Lykouressis v Lykouresis - [2009] NSWSC 80

CITATION: Lykouressis v Lykouresis & Ors [2009] NSWSC 80

HEARING DATE(S): 2 to 5 February 2009

JUDGMENT DATE :
26 February 2009

JURISDICTION: Equity Division

JUDGMENT OF: Palmer J

DECISION: Judgment for Plaintiff against First Defendant; judgment for Third, Fourth and Fifth Defendants.

CATCHWORDS: DECEIT – First Defendant induced deceased to lend money to company to start a business when First Defendant had no intention that company would carry on business – First Defendant withdrew loan monies from company for benefit of himself and family. - HELD: First Defendant liable in deceit. - DIRECTORS’ DUTIES – First Defendant breached statutory and equitable duties as director – DERIVATIVE CLAIM – LEAVE TO PROCEED – administratrix of deceased’s estate sought leave under CA s 237 to bring suit in company’s name against First Defendant’s family who had withdrawn money from company’s account – relief sought related only to status of administratrix as secured creditor of company, not to status as shareholder. - HELD: Application for leave not “in good faith” – leave refused. - COSTS: successful Defendants were guilty of dishonest conduct – claim against them failed only because Plaintiff had not appointed receiver who could have sued in company’s name without leave – successful Defendants deprived of costs order.

LEGISLATION CITED: Corporations Act 2001 (Cth) – s 180(1), s 181(1), s 182(1), s 237, s 420, s 1317H

CATEGORY: Principal judgment

CASES CITED: - Antoun v R [2006] HCA 2
- Barnes v Addy (1874) LR9ChApp 244
- Cesan v The Queen (2008) 83 ALJR 43
- Chahwan v Euphoric Pty Ltd (2008) 65 ACSR 661
- Derry v Peek (1889) 14 App Cas 337
- Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337
- Galea v Galea (1990) 19 NSWLR 263
- Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298
- Jones v Dunkel (1959) 101 CLR 298
- McLean v Lake Como Venture Pty Ltd [2004] 2 Qd R 280
- Maher v Honeysett & Maher Electrical Contractors Pty Ltd [2005] NSWSC 859
- Malouf v Malouf [2006] NSWCA 83
- Melbourne Steamship Co Ltd v Moorehead (1912) 15 CLR 333
- North Australian Aboriginal Legal Aid Service Inc v Bradley (2004) 218 CLR 146
- Reg v Watson; ex parte Armstrong (1976) 136 CLR 248
- South Johnstone Mill Ltd v Dennis [2007] FCA 1448, 64 ACSR 447
- Spies v R (2000) 201 CLR 603
- Swansson v R.A. Pratt Properties Pty Ltd (2002) 42 ACSR 313
- Vakauta v Kelly (1989) 167 CLR 568
- Walker v Wimborne (1976) 137 CLR 1

PARTIES: Athena Lykouressis as Administratrix of the estate of the late Dionysios Lykouresis (Plaintiff)
Michael Lykouresis (First Defendant)
Lykouresis Enterprises Pty Ltd (Second Defendant)
Irene Lykouresis (Third Defendant)
Regina Ioannides (aka Regina Lykouresis) (Fourth Defendant)
Joanna Lykouresis (Fifth Defendant)

FILE NUMBER(S): SC 5951/05

COUNSEL: E. Chrysostomou (Plaintiff)
B. Spinks (Sol) (3rd, 4th & 5th Defendants)

SOLICITORS: Populaw (Plaintiff)
Spinks Eagle Lawyers (3rd, 4th & 5th Defendants)

5951/05 Lykouressis v…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2009] NSWSC 80
Decision Date: 26 February 2009

CaseChat Overview and Summary

In the case of Lykouressis v Lykouresis, the deceased's administratrix sought to hold the First Defendant liable for deceit and breach of fiduciary duty. The deceased had lent money to a company to start a business, at the First Defendant's inducement, but the First Defendant had no intention that the company would carry on business. Instead, the First Defendant withdrew the loan monies from the company for his own and his family's benefit. The court was required to determine whether the First Defendant was liable for deceit and breach of fiduciary duty.

The court found that the First Defendant had indeed been deceitful in inducing the deceased to lend money to the company and had breached his statutory and equitable duties as a director. However, the administratrix sought leave under Corporations Act s 237 to bring a suit in the company's name against the First Defendant's family who had withdrawn money from the company's account. The relief sought related only to the status of the administratrix as a secured creditor of the company, not to her status as a shareholder. The court found that the application for leave was not made in good faith, and therefore, leave was refused.

The court also found that the successful defendants were guilty of dishonest conduct. However, because the plaintiff had not appointed a receiver who could have sued in the company's name without leave, the claim against them failed. The court deprived the successful defendants of the costs order, finding that they were entitled to it due to the dishonest conduct of the plaintiff.

In conclusion, the court found the First Defendant liable for deceit and breach of fiduciary duty but refused leave to the administratrix to bring a derivative claim. The court also deprived the successful defendants of the costs order due to the plaintiff's failure to appoint a receiver.

Orders