Sprowles, in the matter of ACN 619 665 628 Pty Ltd (in liquidation) v Rouse [2024] FCA 988

FEDERAL COURT OF AUSTRALIA

Sprowles, in the matter of ACN 619 665 628 Pty Ltd (in liquidation) v Rouse [2024] FCA 988 File number: NSD 632 of 2024

Judgment of: SHARIFF J

Date of judgment: 29 August 2024

Catchwords: CORPORATIONS – where liquidators sought orders under ss 588FB, 588FDA, 588FE and 588FF of the Corporations Act 2001 (Cth) in relation to certain alleged uncommercial transactions and unreasonable director-related transactions – where company made $2.3 million worth of loans and other payments to director and entity he controlled over four year period leading up to company's insolvency – where director and company entered into exit deed which required director to resign in exchange for company forgiving debts owing to company – whether entry into deed on those terms an uncommercial transaction – whether loans and payments were unreasonable director-related transactions – held that transactions were uncommercial transactions and unreasonable director-related transactions and were voidable transactions – orders sought by liquidators granted

Legislation: Corporations Act 2001 (Cth) ss 9, 91, 588F(1), 588FB, 588FB(1), 588FB(1)(a), 588FB(1)(b), 588FB(1)(c), 588FB(1)(d), 588FC, 588FC(a), 588FDA, 588FDA(1), 588FDA(1)(c), 588FE, 588FE(3), 588FE(3)(b), 588FE(6A), 588FF, 588FF(1)(a)-(j), 588FF(1)(h) Income Tax Assessment Act 1936 (Cth) Division 7A

Cases cited: Bryant, in the matter of Gunns Limited (in liq) (receivers and managers appointed) v Edenborn Pty Ltd [2020] FCA 715; (2020) 145 ACSR 20 Campbell Street Theatre Pty Ltd (In Liq) v Commercial Mortgage Trade Pty Ltd [2012] NSWSC 669 Capital Finance Australia Ltd v Tolcher [2007] FCAFC 185 Crowe-Maxwell v Frost (2016) 91 NSWLR 414 D Pty Ltd (in liq) v Calas (Trustee), in the matter of D Pty Ltd (in liq) [2016] FCA 1409 Demondrille Nominees Pty Ltd v Shirlaw (1997) 25 ACSR 535 Great Investments Ltd v Warner [2016] FCAFC 85; (2016) 243 FCR 516 In Re McGrath: HIH Insurance Ltd [2010] NSWSC 404; (2010) 266 ALR 642 Lewis (as liquidator of Doran Constructions Pty Ltd (in liq) v Doran (2005) 54 ACSR 410 Lewis v Cook (2000) 18 ACLC 490 Maronis Holdings Ltd v Nippon Credit Australia Pty Ltd [2001] NSWSC 448; 38 ACSR 404 Peter Pan Management Pty Ltd v Capital Finance Corp (Aust) Pty Ltd (2001) 19 ACLC 1392 Smith (in his capacity as liquidator of Action Paintball Games Pty Ltd) (in liq) v Starke (No 2) [2015] FCA 1119; (2015) 109 ACSR 145 Southern Cross Interiors Pty Ltd v Deputy Commissioner of Taxation (2001) 53 NSWLR 213 Sparks v Berry [2001] QSC 251; (2001) 19 ACLC 1430 Tosich Construction Pty Ltd (in liq) v Tosich (1997) 78 FCR 363 Walker v Wimborne (1976) 137 CLR 1 Explanatory Memorandum, Corporate Law Reform Bill 1992