Prechelt v Douran [2022] NFSC 1

SUPREME COURT OF NORFOLK ISLAND

Prechelt v Douran [2022] NFSC 1 File number(s): SC 3 of 2018

Judgment of: RARES J

Date of judgment: 1 November 2022

Catchwords: CORPORATIONS – directors' duties – duty pursuant to s 285(2) of the Companies Act 1985 (NI) to exercise reasonable care and diligence – duty pursuant to s 285(4) of the Companies Act 1985 (NI) not to use position improperly to gain advantage for another person or cause detriment to company – where brother and sister directors of company – where company property sold at undervalue to another company owned by director and his business associate – where other director made no inquiries at all into circumstances of transaction and admitted her object was to help her brother – where minority shareholder brought separate proceeding to wind up company and appoint liquidator to investigate sale – where under s 481(2)(c) of the Companies Act 1985 (NI) liquidator assigned company's statutory causes of action against directors to minority shareholder – whether company's statutory causes of action against former directors assignable – whether minority shareholder proved that company would have entered into sale at undervalue but for passive director's breach of duty – Held: judgment for plaintiff

Legislation: Competition and Consumer Act 2010 (Cth) Sch 2, s 236 Corporations Act 2001 (Cth) ss 477, 1317H Corporations Law (Cth) (repealed) ss 588M, 588W Trade Practices Act 1974 (Cth) (repealed) s 82 Companies (Western Australia) Code s 229 Companies Act 1985 (NI) ss 285, 481 Conveyancing Act 1919 (NSW) s 12 Mercantile Law (Chose in Action) Act 1989 (NI) s 2 Supreme Court of Judicature Act 1873 (UK) s 25