In the matter of Lawrence Waterhouse Pty Ltd (in liq) - Shaw v Minsden Pty Ltd [2011] NSWSC 964

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Lawrence Waterhouse Pty Ltd (in liq) - Shaw v Minsden Pty Ltd [2011] NSWSC 964 Hearing dates: 13, 17-20 May 2011 Decision date: 24 August 2011 Jurisdiction: Equity Division - Corporations List Before: Ward J Decision: First defendant holds land subject to a charge in favour of the second plaintiff for indemnification of costs incurred by the latter as trustee for the second defendant. Deed of Charge set aside as having been granted with intention to defraud creditor(s). Finding that second defendant breached statutory duty as director of second plaintiff in having failed to put in place proper means to keep proper books and records of intercompany loans. Catchwords: CORPORATIONS - whether transfer of land and/or creation of charge over land is/are insolvent transaction(s) pursuant to s 588FC of the Corporations Act 2001 (Cth) or unreasonable director-related transaction(s) pursuant to s 588FDA (and, in either case, voidable pursuant to s 588FE) - in the alternative, whether transfer and/or creation of charge is/are alienation(s) of land with intent to defraud a creditor pursuant to s 37A of the Conveyancing Act 1919 (NSW) - CONTRACTS - whether rights and equitable interest arising under transfer have been abandoned - TRUSTS - whether transferee (Minsden) holds land and/or charge on constructive trust for transferor (Lawrence Waterhouse) - whether Lawrence Waterhouse held land as trustee for its director (Wayne Lawrence) and, if so, whether Lawrence Waterhouse is entitled to indemnification - whether, if transfer void or set aside, land is held on constructive trust for Wayne Lawrence and subject to an equitable charge in his favour - HELD - abandonment not established - Lawrence Waterhouse held land as trustee for Wayne Lawrence at time of transfer - Lawrence Waterhouse entitled to indemnification and to trace land into hands of Minsden for that purpose - charge set aside as unreasonable director-related transaction and alienation of property with intent to defraud creditor - CORPORATIONS - whether Lawrence Waterhouse has kept proper books and records for purposes of s 286 of the Corporations Act - if not, whether presumption of insolvency has been rebutted - whether Wayne Lawrence has breached any civil penalty provisions and exculpatory relief should be granted - HELD - failure to keep proper books and records - presumption of insolvency rebutted up to date of withdrawal of support by Wayne Lawrence - breach of statutory duty established - exculpatory relief not granted so as to absolve director from obligation to account for any loss sustained through breach of that duty Legislation Cited: Conveyancing Act 1919 (NSW) Corporations Act 2001 (Cth) Duties Act 1997 (NSW) Legal Profession Act 2004 (NSW) Uniform Civil Procedures Rules 2005 (NSW) Cases Cited: Arena Management Pty Ltd (Admin App) (Rec and Mgrs App) and Anor v Campbell Street Theatre Pty Ltd [2010] NSWSC 957 Australian Securities and Investments Commission v ABC Fund Managers Ltd [2001] VSC 383; (2001) 39 ACSR 443 Australian Securities and Investments Commission v Healey [2011] FCA 717 Australian Securities Commission v Fairlie (1993) 11 ACLC 669 Barton v DCT (1974) 131 CLR 370 Black Uhlans v New South Wales Crimes Commission [2002] NSWSC 1060; (2002) 12 BPR 22,421 Brooks v Heritage Hotel Adelaide Pty Ltd (1996) 20 ACSR 61 Calverley v Green (1984) 155 CLR 242 Cannane v J Cannane Pty Ltd (in liq) (1998) 192 CLR 557; 153 ALR 163 Chief Commissioner of Stamp Duties v Buckle (1998) 72 ALJR 243 Claremont Petroleum v Cummings & Anor (1992) 110 ALR 239 Commonwealth Bank of Australia v Friedrich (1991) 5 ACSR 115 Commonwealth of Australia v McLean (1996) 41 NSWLR 389 Daniels (formerly practising as Deloitte Haskins & Sells) v Anderson (1995) 37 NSWLR 438; 16 ACSR 607; 13 ACLC 614 Demondrille Nominees Pty Ltd v Shirlaw (1997) 25 ACSR 535; 15 ACLC 1716 Dowse v Gorton [1891] AC 190 DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423; 19 ALR 223 Fitzgerald v Masters (1956) 95 CLR 420 Grossman v E Katz Manufacturing Jewellers (ACT) Pty Ltd [2004] NSWSC 1224 Intergraph Public Safety Pty Ltd v Tess Lawrence Media Services Pty Ltd (1996) 19 ACSR 523; 14 ACLC 1234 Jones v Dunkel (1959) 101 CLR 298 Kenna & Brown Pty Ltd v Kenna [1999] NSWSC 533; (1999) 32 ACSR 430 Lam Soon Australia Pty Ltd v Molit (No 55) (1996) 70 FCR 34 Lawrence Waterhouse Pty Ltd v Port Stephens Council [2008] NSWCA 235 Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd [2008] NSWSC 1344; (2008) 74 NSWLR 550 Levi v Guerlini (1997) 24 ACSR 159; 15 ACLC 913 Lewis (as liquidator of Doran Constructions Pty Ltd (in liq)) v Doran [2005] NSWCA 243; (2005) 54 ACSR 410 Lewis v Doran [2004] NSWSC 608; (2004) 50 ACSR 175 Lo v Nielsen [2008] NSWSC 407; (2008) 26 ACLC 497 Longtom Pty Ltd v Oberon SC (1996) 7 BPR 14,799 Love v ASC [2000] WASCA 404; (2000) 36 ACSR 363 Maguire v Makaronis (1997) 188 CLR 449 Manning v Cory [1974] WAR 60; (1974) CLC 40-140 McDonald v Hanselmann (1998) 144 FLR 463 Mulkana Corporation Pty Limited (in liq) v Bank of New South Wales (1983) 8 ACLR 278 New World Alliance Pty Limited; Sycotex Pty Limited v Baseler (No 2) (1994) 51 FCR 425 Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360 O'Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262 Old Kiama Wharf Company Pty Ltd (in liq) v Betohuwisa Investments Pty Ltd [2011] NSWSC 823 Re Dawson (deceased); Union Fidelity Trustee Co Ltd v Perpetual Trustee Co Ltd [1966] 2 NSWR 211 Re International Vending Machines Pty Limited and the Companies Act (1962) NSWR 1408 Re Kazar; Frontier Architects Pty Ltd (in liq) [2010] FCA 1381; (2010) 81 ACSR 158 Re Leisure Developments (Qld) Pty Ltd (in liq); Ell v Palmer (2002) 41 ACSR 276 Re Northumberland Insurance Co Ltd (No 2) (1975) 1 ACLR 142 Re Suco Gold Pty Ltd (1983) 33 SASR 99; 7 ACLR 873 Re World Expo Park Pty Ltd (1994) 12 ACSR 759 Repforce International v Master Lease Properties [2003] NSWSC 970 Sandhurst Trustees Ltd v Harvey (2004) 88 SASR 519 Skouloudis Group Pty Ltd (in liq) v Planet Enterprizes Pty Ltd [2002] NSWSC 239; (2002) 41 ACSR 369 Southern Wine Corp Pty Ltd (in liq) v Frankland River Olive Co Ltd [2005] WASCA 236; (2005) 31 WAR 162 Stott v Milne (1884) 25 Ch D 710 Stratti Ocean and Earthworks Pty Ltd v Deputy Commissioner of Taxation [2003] NSWSC 509 Summers v Commonwealth (1918) 25 CLR 144 Van Reesema v Flavel (1992) 7 ACSR 225; 10 ACLC 291 West v Mead (1984) 155 CLR 242; (1984) 56 ALR 483 White v Conroy (1921) 21 SR (NSW) 257; 38 WN (NSW) 63 Ziade Investments Pty Ltd v Welcome Homes Real Estate Pty Ltd [2006] NSWSC 457; (2006) 57 ACSR 693 Texts Cited: Carter on Contract Ford's Principles of Corporations Law Halsbury's Laws of Australia Heydon and Leeming, Jacobs' Law of Trusts in Australia (7th edn) Category: Principal judgment Parties: James Alexander Shaw (First Plaintiff) Lawrence Waterhouse Pty Ltd (in liq) (Second Plaintiff) Minsden Pty Ltd (First Defendant) Wayne Lawrence (Second Defendant) Representation: Counsel R Marshall (Plaintiffs) Solicitors Harris Wheeler (Plaintiffs) G Lancaster (Access Law Group) (Defendants) File Number(s): 09/287488