McLeod v Alokaily

McLeod v Alokaily was a case before the court regarding the winding up of Ali Ali Contracting Pty Ltd, with the primary dispute centering around transactions made by the company's sole director and shareholder, Mr Alokaily, prior to the appointment of liquidators. The company was in liquidation and had no assets or funds to satisfy its creditors. The liquidators sought to challenge several transactions made by Mr Alokaily, including payments to his personal bank account, credit card account, and another bank account he controlled, arguing these were unreasonable director-related transactions.

The legal issues before the court were whether the payments made by the company to Mr Alokaily constituted unreasonable director-related transactions under section 588FDA(1) of the Corporations Act 2001, and if so, whether the court should make an order directing Mr Alokaily to repay the amounts. Additionally, the court had to consider whether an order should be made requiring Mr Alokaily to repay a director’s loan recorded in the company’s financial records.

The court found that the transactions in question were indeed unreasonable director-related transactions under the relevant section of the Corporations Act. The payments made by the company to Mr Alokaily’s personal accounts were not substantiated as being for the benefit of the company’s business, and the lack of records to support these transactions supported the liquidators' claim. The court also noted the outstanding director’s loan and directed Mr Alokaily to repay it. Consequently, the court ordered Mr Alokaily to pay the company $358,683.44 to satisfy the director’s loan and declared several transactions voidable. The court further directed the liquidators to file an affidavit detailing their costs and scheduled further submissions regarding the orders to be made under section 588FF(1)(a) of the Corporations Act 2001.