What is the case Kinsela v Russell Kinsela Pty Ltd?

Answer 1

a case cited with approval in a number of jurisdictions, the New South Wales Court of Appeal was faced with a claim against directors who, on behalf of their company, entered into a lease of the company's premises in favor of themselves for a three-year period with a three-year option at a rental which was well below the current market rental. At the time the company was in a financially precarious state. Shortly after the lease was given the company entered liquidation pursuant to a winding-up order. Subsequently, the liquidator sought a declaration that the lease was voidable. Street C.J., in delivering the leading judgment, found against the directors of the company because of the fact that the company was clearly insolvent when the lease was executed. His Honour left open the door for extending the scope of the duty to encompass other states of financial distress short of insolvency, preferring not to comment on the degree of financial instability required before a duty was imposed on directors, as he was not required to do so given the facts of the case.

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