In the matter of ZH International Pty Ltd (in liquidation) [2022] NSWSC 2

Supreme Court New South Wales

Medium Neutral Citation: In the matter of ZH International Pty Ltd (in liquidation) [2022] NSWSC 2 Hearing dates: 3-6 and 10 August 2021 Decision date: 02 February 2022 Jurisdiction: Equity Before: Rees J Decision: Defendants ordered to transfer seven properties under section 588FF(1)(b), Corporations Act 2001 (Cth). Further orders made to quantify any benefit conferred by the defendants on the company. Catchwords: CORPORATIONS – voidable transactions – husband and wife directors and shareholders of company – company acquires four properties – net equity in properties is $2 million – couple separate – company sued for building defects for $3 million – company insolvent – couple agree partial property settlement in respect of the properties owned by the company only – 'asset strip' to defeat prospective creditors –company not a party to Family Court proceedings or orders – couple discharge mortgages – company transfers properties to husband and wife. VOIDABLE TRANSACTIONS – whether Family Court orders constituted "transaction of the company" – whether later transfer of properties by the company a "transaction" – consideration of Mateo and s. 588FF Corporations Act at [172]-[177] – whether relief sought is inconsistent with Family Court orders – consideration of Higgins and s. 90AC and 90AE, Family Law Act at [203]-[208] SECTION 588FF – order sought to transfer property – whether to exercise discretion to make order – reliance on legal advice – how to account for benefits conferred by directors on company – insufficient evidence. Legislation Cited: Bankruptcy Act 1966 (Cth) Corporations Act 2001 (Cth) Conveyancing Act 1919 (NSW) Civil Procedure Act 2005 (NSW) Family Law Act 1975 (Cth) Family Law Rules 2004 (Cth) Cases Cited: Ansell Ltd v Davies [2008] SASC 203; (2008) 219 FLR 329 Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337; [1981] HCA 1 Australian Securities and Investments Commission v Rich [2005] NSWSC 417; (2005) 53 ACSR 752 Australian Securities and Investments Commission v Rich [2009] NSWSC 1229; (2009) 75 ACSR 1 Baxter v Obacelo Pty Ltd (2001) 205 CLR 635; 184 ALR 616; [2001] HCA 66 BCI Finances Pty Ltd (In Liq) v Binetter (No 4) [2016] FCA 1351; (2016) 117 ACSR 18 BCI Finances Pty Ltd (In Liq) v Binetter [2018] FCAFC 189; (2018) 132 ACSR 1 Bovis Lend Lease v Wily [2003] NSWSC 467 BP Australia Ltd v Brown (2003) 58 NSWLR 322; [2003] NSWCA 216 Bryant v Edenborn Pty Ltd [2020] FCA 715; (2020) 145 ACSR 20 Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17 Buzzle Operations Pty Ltd (in liq) v Apple Computer Australia Pty Ltd (2011) 81 NSWLR 47; [2011] NSWCA 109 Cantrell v North (2020) FLC 93-976; [2020] FamCAFC 175 Capital Finance Australia Ltd v Tolcher (2007) 164 FCR 83; [2007] FCAFC 185 Cashflow Finance Pty Ltd (in liq) v Westpac Banking Corporation [1999] NSWSC 671 Challenger Property Asset Management Pty Ltd v Stonnington City Council (2011) 34 VR 445 Coates Hire Operations Pty Ltd v D-Link Homes Pty Ltd [2011] NSWSC 1279 Combis v Jensen (No 2) (2009) 181 FCR 178; [2009] FCA 1383 Crowe-Maxwell v Frost (2016) 91 NSWLR 414; [2016] NSWCA 46 Cummings Engineering Holdings Pty Ltd [2014] NSWSC 250 D Pty Ltd (in liq) v Calas (Trustee) [2016] FCA 1409 DJG Equities Pty Ltd [2014] NSWSC 36 Edwards v Attorney-General (NSW) (2004) 60 NSWLR 667; [2004] NSWCA 272 Fisher v Divine Homes Pty Ltd [2011] NSWSC 8; (2011) 85 ACSR 512 Grimaldi v Chameleon Mining NL (No 2) (2012) 87 ACSR 260; [2012] FCAFC 6 Hall v Poolman [2007] NSWSC 1330; (2007) 65 ACSR 123 Hosking v Extend N Build Pty Ltd [2018] NSWCA 149; (2018) 128 ACSR 555 In the marriage of Foda (1997) 21 Fam LR 653 In the matter of Earth Civil Australia Pty Ltd [2021] NSWSC 966 In the matter of Emanuel (No 14) Pty Ltd (in liq) (1997) 24 ACSR 292 In the matter of Evolvebuilt Pty Ltd [2017] NSWSC 901 In the matter of Purcom No 34 Pty Ltd (In Liq) (No 2) [2010] FCA 624 In the matter of Western Port Holdings Pty Ltd [2021] NSWSC 232; (2021) 150 ACSR 274 IW4U Pty Limited (in liq) [2021] NSWSC 40; (2021) 150 ACSR 146 Jones v Dunkel (1959) 101 CLR 298 Kalls Enterprises Pty Ltd v Baloglow [2007] NSWCA 191; (2007) 63 ACSR 557 Kazar v Kargarian [2010] FCA 1381; (2010) 81 ACSR 158 Kijurina v Taouk (2015) 105 ACSR 686; [2015] FCA 424 Kinsela v Russell Kinsela Pty Ltd (in liq) (1986) 4 NSWLR 722 Lewis v Doran [2005] NSWCA 243; (2005) 54 ACSR 410 M & R Jones Shopfitting Co Pty Ltd (in liq) v National Bank of Australasia Ltd (1983) 68 FLR 282. Matlic Pty Ltd (in liq) [2014] NSWSC 1342; (2014) 102 ACSR 602 Mingos v Federal Commissioner of Taxation (2019) 274 FCR 148; [2019] FCAFC 211 MK Floors (NSW) Pty Ltd (in liq) [2020] NSWSC 1718 New Cap Reinsurance Corp Ltd v AE Grant [2009] NSWSC 662; (2009) 72 ACSR 638 Ng v Van Der Velde [2011] FCAFC 35 Official Trustee in Bankruptcy v Higgins (Family Court of Australia, Moore J, 2 September 2002, unrep) Official Trustee in Bankruptcy v Mateo (2003) 127 FCR 217; [2003] FCAFC 26 R v Byrnes (1995) 183 CLR 501; [1995] HCA 1 R v Portus; ex parte Federated Clerks Union of Australia (1949) 79 CLR 428; [1949] HCA 53 Re Dawson [1966] 2 NSWR 211 Rivarolo Holdings Pty Ltd v Casa Tua (Sales) Pty Ltd (1997) 24 ACSR 105 Roberts v Wayne Roberts Concrete Constructions Pty Ltd [2004] NSWSC 734; (2004) 50 ACSR 204 Ronchi v Portland Smelter Services Ltd [2005] VSCA 83 Sino-Resource Imp & Exp Co Ltd v Oakland Investment Group Ltd [2018] QSC 98 Slaven v Menegazzo [2009] ACTSC 94 Smith v Starke (No 2) [2015] FCA 1119; (2015) 109 ACSR 145 Southern Cross Interiors Pty Ltd (in liq) v Deputy Commissioner of Taxation (2001) 53 NSWLR 213; [2001] NSWSC 621 Super Vision Resources Ltd BVI Registered No 1810534 v AC Holdings Co Pty Ltd [2020] NSWCA 319 Swan Services Pty Limited (in liq) [2016] NSWSC 1724 Sydney Futures Exchange Ltd v Australian Stock Exchange Ltd (1995) 56 FCR 236 Trajkovski v Simpson [2019] NSWCA 52 Trinick v Forgione (2015) 239 FCR 285; [2015] FCA 642 Universal Financial Group Pty Ltd v Mortgage Elimination Services Pty Ltd (in liq) [2006] NSWSC 1132; (2006) 205 FLR 186 Van Reesema v Flavel (1992) 7 ACSR 225 Vasudevan v Becon Constructions (Australia) Pty Ltd (2014) 41 VR 445 Walker v Wimborne (1976) 137 CLR 1; [1976] HCA 7 Weaver v Harburn [2014] WASCA 227; (2014) 103 ACSR 416 Westgem Investments Pty Ltd v Commonwealth Bank of Australia Ltd (No 6) [2020] WASC 302 Westpac Banking Corporation v Bell Group Ltd (in liq) (No 3) (2012) 44 WAR 1; (2012) 89 ACSR 1 Westpac Banking Corporation v ZH International Pty Ltd [2015] NSWSC 607 White v Shortall (2006) 68 NSWLR 650; [2006] NSWSC 1379 Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; [2003] HCA 15 Zaravinos v Houvardas [2004] NSWCA 421; (2004) 32 Fam LR 490 Zhang v ZH International Pty Ltd (District Court (NSW), Sorby DCJ, 28 May 2015, unrep) Texts Cited: John Henry Wigmore, Wigmore on Evidence (3rd ed, 1940) Category: Principal judgment Parties: Alan Hayes (First Plaintiff) ZH International Pty Ltd (in liquidation) (Second Plaintiff) Hui Zhang (First Defendant) Ngoc Hong Ly (Second Defendant) V & T Vuong Pty Ltd (Third Defendant) Representation: Counsel: Mr RD Glasson (Plaintiffs) Mr MK Condon SC / Mr PF Santucci (First Defendant) Mr E Young / Ms F McNeil (Second Defendant)