In the matter of IW4U Pty Limited (in liq) [2021] NSWSC 40

Supreme Court New South Wales

Medium Neutral Citation: In the matter of IW4U Pty Limited (in liq) [2021] NSWSC 40 Hearing dates: 1 December 2020 Date of orders: 4 February 2021 Decision date: 04 February 2021 Jurisdiction: Equity - Corporations List Before: Gleeson J Decision: (1) Statement of claim dismissed. (2) Reserve liberty to the first defendant to apply within 14 days for a costs order if he has incurred any costs which are recoverable. Catchwords: CORPORATIONS – winding up – unreasonable director-related transaction – where director allowed company's business to be taken over by new company for nil consideration – whether disposition "for the benefit of" director – Vasudevan v Becon Constructions (Aust) Pty Ltd (2014) 41 VR 445 applied – Corporations Act 2001 (Cth), s 588 FDA CORPORATIONS – directors' duties – statutory duty to act in good faith and in the best interest of the company and for proper purpose – where director allowed company's business to be taken over by new company for nil consideration – Corporations Act 2001 (Cth), s 181(1) CORPORATIONS – accessorial liability for involvement in breach of director's statutory duty – whether person "aided and abetted" or "knowingly concerned in, or party to" contravention – where accountant registered new company and was sole director, secretary and shareholder of new company – Corporations Act 2001 (Cth), s 79 CORPORATIONS – claim for compensation – whether company suffered loss as a result of accessory's contravention of director's duty – Corporations Act 2001 (Cth), s 1317H(1) Legislation Cited: Corporations Act 2001 (Cth), ss 9, 79, 91, 180, 181, 182, 436A, 491, 494, 513A, 588FDA, 588FE, 588FF, 597, 1317E, 1317G, 1317H Evidence Act 1995 (NSW), s 63 Uniform Civil Procedure Rules 2005 (NSW), r 14.14 Cases Cited: Adler v ASIC [2003] NSWCA 131; (2003) 46 ACSR 504 Australian Securities and Investments Commission v Adler [2002] NSWSC 171; (2002) 41 ACSR 72 Australian Securities and Investments Commission v Drake (No 2) [2016] FCA 1552; (2016) 340 ALR 75; 118 ACSR 184; 117 ACSR 408 Australian Securities and Investments Commission v Flugge [2016] VSC 779; (2016) 342 ALR 1 Australian Securities and Investments Commission v Mitchell (No 2) [2020] FCA 1098 Australian Securities and Investments Commission v Somerville (2009) 77 NSWLR 110; [2009] NSWSC 934 Barnes v Addy (1874) LR 9 Ch App 244 Chew v R (1991) 4 WAR 21; (1991) 5 ACSR 473 Crowe-Maxwell v Frost (2016) 91 NSWLR 414; [2016] NSWCA 46 Downer EDI Ltd v Gillies [2012] NSWCA 333; (2012) 92 ACSR 373 Giorgianni v R (1985) 156 CLR 473; [1985] HCA 29 Hart Security Australia Pty Ltd v Boucousis [2016] NSWCA 307; (2016) 339 ALR 659; 117 ACSR 408 Hydrocool Pty Ltd v Hepburn [2011] FCA 495; (2011) 279 ALR 646; 83 ACSR 652 Kalls Enterprises Pty Ltd (in liq) v Baloglow [2007] NSWCA 191; (2007) 63 ACSR 557 Lifeplan Australia Friendly Society Ltd (ACN 087 649 492) v Ancient Order of Foresters in Victoria Friendly Society Ltd (ACN 087 648 842) [2017] FCAFC 74; (2017) 120 ACSR 421 Madsen-Ries and Levin as Liquidators of Debut Homes Limited (in liquidation) v Cooper [2020] NZSC 100 March v E and MH Stramare Pty Ltd (1991) 171 CLR 506; [1991] HCA 12 Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd [2006] FCAFC 40; (2006) 230 ALR 56 Pereira v Director of Public Prosecutions [1988] HCA 57; (1988) 82 ALR 217 Permanent Building Society Pty Ltd (in liq) v Wheeler (1994) 11 WAR 187; (1994) 14 ACSR 109 Re Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 789; (2014) 101 ACSR 233 Re Great Wall Resources Pty Ltd (in liq) [2013] NSWSC 354 Spies v R (2000) 201 CLR 603; [2000] HCA 43; (2000) 35 ACSR 500 Sycotex Pty Ltd v Baseler (1994) 122 ALR 53; 13 ACSR 766 Termite Resources NL (in liq) v Meadows, in the matter of Termite Resources NL (in liq) (No 2) [2019] FCA 354; (2019) 370 ALR 191; (2019) 135 ACSR 45 Vasudevan v Becon Constructions (Aust) Pty Ltd (2014) 41 VR 445; [2014] VSCA 14 V-Flow Pty Ltd v Holyoake Industries (Vic) Pty Ltd [2013] FCAFC 16; (2013) 296 ALR 418; 93 ACSR 76 Weaver v Harburn [2014] WASCA 227; (2014) 103 ACSR 416 Yorke v Lucas (1985) 158 CLR 661; [1985] HCA 65 Ziade Investments Pty Ltd v Welcome Homes Real Estate Pty Ltd [2006] NSWSC 457; (2006) 57 ACSR 693 Category: Principal judgment Parties: IW4U Pty Limited (in liq) (First plaintiff) Frank Lopilato (Second plaintiff) Mitchell Herrett (Third plaintiff) Herman Astarci (First defendant) IW4U Employment Services Pty Limited (Second defendant) Representation: Counsel: Mr A Bailey (Plaintiffs) Mr H Astarci (Self-represented) (First defendant) No appearance (Second defendant)