Carter, in the matter of Townsville Electronics Service Centre Pty Ltd (In Liquidation) v Sinclair [2019] FCA 2178

Carter, in the matter of Townsville Electronics Service Centre Pty Ltd (In Liquidation) v Sinclair [2019] FCA 2178

Judgment was entered against the third and fourth defendants as they caused the company to enter into an uncommercial transaction at significant undervalue, breaching their statutory duty of care and diligence (s 180(1)), and permitted the company to incur debts while insolvent (contravening s 588G). The court awarded damages corresponding with the value of the business and the losses resulting from insolvent trading.

Parties
First Plaintiff: Moira Kathleen Carter in her capacity as liquidator of Townsville Electronics Service Centre Pty Ltd (In Liquidation) (ACN 160 469 036); Second Plaintiff: Townsville Electronics Service Centre Pty Ltd (In Liquidation) (ACN 160 469 036); First Defendant: Bradley James Sinclair; Second Defendant: Catrina Louise Sinclair; Third Defendant: Roslyn Maree Sinclair; Fourth Defendant: Geoffrey Peter Sinclair
Jurisdiction
Australia
Judgment Date
23 December 2019
Procedural Posture
Corporations Act Application (damages, Insolvency) / Judgment Following Application for Default Judgment; Orders as to Quantum and Further Directions
Outcome
Judgment entered for plaintiffs against third and fourth defendants in specified sums; application against first defendant adjourned; further orders as to interest and costs; orders published from Chambers.
Legal Topics
Director Duties, Uncommercial Transactions, Insolvent Trading, Damages/compensation
Corporations Law Insolvency Director Duties Uncommercial Transactions Insolvent Trading Damages/compensation

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Parties

Moira Kathleen Carter in her capacity as liquidator of Townsville Electronics Service Centre Pty Ltd (In Liquidation) (ACN 160 469 036)

First Plaintiff

Townsville Electronics Service Centre Pty Ltd (In Liquidation) (ACN 160 469 036)

Second Plaintiff

Bradley James Sinclair

First Defendant

Catrina Louise Sinclair

Second Defendant

Roslyn Maree Sinclair

Third Defendant

Geoffrey Peter Sinclair

Fourth Defendant

Procedural Posture

Corporations Act Application (damages, Insolvency) / Judgment Following Application for Default Judgment; Orders as to Quantum and Further Directions

Legal Issues

  1. 1 Whether directors entered into uncommercial transaction contravening Corporations Act 2001 (Cth)
  2. 2 Whether directors breached duty of care and diligence under section 180(1)
  3. 3 Whether directors are liable for insolvent trading under section 588G

Ratio Decidendi

Judgment was entered against the third and fourth defendants as they caused the company to enter into an uncommercial transaction at significant undervalue, breaching their statutory duty of care and diligence (s 180(1)), and permitted the company to incur debts while insolvent (contravening s 588G). The court awarded damages corresponding with the value of the business and the losses resulting from insolvent trading.

Court Disposition

Judgment entered for plaintiffs against third and fourth defendants in specified sums; application against first defendant adjourned; further orders as to interest and costs; orders published from Chambers.

Orders

  • Judgment for damages of $190,000.00 against third and fourth defendants for uncommercial transaction and breach of director duties.
  • Damages for $107,793.33 for contravention of s 588G (insolvent trading) against third and fourth defendants.