the directors, with no corresponding benefit to the company. A reasonable person in the company's circumstances would not have entered into the transaction, rendering it an unreasonable director-related transaction and voidable. Repayment, with interest, was ordered.

Court Disposition

Plaintiffs succeed in part; declaration made and order for repayment with interest and costs.

Orders

  • Declaration that the $70,000 payment was an unreasonable director related transaction under s 588FDA and a voidable transaction under s 588FE(6A).
  • Defendants ordered to pay to the first plaintiff $70,000 plus interest of $29,706.36 (total $99,706.36).