In Fisk v Fawcet  NZHC 2811 the liquidators of Luxta Limited sought summary judgment against Luxta's director, Mr Fawcet, for breach of his director's duty to act in good faith and in the best interests of Luxta. Mr Fawcet transferred the titles of two properties owned by Luxta to Contorto Limited (a related party) without first receiving the purchase price of $857,500 (not including an immediate payment of $45,000). Contorto eventually defaulted on its payment, leaving Luxta with a shortfall of $812,500. Luxta was then placed in liquidation. The liquidators sought to recover this shortfall from Mr Fawcet. In evidence, Mr Fawcet stated that the transfer was done to benefit a wider group of related real estate companies. This evidence effectively amounted to an admission by Mr Fawcet that he was not acting in the best interests of Luxta. On this basis, the Court had no hesitation in finding that Mr Fawcett breached his duty and entered summary judgment against him for the shortfall.
This case establishes a useful precedent for liquidators who may seek summary judgment against directors of a company who have breached their duties.
See Court decision here.