On 29 September 2015, in Fonterra Brands (Australia) Pty Ltd
v Viropoulos (No 3)  FCA 1050 the Federal Court
dismissed an application by Fonterra Brands (Australia) Pty Ltd
Kemp Strang acted for the successful respondents.
The application alleged, among other things, misleading and
deceptive conduct against the director of a company in liquidation
and also against a company which purchased the plant and equipment
from the company in liquidation.
By way of a short background:
Fonterra, the applicant, supplied milk and dairy products to
Falcon GT. Mr Viropoulos, the first respondent, was the director of
Between September 2009 and early January 2010, Falcon GT
undertaking its usual practice, placed orders with Fonterra for the
supply of milk and dairy products;
On 15 October 2009, Falcon GT sold its plant and equipment to
FCD Holdings Pty Ltd (FCD), the second respondent; and
On 20 January 2010 an administrator was appointed to Falcon GT
and it was subsequently placed into liquidation.
Fonterra alleged in its claim that at the time the goods were
sold and delivered, Falcon and its controller Mr Viropoulos, never
intended to pay for the goods. Fonterra alleged that Mr Viropoulos
was liable for Falcon GT's failure to pay for the goods. The
claim further alleged that FCD was liable for the conduct of Falcon
as it was the beneficiary of that conduct through acquiring Falcon
GT's plant and equipment.
Fonterra ultimately alleged that there was a
"strategy" conceived to avoid paying creditors, namely
Justice Robertson dismissed Fonterra's claim and refused to
draw the suggested inferences.
In his judgment, Justice Robertson held that when evaluating
whether the respondents had a strategy or scheme never to pay
the evidence had to be evaluated as a whole;
the Court must consider the gravity of the matters
the Court had to consider contemporaneous events in light of
the then objective surrounding circumstances and not a
retrospective view with the benefit of hindsight; and
the applicant had to prove fraud and that the same fraudulent
intention applied to all of the orders placed
The Court accepted Mr Viropoulos' evidence in respect of the
relevant events and as a result Fonterra's case failed.
The case provides some insight into the high evidentiary burden
faced by creditors who wish to pursue the director of a company in
liquidation for misleading and deceptive conduct as the controller
of that company.
The case further demonstrates that in the context of alleging
misleading and deceptive conduct the Courts are reluctant to pierce
the corporate veil.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
Kemp Strang has received acknowledgements for the quality of
our work in the most recent editions of Chambers & Partners,
Best Lawyers and IFLR1000.
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A recent NSW decision has implications for liquidators of trustee companies dealing with trust funds and priority debts.
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