Damelian Automobile Pty Limited (Receivers and Managers Appointed) -v- Ricardo Rovira Damelian [2012] NSWSC 950

Supreme Court New South Wales

Medium Neutral Citation: Damelian Automobile Pty Limited (Receivers and Managers Appointed) -v- Ricardo Rovira Damelian [2012] NSWSC 950 Hearing dates: 13 & 14 August 2012 Decision date: 20 August 2012 Jurisdiction: Equity Division - Commercial List Before: Hammerschlag J Decision: Judgment for the plaintiff for $1,876,266.25 Catchwords: CORPORATIONS - Corporations Act 2001 (Cth) ("the Act") ss 9, 286(1), 429 and1305 - company books and records - presumption that books kept by body corporate under a requirement of the Act are prima facie evidence of any matter stated or recorded - director's loan account records his indebtedness to the company - where company is placed in receivership and director signs Report as to Affairs stating that he is a debtor of the company - director challenges accuracy of loan account balance on the basis that additional matters should be recorded and certain entries were incorrectly included - CONTRACT - where director borrows money and on lends it to company - whether agreement by company to pay interest Legislation Cited: Corporations Act 2001 (Cth) Cases Cited: Electrical Enterprises Retail Pty Ltd v Rodgers (1988) 15 NSWLR 473 Category: Principal judgment Parties: Damelian Automobile Pty Limited (Receivers and Managers Appointed) ABN 62 003 688 837 - Plaintiff Ricardo Rovira Damelian - Defendant Representation: J.R. Williams - Plaintiff V.R.W. Gray - Defendant Allens Linklaters - Plaintiff Moloney Lawyers - Defendant File Number(s): 2012/7985

Judgment

INTRODUCTION 1HIS HONOUR: Section 286(1) of the Corporations Act 2001 (Cth) ("the Act") provides that a company must keep written financial records that: (a) correctly record and explain its transactions and financial position and performance; and (b) would enable true and fair financial statements to be prepared and audited. 2Section 1305 of the Act provides as follows: (1) A book kept by a body corporate under a requirement of this Act is admissible in evidence in any proceeding and is prima facie evidence of any matter stated or recorded in the book. (2) A document purporting to be a book kept by a body corporate is, unless the contrary is proved, taken to be a book kept as mentioned in subsection (1). 3Section 9 of the Act defines books to include financial reports or financial records, however compiled, recorded or stored. 4On 5 September 2011, the National Australia Bank ("the Bank") appointed Messrs Steven Sherman and Jim Sarantinos to be receivers and managers of the company, pursuant to a registered fixed and floating charge over its assets and an undertaking. 5The plaintiff ("the company") sues the defendant for $1,876,266.25. This amount is recorded in the company's books as being owed to it by the defendant at that date. 6At all material times the defendant, Ricardo Rovira Damelian (commonly known as Ric or Rick), was the managing director and chief executive officer of the company. He is presently its sole director. Through other entities he owns and controls all of its shares and has done so since 1 August 2006. Before that, his brother, Mr Robert Damelian, owned and controlled 30 percent of the company. 7Section 429 of the Act obliges directors of a corporation to which a controller (including a receiver) is appointed to make out and submit to the controller a report in the prescribed form about the affairs of the corporation as at the date of the receivership. 8On 13 September 2011, the defendant signed, as he was required to do, a Report as to Affairs of the company as at the date of its receivership. He certified that the particulars contained in it were to the best of his knowledge and belief. 9The Report as to Affairs identifies the defendant as a sundry debtor of the company for $1,645,495. This is the amount recorded in the company's books as being owed to it by him as at 30 June 2011. The company's books record that his indebtedness increased between 30 June 2011 and the date of the receivership to the amount claimed. 10The defendant also signed a questionnaire given to him by the receivers. In it, he stated, amongst others, that financial reports were reviewed by him and the company's financial controller monthly. 11Notwithstanding that the company's books record the defendant as a debtor and that he certified his own indebtedness to the company in the Report as to Affairs, he denies any indebtedness to the company.