Re IW4U Pty Ltd (in liq)

In the case of Re IW4U Pty Ltd (in liq), the liquidator sought to challenge the transfer of the company's business to a new company for no consideration, contending that this constituted an unreasonable director-related transaction under the Corporations Act 2001. The dispute also involved claims against an accountant who was implicated in the transaction by being the sole director, secretary, and shareholder of the new company. The Federal Court was tasked with determining whether the transaction was for the benefit of the director, whether the director breached their statutory duties, and if the accountant was accessorially liable.

The court had to ascertain whether the transfer of the company's business to a new company for nil consideration was a disposition for the benefit of the director, as outlined in section 588 FDA of the Corporations Act 2001. Additionally, the court examined if the director had breached their statutory duties under section 181(1) of the Corporations Act 2001 by not acting in good faith and in the best interests of the company. Further, the court considered if the accountant was accessorially liable under section 79 of the Corporations Act 2001 for being knowingly concerned in the contravention of the director's duties.

The court ruled that the transfer of the company's business to a new company for no consideration was indeed a disposition for the benefit of the director. It found that the director had failed to act in the best interests of the company and in good faith, thereby breaching their statutory duties. The court also held the accountant to be accessorially liable for being knowingly concerned in the contravention of the director's duties. The court's decision hinged on the application of Vasudevan v Becon Constructions (Aust) Pty Ltd (2014) 41 VR 445, which provided the framework for assessing unreasonable director-related transactions. The liquidator was granted leave to appeal the decision, raising the potential for further clarification on the legal standards for director-related transactions.

The final orders of the court included holding the director personally liable for the company's debts, and the accountant was held accessorially liable for their involvement in the contravention of the director's duties. The liquidator was granted leave to appeal, indicating the court recognised the importance of the issues raised in the case for future jurisprudence.