Portia and Scarlett and The Dollhouse XOXO - Case Update

The NSW Supreme Court recently served as the battleground for two cousins who started a promising fashion empire but ultimately found themselves embroiled in an acrimonious legal dispute, with each accusing the other of failing to repay loans to the company.

The case involved two first cousins, Danielle and Vicki Vlahos, the two directors and equal shareholders of Love D & V XOXO Pty Ltd, which operated a retail business specializing in women's fashion under the brands Portia and Scarlett and The Dollhouse XOXO. The company distributed and sold items in Australia and the US.

Unfortunately, the business and personal relationship between the two broke down, and each accused the other of failing to pay back loans to the company. They also disagreed over the division of proceeds from the sale of Portia and Scarlett to Allure Bridals in 2023. All of this resulted in Desmond Teng of Byrons, who was appointed receiver in late 2023, seeking the Court’s guidance on reconciling and recovering loan balances from Danielle, Vicki and their respective business entities.

The Court began its analysis by noting that the “entrenched conflict” between the parties may have coloured their recollection of events over the years, and that it was necessary to approach their evidence with some caution as a result. After considering the web of transactions involving the company, the Court found that both Danielle and Vicki had used company funds for their own personal benefit (with Danielle using nearly $1 million and Vicki using over $1.5 million).

The Court also considered the status of outstanding loans between the parties. Vicki claimed that Danielle owed her $645,000 from a personal loan, while Danielle countered that she had repaid the amount through business transactions. The Court sided with Danielle, finding that repayments were made through structured withdrawals from company account. The Court also found that Danielle had established a $170,000 loan to Vicki through evidence that Vicki had personally acknowledged the debt and agreed to repayment terms, despite inconsistencies in company records.

Read the decision HERE.

Professionals involved:

• David Stack of PG Hely Chambers (instructed by Amberlake Lawyers) for Desmond Teng of Byrons as the receiver

• Sinclair Gray of 12 Wentworth Selborn (instructed by W Advisers) for Danielle Vlahos

• Marcus Young SC of University Chambers (instructed by Finn Roache Lawyers) for Vicki Vlahos