Lewis v Doran

Case [2005] NSWCA 243

Reported Decision:

 54 ACSR 410
(2005) 23 ACLC 1666

Court of Appeal


CITATION:

Lewis (as liquidator of Doran Constructions Pty Ltd (in liq) & Anor v Doran & Ors [2005] NSWCA 243
This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):

21 & 22 April 2005
 
JUDGMENT DATE: 


18 August 2005

JUDGMENT OF:

Giles JA at 1; Hodgson JA at 162; McColl JA at 163
DECISION:

Appeal dismissed with costs.
CATCHWORDS:

Related companies - debt restructuring - resolutions that debt owed to company A by company B be replaced by debt owed by company C - journal entries later made - whether transaction in breach of directors' statutory and fiduciary duties - whether an uncommercial transaction within s 588FB of Corporations Law - whether company A became insolvent because of the transaction - whether transaction given effect by making the journal entries and company A insolvent at that time - consideration of whether voluntary assistance from related companies material to insolvency - and of scheme for avoidance of insolvent transactions within s 588FC of the Law. D
CASES CITED:

re a Company (1986) BCLC 261;
re Adnot Pty Ltd (1982) 1 ACLC 307;
Allianz Australia Insurance Ltd v GSF Australia Pty Ltd (2003) 57 NSWLR 321;
Allianz Australia Insurance Ltd v GSF Australia Pty Ltd (2005) 215 ALR 385;
Bank of Australasia v Hall (1907) 4 CLR 1514;
Demondrille Nominees Pty Ltd v Shirlaw (1997) 25 ACSR 535;
Doran Constructions Pty Ltd v Beresfield Aluminium Pty Ltd [1999] NSWSC 499 (Brownie AJ, 21 May 1999);
Doran Constructions Pty Ltd v Beresfield Aluminium Pty Ltd (2001) 17 BCL 215 (Brownie AJ, 8 February 2001);
Doran Constructions Pty Ltd v Beresfield Aluminium Pty Ltd (2002) 54 NSWLR 416 (CA, 8 May 2002);
Environment Agency (formerly National Rivers Authority) v Empress Car Co (Abertillery) Ltd (1999) 2 AC 22;
Equiticorp Finance Ltd (In Liquidation) v Bank of New Zealand (1993) 32 NSWLR 50;
re Kerisbeck Pty Ltd (1992) 10 ACLC 619';
Kinsela v Russell Kinsella Pty Ltd (in liq) (1986) 4 NSWLR 722;
Lewis v Cook [2000] NSWSC 191; (2000) 18 ACLC 490;
Linton v Telnet Pty ltd (1999) 30 ACSR 465
March v E & M H Stramare Pty Ltd (1991) 171 CLR 506;
Nicholson v Permakraft (NZ) Ltd (in liq) (1985) 3 ACLC 453;
Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146;
re RHD Power Services Pty Ltd (1991) 9 ACLC 27;
Sandell v Porter (1966) 115 CLR 666;
Southern Cross Interiors Pty Ltd (in liquidation) v Deputy Commissioner of Taxation (2001) 53 NSWLR 213;
Tosich Construction Pty Ltd (in liq) v Tosich (1997) 78 FCR 363;
Walker v Wimbourne (1976) 137 CLR 1.
PARTIES:

Alan Edward Lewis (as liquidator of Doran Constructions Pty Ltd (in liq) - First Appellant
Doran Constructions Pty Ltd (in liq) - Second Appellant
Paul Doran - First Respondent

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Details
AGLC
Lewis v Doran [2005] NSWCA 243
Case
[2005] NSWCA 243
Decision Date

CaseChat Overview and Summary

The appeal concerned a dispute between Lewis and Doran, brought before the New South Wales Court of Appeal. The core of the disagreement involved a debt restructuring transaction where resolutions were passed to replace a debt owed by Company B to Company A with a debt owed by Company C to Company A. This was subsequently effected through journal entries.

The court was required to determine whether this transaction constituted a breach of the directors' statutory and fiduciary duties. Further, it needed to consider whether the transaction was uncommercial within the meaning of s 588FB of the Corporations Law, and if Company A became insolvent as a result of this transaction. The court also had to assess whether the transaction was given effect by the making of the journal entries at a time when Company A was already insolvent, and whether voluntary assistance from related companies was material to Company A's insolvency. Finally, the court considered the application of the scheme for the avoidance of insolvent transactions under s 588FC of the Law.

The Court of Appeal dismissed the appeal with costs. The reasoning and legal principles applied by the court are not detailed in the provided text, but the outcome indicates that the transaction was found not to be in breach of directors' duties, not to be an uncommercial transaction, and that Company A's insolvency was not caused by the transaction in a manner that would render it voidable under the Corporations Law.

Orders

Orders of the court

Appeal dismissed with costs.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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