Super Art Australia v Foden [2014] FCA 1168

In this case the court found that loan and mortgage entered into between a company (which later went into liquidation) and its director was an unreasonable director related transactions pursuant to section 588FDA of the Corporations Act.

The director, who was also the company’s accountant, claimed that the loan and mortgage was to secure accountancy fees owed to him. To this the judge held:

If the purpose was to secure the payment of the fees owed to the accountant,that liability had already been incurred by the company and the effect of the charge was to convert that liability from an unsecured debt that the company owed to the accountant to a secured debt. If that be the case, the benefit to accountant was significant in that it secured an existing indebtedness, with no corresponding commercial benefit for the company. It may be concluded that a reasonable person in the company’s circumstances would not have entered into those transactions.

Click here to read full judgment.

Scroll to Top