Smith v Starke, in the matter of Action Paintball Games Pty Ltd (in liq) (No 2) [2015] FCA 1119

FEDERAL COURT OF AUSTRALIA

Smith v Starke, in the matter of Action Paintball Games Pty Ltd (in liq) (No 2) [2015] FCA 1119 Citation: Smith v Starke, in the matter of Action Paintball Games Pty Ltd (in liq) (No 2) [2015] FCA 1119

Parties: MICHAEL JOHN MORRIS SMITH IN HIS CAPACITY AS LIQUIDATOR OF ACTION PAINTBALL GAMES PTY LTD (IN LIQUIDATION) ACN 085 205 536 and ACTION PAINTBALL GAMES PTY LIMITED (IN LIQUIDATION) ACN 085 205 536 v BILL ROY STARKE, BERYL JEANETTE STARKE, JOHN SALVINU CARUANA, MICHAEL WILLIAM WHYBREW and ELIZABETH SUSAN WHYBREW

File number: NSD 2451 of 2013

Judge: GLEESON J

Date of judgment: 22 October 2015

Catchwords: CORPORATIONS – whether certain payments unreasonable director-related transactions – whether reasonable person in company's circumstances would not have made payments – where payments made by company to director defendants' creditor – where defendants borrowed money, in part to purchase property to be developed for company's use – where company unable to purchase property itself – where difficulties experienced with development – whether payments conferred benefits on company – detriment to company of making payments – obligation to consider interests of members – some impugned payments found to be unreasonable director-related transactions – Corporations Act 2001 (Cth), s 588FF

Legislation: Corporations Act 2001 (Cth), ss 588FB, 588FDA, 588FE, 588FF

Cases cited: Cashflow Finance Pty Ltd v Westpac Banking Corporation [1999] NSWSC 671 Cussen v Sultan [2009] NSWSC 1114 Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1993) 32 NSWLR 50 Fielding as liquidator of Lyngray Developments Pty Ltd v Dushas [2013] QCA 55 Kazar, in the matter of Frontier Architects Pty Limited [2010] FCA 1381; (2010) 81 ACSR 158 Kijurina (as liquidator of ET Family Pty Ltd) v Taouk [2015] FCA 424; (2015) 105 ACSR 686 Lewis v Doran [2005] NSWCA 243; (2005) 219 ALR 555 Linton v Telnet Pty Ltd [1999] NSWCA 33; (1999) 30 ACSR 465 Re Lesvos Pty Ltd [2012] NSWSC 1288 Slaven v Menegazzo [2009] ACTSC 94 Tosich Constructions Pty Ltd (in liq) v Tosich (1997) 78 FCR 363 Vasudevan v Becon Constructions (Australia) Pty Ltd [2014] VSCA 14; (2014) 41 VR 445 Weaver v Harburn [2014] WASCA 227; (2014) ACSR 416 Welcome Homes Real Estate Pty Ltd v Ziade Investments Pty Ltd (in liq) [2007] NSWCA 167