Auckland labour-only construction company Loumaile Construction Ltd filed financial statements with Inland Revenue reporting a net profit but was wound up insolvent after failing to pay taxes due because directors Viliami Tatafu and Penisimani Tatafu drained cash from their company to pay personal expenses, leaving their company’s Inland Revenue debts unpaid. They were jointly ordered to repay $481,500 to Loumaile Construction and Viliami separately ordered to repay a further $380,000 covering the period he was sole director.
In the High Court, Justice Gardiner ruled the two were in breach of Companies Act directors’ duties putting their own personal interests ahead of an obligation to ensure company creditors were paid first.
Neither of them defended action taken by the liquidator.
Loumaile Construction was incorporated in 2015, operating from the home of one of its directors.
Seven years later, Inland Revenue forced their company into liquidation after multiple years of failing to pay income tax, PAYE and GST.
Directors kept no proper accounting records. Liquidator had to reconstruct the company’s financial position by analysis of its banking records and Xero records.
The court was told up to $2.2 million may have been withdrawn from the company for personal expenses.
There was clear evidence that the two had withdrawn at least $481,500 for personal use up to March 2021. Judge held both Viliami and Penisimani personally liable to return this amount to their company, having failed to act in good faith and in the best interests of their company.
Penisimani resigned as a director in June 2021.
Viliami as sole director from this date was held personally liable to repay $380,000 used for personal expenses in the remaining eighteen months before their company’s liquidation.
At time of liquidation, Loumaile Construction owed Inland Revenue $417,500 in total.
Loumaile Construction Ltd v. Tatafu – High Court (22.06.26)
26.189