Lykouressis v Lykouresis

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leave under Corporations Act s 237 to bring a suit in the company's name against the First Defendant's family who had withdrawn money from the company's account.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.