Demetriou v Gusdote Pty Limited [2010] FCA 581

FEDERAL COURT OF AUSTRALIA

Demetriou v Gusdote Pty Limited [2010] FCA 581 Citation: Demetriou v Gusdote Pty Limited [2010] FCA 581

Parties: EMILIOS DEMETRIOU, JANETTE LINDA ASHLEY and GEORGINA DEMETRIOU v GUSDOTE PTY LIMITED (ACN 089 937 253), MADEAS PTY LIMITED (ACN 108 819 316), NORTH QUEENSLAND LAND DEVELOPMENT PTY LIMITED (ACN 125 265 358), DON MATHESON GOLF COURSE CONSTRUCTION PTY LIMITED (ACN 108 200 693), DONALD JOHN MATHESON and SUSAN ROSE MATHESON

File number: NSD 935 of 2009

Judge: COWDROY J

Date of judgment: 11 June 2010

Catchwords: CORPORATIONS – Directors' Duties – Failure to notify ASIC of additional directors and shareholders – Failure to record names of directors and shareholders on ASIC register – One director subsequently contracting on behalf of the company without authority – Whether declarations should be made requiring amendments to company records and of ASIC register – Held – Court should make declarations requiring amendments to company records and of the ASIC register. CONTRACTS – Agreement to appoint additional directors and issue shares in exchange for substantial investment – Appointment of additional directors and issue of new shares never notified to ASIC – Whether Court should make declarations to correct records of company and of ASIC – Held – Court should make declarations regarding change in directors and issue of shares. EQUITY – Fiduciary Duties – Single director contracting on behalf of a company without authorisation from other directors to sell land to another company of which he was the sole director and of which he and his wife owned all shares – Director acting in own interests rather than interests of company and without proper authorisation – Whether land should be held on constructive trust for the transferring company – Held – Land should be held on constructive trust resulting from breach of fiduciary duty. COSTS – Indemnity Costs – Whether single director of company should be solely liable for costs on the basis that he was the corporate mind of company in circumstances where he did not consult other directors regarding sale of land – Whether unsuccessful respondent companies should be liable for costs in circumstances where such companies are substantially owned by the successful applicants – Whether respondent's conduct in maintaining defences until the commencement of the hearing and then abandoning all defences at the hearing warranted granting of indemnity costs – Held – Single director was the corporate mind of the contracting companies and is personally liable for costs in circumstances where other directors were not consulted and transactions were made for the benefit of another company of which he was the sole director – Applicants should not be liable for costs in proceedings in which they were successful by virtue of their interests in unsuccessful respondent companies in circumstances where they were not consulted – Conduct of respondent in persisting with defences which were all abandoned at the hearing justified the grant of indemnity costs.