Ross, in the matter of Print Mail Logistics (International) Pty Ltd (in liq) v Elias

• Jurisdiction: Australia Federal only
• Court: Federal Court
• Judgment Date: 23 April 2021
• Neutral Citation: [2021] FCA 419
• Date: 23 April 2021

Federal Court of Australia

Ross, in the matter of Print Mail Logistics (International) Pty Ltd (in liq) v Elias [2021] FCA 419

File number:	QUD 240 of 2019
Judgment of:	REEVES J
Date of judgment:	23 April 2021
Catchwords:	CORPORATIONS – directors’ statutory duties – whether directors entered into an unreasonable director-related transaction per s 588FCA of the Corporations Act 2001 (Cth) (the Act) – whether directors breached their duties under ss 180, 181 and 182 of the Act – whether directors entered into an insolvent transaction in breach of s 588G of the Act and entered into an uncommercial transaction under s 588FB of the Act – consideration of principles relating to ss 588G and 588FB of the Act.
Legislation:	Corporations Act 2001 (Cth) Evidence Act 1995 (Cth) Federal Court Rules 2011 (Cth)
Cases cited:	Asden Developments Pty Ltd (in liq) v Dinoris (No 3) (2016) 114 ACSR 347; [2016] FCA 788 Ashby v Slipper (2014) 219 FCR 322; [2014] FCAFC 15 Australian Securities and Investments Commission v Australian Lending Centre Pty Ltd (No 3) (2012) 213 FCR 380; [2012] FCA 43 Blatch v Archer (1774) 98 ER 969 Briginshaw v Briginshaw (1938) 60 CLR 336 Chan & Ors v First Strategic Development Corporation Limited (in liq) & Anor [2015] QCA 28 Chetcuti v Minister for Immigration and Border Protection (2019) 270 FCR 335; [2019] FCAFC 112 Claremont Petroleum NL v Cummings (1992) 110 ALR 239 Clifton (Liquidator) v Kerry J Investment Pty Ltd trading as Clenergy (2020) 379 ALR 593; [2020] FCAFC 5 Fair Work Ombudsman v Hu (2019) 289 IR 240; [2019] FCAFC 133 First Equilibrium Pty Ltd v Bluestone Property Services Pty Ltd (in liq) (2013) 95 ACSR 654; [2013] FCAFC 108 G v H (1994) 181 CLR 387 Henderson v State of Queensland (2014) 255 CLR 1; [2014] HCA 52 Jones v Dunkel (1959) 101 CLR 298 Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11 Kumar v Minister for Immigration and Border Protection (2020) 274 FCR 646; [2020] FCAFC 16 Lewis v Doran (2004) 184 FLR 454; [2004] NSWSC 608 Lewis v Doran (2005) 219 ALR 555; [2005] NSWCA 243 Lithgow City Council v Jackson (2011) 244 CLR 352; [2011] HCA 36 Manly Council v Byrne [2004] NSWCA 123 Southern Cross Interiors Pty Ltd v Deputy Commissioner of Taxation (2001) 53 NSWLR 213; [2001] NSWSC 621 Treloar Constructions Pty Limited v McMillan (2017) 318 FLR 58; [2017] NSWCA 72 ; Austin RP, Ramsay IM, Ford, Austin and Ramsay’s Principles of Corporations Law (17th ed, 2018)
Division:	General Division
Registry:	Queensland
National Practice Area:	Commercial and Corporations
Sub-area:	Corporations and Corporate Insolvency
Number of paragraphs:	141
Date of last submissions:	9 October 2020
Date of hearing:	24 September 2020
Counsel for the Plaintiffs:	Mr BA Hall
Solicitor for the Plaintiffs:	AJ & Co Lawyers
Counsel for the Defendants:	Ms AG Rae
Solicitor for the Defendants:	Bridge Brideaux

ORDERS

		QUD 240 of 2019
IN THE MATTER OF PRINT MAIL LOGISTICS (INTERNATIONAL) PTY LTD (IN LIQUIDATION) ACN 142 144 830
BETWEEN:	DAVID ROSS AND BLAIR PLEASH AS LIQUIDATORS OF PRINT MAIL LOGISTICS (INTERNATIONAL) PTY LTD (IN LIQUIDATION) ACN 142 144 830 First Plaintiff ; PRINT MAIL LOGISTICS (INTERNATIONAL) PTY LTD (IN LIQUIDATION) ACN 142 144 830 Second Plaintiff
AND:	NIGEL BENJAMIN ELIAS First Defendant ; LUIS GARCIA Second Defendant ; JOHN WILLIAM WOODS (and another named in the Schedule) Third Defendant

order made by:	REEVES J
DATE OF ORDER:	23 April 2021

THE COURT ORDERS THAT:

1. The plaintiffs’ originating application filed on 10 April 2019 is dismissed.

2. The plaintiffs pay the defendants’ costs of the proceeding to be taxed failing agreement.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

REEVES J:

INTRODUCTION

1. Mr David Ross and Mr Blair Pleash, the first plaintiffs, are the Liquidators of the second plaintiff, Print Mail Logistics (International) Pty Ltd (PMLI or the company). In this proceeding, they have sought relief under various provisions of the Corporations Act 2001 (Cth) (the Act) against present and past directors of PMLI. Their claim for this relief revolves around two loan transactions: the Armstrong Unsecured Loan Agreement (the Armstrong Agreement) which was allegedly made on or about 14 July 2015; and the Wellington Secured Loan Agreement (the Wellington Agreement) which was made about two weeks later.

2. The Liquidators allege that, under the Wellington Agreement, PMLI took responsibility for the personal debts of Mr Nigel Elias, the first defendant, including a debt of $100,000 allegedly due under the Armstrong Agreement and that it became insolvent by entering into that agreement. With respect to the former, that is, the transfer of personal liabilities allegation, the Liquidators allege in their fourth further amended statement of claim (4FASC) that the defendants, as directors of PMLI, entered into an unreasonable director-related transaction (s 588FDA of the Act) and in the process breached their duties as directors of PMLI (ss 180, 181 and 182 of the Act). With respect to the latter, that is, the insolvency allegation, they alleged that the defendants entered into an insolvent transaction in breach of s 588G of the Act and entered into an uncommercial transaction (s 588FB of the Act). Consequently, they claimed that the defendants were liable to pay PMLI compensation under ss 588FF(1)(a), 588M(2) and/or 1317H(1) of the Act.

3. Prior to closing submissions at the trial, the parties agreed that there were three closely interconnected factual issues in dispute. The first related to the existence of the Armstrong Agreement and the other two related to the effect of the Wellington Agreement. The Liquidators bear the onus on all three issues. For the reasons that follow, I do not consider the evidence that they adduced at trial was sufficient to discharge their onus on any of those issues. Their originating application will therefore be dismissed with costs.

4. PMLI was registered on 19 February 2010. It was then known as PML Media Pty Ltd. Mr Elias was a director of the company from the outset and remains so. The other three defendants served as directors of the company from time to time. They were: Mr Luis Garcia (the second defendant) from 3 March 2014 to 4 August 2017; Mr John Woods (the third defendant) from 24 March 2010 to 1 December 2016; and Mr Adrian Pereira (the fourth defendant) from 19 February 2010 to 24 June 2016.

5. PMLI was a subsidiary of Print Mail Logistics Limited (PML) and a part of the PML...