In the matter of Auzhair Supplies Pty Ltd (In Liq) (No 2); In the matter of Auzhair 1 Pty Ltd

In the case of Auzhair Supplies Pty Ltd (In Liq) (No 2), the liquidator of Auzhair Supplies Pty Ltd sought equitable compensation from Auzhair 1 Pty Ltd and its directors for breach of fiduciary duty. The liquidator argued that the directors of Auzhair Supplies Pty Ltd transferred assets to Auzhair 1 Pty Ltd in breach of their fiduciary obligations, and that Auzhair 1 Pty Ltd held those assets on trust for Auzhair Supplies Pty Ltd. The legal issues before the court were whether the directors of Auzhair Supplies Pty Ltd were liable for equitable compensation and, if so, the amount of compensation to be awarded.

The court held that the directors of Auzhair Supplies Pty Ltd were indeed liable for equitable compensation. The court found that the transfer of assets from Auzhair Supplies Pty Ltd to Auzhair 1 Pty Ltd was in breach of the directors' fiduciary obligations, and that Auzhair 1 Pty Ltd held those assets on trust for Auzhair Supplies Pty Ltd. The court further held that the directors were liable for the full amount of the loss suffered by Auzhair Supplies Pty Ltd as a result of the breach of fiduciary duty. The court awarded equitable compensation to the liquidator of Auzhair Supplies Pty Ltd against Auzhair 1 Pty Ltd and its directors in the amount of $491,250. This amount represented the full extent of the loss suffered by Auzhair Supplies Pty Ltd due to the breach of fiduciary duty.