Alora Davies Developments 104 Pty Ltd (in liq) & Ors v Raphael & Anor [2024] NSWSC 547

Supreme Court New South Wales

Medium Neutral Citation: Alora Davies Developments 104 Pty Ltd (in liq) & Ors v Raphael & Anor [2024] NSWSC 547 Hearing dates: 20-22 March 2024, 9-10, 23 April 2024 Date of orders: 10 May 2024 Decision date: 10 May 2024 Jurisdiction: Equity - Corporations List Before: Black J Decision: Declarations and orders in respect of directors' duties and under Part 5.7B of the Corporations Act 2001 (Cth) made against the Defendants. Catchwords: CORPORATIONS – Directors and officers – Whether Second Defendant was a de facto or shadow director of the company. CORPORATIONS – Directors and officers – Breach of duties under ss 180–182 of the Corporations Act 2001 (Cth) – Breach of fiduciary duties – Whether directors caused company to enter uncommercial transactions – Whether directors caused funds to be transferred to related entity absent any benefit to the company – Whether directors procured loan to the company while it was insolvent. CORPORATIONS – Whether transactions amount to unfair preferences, uncommercial transactions, unreasonable-director related transactions and insolvent transactions under Part 5.7B of the Corporations Act 2001 (Cth). Legislation Cited: - Civil Procedure Act 2005 (NSW) ss 100, 101 - Corporations Act 2001 (Cth) ss 9, 95A, 180-183, 588FA, 588FB, 588FC, 588FDA, 588FE, 588FF, 588G, 588M, 1317H - Evidence Act 1995 (NSW) ss 136, 140 - Environmental Planning and Assessment Act 1979 (NSW) s 7.6 Cases Cited: - Armagas Ltd v Mundogas SA [1985] 1 Ll R 1 - Australian Securities and Investments Commission v Cassimatis (No 8) (2016) 336 ALR 209; [2016] FCA 1023 - Australian Securities and Investments Commission v Plymin (No 1) (2003) 46 ACSR 126; [2003] VSC 123 - Australian Securities Commission v AS Nominees Ltd (1995) 62 FCR 504; (2019) 133 ALR 1; (2019) 18 ACSR 459; [1995] FCA 1663 - Bentley Smythe Pty Ltd v Anton Fabrications (NSW) Pty Ltd (2011) 248 FLR 384; [2011] NSWSC 186 - Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 - Buzzle Operations Pty Ltd (in liq) v Apple Computer Australia Pty Ltd (2010) 238 FLR 384; (2010) 77 ACSR 410; [2010] NSWSC 233 - Buzzle Operations Pty Ltd v Apple Computers Australia Pty Ltd (2011) 250 FLR 242; (2011) 82 ACSR 703; [2011] NSWCA 109 - Capital Finance Australia Ltd v Tolcher (2007) 164 FCR 83; (2007) 64 ACSR 705; [2007] FCAFC 185 - Cassimatis v Australian Securities and Investments Commission (2020) 376 ALR 261; (2020) 144 ACSR 107; [2020] FCAFC 52 - Chan v Zacharia (1984) 154 CLR 178; [1984] HCA 36 - Canstruct Pty Ltd v Project Sea Dragon Pty Ltd (subject to DOCA) (No 4) [2024] FCA 112 - Coope v LCM Litigation Fund Pty Ltd (2016) 333 ALR 524; [2016] NSWCA 37 - Crowe-Maxwell v Frost (2016) 91 NSWLR 414; 111 ACSR 583; [2016] NSWCA 46 - Deputy Commissioner of Taxation v Austin (1998) 28 ACSR 565 at 570; (1998) 16 ACLC 1555 - Edenden v Bignell [2007] NSWSC 1122 - Electrical Enterprises Retail Pty Ltd v Rodgers (1988) 15 NSWLR 473 - Elliott v Australian Securities and Investments Commission (2004) 10 VR 369; [2004] VSCA 54 - Emanuel Management Pty Ltd v Foster's Brewing Group Ltd (2003) 178 FLR 1; [2003] QSC 205 - ET-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128; [2021] NSWCA 24 - First Strategic Development Corporation Ltd (in liq) v Chan [2014] QSC 060 - Fitz Jersey Pty Ltd v Atlas Construction Group Pty Ltd (in liq) [2022] NSWSC 394 - Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; [2012] FCAFC 6 - Huntlee Pty Ltd v Sweetwater Action Group Inc [2011] NSWCA 378 - International Cat Manufacturing Pty Ltd (in liq) v Rodrick [2013] QSC 91 - K&A Laird (N.S.W.) Pty Ltd (in liq) v Aidzan Pty Ltd (in liq) [2023] NSWSC 603 - Lewis (as liquidator of Doran Constructions Pty Ltd) v Doran (2005) 54 ACSR 410; [2005] NSWCA 243 - Mistmorn Pty Ltd (in liq) v Yasseen (1996) 21 ACSR 173; (1996) 14 ACLC 1387 - Mudgee Dolomite & Lime Pty Ltd v Murdoch [2020] NSWSC 1510 - Natcomp Technology Australia Pty Ltd v Graiche (2001) 19 ACLC 1117; [2001] NSWCA 120 - New Cap Reinsurance Corporation Ltd (in liq) v Renaissance Reinsurance Ltd (2002) 192 ALR 601; (2002) 43 ACSR 65; [2002] NSWSC 856 - No 1 Victoria Dragons Pty Ltd v AEN Developments Pty Ltd [2022] NSWSC 1345 - Re ACN 092 745 330 [2017] NSWSC 241 - Re Ahmed & Associates (Aust) Pty Ltd [2021] NSWSC 499 - Re Atlas Advisors Australia Pty Ltd (2022) 162 ACSR 509; [2022] NSWSC 705 - Re Central Management (NSW) Pty Ltd [2017] NSWSC 1258 - Re Colorado Products Pty Ltd (in prov liq) (2014) 101 ACSR 233; [2014] NSWSC 789 - Re Emanuel (No 14) Pty Ltd (in liq); Macks v Blacklaw & Shadforth Pty Ltd (1997) 147 ALR 281; (1997) 24 ACSR 292 - Re Employ (No 96) Pty Limited (in liq) (2013) 93 ACSR 48; [2013] NSWSC 61 - Re FAL Healthy Beverages Pty Ltd [2017] NSWSC 476 - Re Humur Pty Ltd [2020] NSWSC 1759 - Re IW4U Pty Ltd (in liq) (2021) 150 ACSR 146; [2021] NSWSC 40 - Re RMATA Cutelli Pty Ltd (in liq) [2018] NSWSC 382 - Re Swan Services Pty Ltd (in liq) [2016] NSWSC 1724 - Smith (in his capacity as liquidator of Action Paint Ball Games Pty Ltd) v Starke (No 2) (2015) 109 ACSR 145; [2015] FCA 1119 - Smithton Ltd v Naggar [2015] 1 WLR 189; [2014] EWCA Civ 939 - Southern Cross Interiors Pty Ltd (in liq) v Deputy Commissioner of Taxation (2001) 39 ACSR 305; [2001] NSWSC 621 - Varma v Varma [2010] NSWSC 786 - Vasudevan v Becon Constructions (Australia) Pty Ltd (2014) 97 ACSR 627; [2014] VSCA 14 - V-Flow Pty Ltd v Holyoake Industries (Vic) Pty Ltd (2013) 296 ALR 418; 93 ACSR 76; [2013] FCAFC 16 - VL Finance Pty Ltd v Legudi (2003) 54 ATR 221; [2003] VSC 57 - Vrisakis v Australian Securities Commission (1993) 9 WAR 39; (1993) 11 ACSR 162 - Warman International Ltd v Dwyer (1995) 182 CLR 544; [1995] HCA 18 - Watson v Foxman (1995) 49 NSWLR 315 - Weaver v Harburn (2014) 103 ACSR 416; [2014] WASCA 227 - White in his capacity as joint and several liquidator of Port Village Accommodation Pty Ltd (in liq) v ACN 153 152 731 Pty Ltd (in liq) (2018) 53 WAR 234; (2018) 129 ACSR 182; [2018] WASCA 119 - White Constructions (ACT) Pty Ltd (in liq) v White (2004) 49 ACSR 220; [2004] NSWSC 71 Category: Principal judgment Parties: Alora Davies Developments 104 Pty Ltd (in liq) (First Plaintiff) Henry McKenna in his capacity as liquidator of Alora Davies Developments 104 Pty Ltd (in liq) (Second Plaintiff) David John Raphael (First Defendant) Priscilla Elizabeth Raphael (Second Defendant) Alora Property Group Pty Ltd (Third Defendant) Representation: Counsel: M Davis (Plaintiffs) I King (First and Second Defendants)