The allegations in the statement of claim
21 Relevantly, the statement of claim alleged that:
Hanwood was incorporated on 14 May 1990, had been deregistered by the Australian Securities and Investments Commission (ASIC) on 22 November 2017 and was reinstated on 5 August 2019;
Mr Kelly had former qualifications as an accountant but had been disqualified from practising as one, and had been recorded as a director and secretary of Hanwood in the period between 3 December 1998 and 8 October 2018, during which time he acted in that capacity but did not make any substantial financial contribution to Hanwood and allowed it to be deregistered by failing to pay statutory fees to ASIC;
the second and fourth defendants were experts in environmental planning issues and that their companies, the third and fifth defendants, had received moneys under a property consultancy agreement that Hanwood had entered into with them;
Hanwood purchased the Rothbury property in the early 1990s as unimproved, non-arable land covered primarily in shrub and bush and as at 16 July 2013, that property was wholly unencumbered, unimproved and undeveloped;
Mr Kelly owed duties, as a director, to Hanwood, pursuant to ss 181 and 182 of the Act;
on 16 July 2013, Hanwood through both Mr Kelly and Mr Renton executed the consultancy agreement with the second and fourth defendants;
Mr Kelly had represented to Mr Renton that:
Mr Renton did not need to seek any legal or other advice about Hanwood entering into the consultancy agreement, because Mr Kelly had reviewed it and was comfortable with its content;
it was "a standard document";
Mr Kelly had confidence that the consultants would be able to achieve significant outcomes for Hanwood; and
his son had been injured and it was necessary for Mr Renton to sign the consultancy agreement urgently, so that Mr Kelly could visit his son in hospital;
but for the representations, Mr Renton would not have executed the consultancy agreement;
in making the representations, Mr Kelly had improperly used his position as a director of Hanwood by prevailing upon the confidence and trust that Mr Renton reposed in him to secure Mr Renton's consent;
Mr Kelly had caused detriment to Hanwood by causing it to enter into the consultancy agreement, on the basis that its terms were uncommercial, onerous and grossly disproportionate to the value of the services for which Hanwood became liable;
Mr Kelly breached his duties under s 182(1) and that as a result Hanwood suffered detriment in an amount equal to the difference between the sum ultimately paid to the consultants and the proper value of the services that they actually provided. (As I noted above, it is not appropriate at this point to enter judgment in default against Mr Kelly on those claims because there is a possibility that if the second to fifth defendants are successful in their defence of the proceedings, that may impact on the way in which this part of Hanwood's claim is viewed in respect of Mr Kelly's possible culpability);
On about 20 May 2014 Mr Kelly caused Hanwood to lodge with ASIC documents leading to Mr Renton's removal as a director of Hanwood, notwithstanding that Mr Renton had not resigned or given notice of any intention to resign, and had not given Mr Kelly permission or other authority to lodge such a form;
at no time before Mr Kelly so acted had there been a board or general meeting of Hanwood at which a resolution for Mr Renton's removal was either considered or voted on;
the constitution of Hanwood did not allow one director to remove another;
Mr Renton had never given Hanwood written notice of resignation as director;
Mr Kelly's purported removal of Mr Renton as a director of Hanwood was unlawful, not for a proper purpose and in breach of Mr Renton's duties under ss 181(1)(a) and 181(2)(a) of the Act;
by breaching those duties, Hanwood had suffered loss or damage, consisting of Mr Kelly's diversion of the part of the proceeds of sale of the Rothbury property of $2,673,555.52 that Hanwood had received at Mr Kelly's direction on 18 March 2019 for Mr Kelly's rather than Hanwood's purposes;
as pleaded in par 24 that:
From that amount, Kelly caused Hanwood to make the following payments, totalling $2,425,350 (sic):
(a) Stintari Pty Ltd ($1,090,000) -
(i) 19 March 2015 in the sum of $50,000;
(ii) 19 March 2015 in the sum of $9,000;
(iii) 5 June 2015 in the sum of $931,000; and
(iv) 17 April 2015 in the sum of $100,000;
(b) others ($835,350) -
(i) a payment to a St George term deposit on 19 March 2015 of $700,000;
(ii) a payment to TW Staines & Co on 25 March 2015 of $25,000;
(iii) a payment to K Hainsworth on 5 June 2015 of $30,033;
(iv) a payment to P Hainsworth on 5 June 2015 of $30,033; and
(v) a payment to Biba Zupan on 5 June 2015 of $50,284;
Mr Kelly was the sole director, secretary and shareholder of the issued ordinary shares in Stintari Pty Ltd, and that at the time that Hanwood made the above payments to Stintari, Hanwood was not a debtor of Stintari, had not traded or done business with it and did not owe the performance of any obligation to it;
Mr Kelly had not caused Hanwood to demand that Stintari repay any of the money or caused it to repay the money and Stintari had not done so;
if Mr Renton had remained as a director of Hanwood, he would not have allowed those payments to Stintari to have been made from Hanwood's assets; and
Mr Kelly breached his statutory duties to Hanwood by improperly using his position as the then sole director of Hanwood to cause or allow it to make payments to Stintari for an improper purpose, or so that he could gain an advantage himself to the detriment of Hanwood, and that Hanwood had suffered detriment of $1,090,000 as a result.
22 However, the statement of claim made no allegation challenging the propriety of the payments of $835,350 referred to in paragraph 24(b) nor did it explain why the two sums in pars 24 (a) and (b) do not add up to a total of $2,425,350 that it asserted Mr Kelly had caused Hanwood to make.
23 Hanwood seeks default judgment against Mr Kelly for the whole of the $2,425,350 referred to in par 24 of the statement of claim.