The Court of Appeal held that the inquiry under s 588FDA(1)(c) is whether a reasonable person in the company's circumstances would not have entered into the transaction, assessed objectively by reference to all relevant circumstances including benefits and detriments — not by reference to whether a formal contract or antecedent legal obligation existed between the company and its directors. Focusing on the establishment of contractual relations asks the wrong question and potentially casts the onus in the wrong direction. On the facts, payments for directors' personal expenses (in lieu of wages), mortgage payments on premises used by the business, and a repayment to a director's father were not unreasonable director-related transactions, given the evidence of services rendered and benefits to the company. The Court also held that verified pleadings may, depending on their terms, constitute admissible evidence of fact, not merely evidence of opinion.
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