Smith v Bone, in the matter of ACN 002 864 002 Pty Ltd (in liq) [2015] FCA 319

Smith v Bone, in the matter of ACN 002 864 002 Pty Ltd (in liq) [2015] FCA 319

Petrolink was insolvent at all times from at least 12 May 2010. Mr Boné contravened s 588G by failing to prevent Petrolink incurring debts while insolvent, being aware (objectively and subjectively) of reasonable grounds for suspecting insolvency. The plaintiffs are entitled to recover from Mr Boné compensation calculated as the outstanding debts incurred during insolvency less the permitted set-off. Valvelink received payments constituting voidable preferences under s 588FE for which a recovery order is appropriate. Mr Boné is not entitled to relief under ss 1317S or 1318.

Parties
First Plaintiff: Michael John Morris Smith in his capacity as Liquidator of ACN 002 864 002 Pty Ltd (in liquidation) formerly known as Petrolink Pty Ltd; Second Plaintiff: ACN 002 864 002 Pty Ltd (in liquidation) formerly known as Petrolink Pty Ltd; First Defendant: Barry Boné; Second Defendant: Valvelink Pty Ltd ACN 053 332 808
Jurisdiction
Australia
Judgment Date
07 April 2015
Procedural Posture
Commercial/corporations – Insolvency Proceedings / Judgment After Final Hearing
Outcome
Judgment for plaintiffs; directions to bring in short minutes for final orders.
Legal Topics
Insolvent Trading, Director's Duties, Set Off, Voidable Transactions, Compensation for Creditors, Preference Claims
Corporations Law Insolvency Bankruptcy Insolvent Trading Director's Duties Set Off Voidable Transactions Compensation for Creditors +1 more

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Parties

Michael John Morris Smith in his capacity as Liquidator of ACN 002 864 002 Pty Ltd (in liquidation) formerly known as Petrolink Pty Ltd

First Plaintiff

ACN 002 864 002 Pty Ltd (in liquidation) formerly known as Petrolink Pty Ltd

Second Plaintiff

Barry Boné

First Defendant

Valvelink Pty Ltd ACN 053 332 808

Second Defendant

Procedural Posture

Commercial/corporations – Insolvency Proceedings / Judgment After Final Hearing

Legal Issues

  1. 1 When did Petrolink become insolvent?
  2. 2 Did Mr Boné as director contravene s 588G by allowing debts to be incurred while insolvent?
  3. 3 Are compensation and preference orders recoverable against Mr Boné and Valvelink?

Ratio Decidendi

Petrolink was insolvent at all times from at least 12 May 2010. Mr Boné contravened s 588G by failing to prevent Petrolink incurring debts while insolvent, being aware (objectively and subjectively) of reasonable grounds for suspecting insolvency. The plaintiffs are entitled to recover from Mr Boné compensation calculated as the outstanding debts incurred during insolvency less the permitted set-off. Valvelink received payments constituting voidable preferences under s 588FE for which a recovery order is appropriate. Mr Boné is not entitled to relief under ss 1317S or 1318.

Court Disposition

Judgment for plaintiffs; directions to bring in short minutes for final orders.

Orders

  • The parties are to confer and submit agreed or competing short minutes to give effect to the reasons by 17 April 2015.
  • If not agreed, each side to submit draft orders by 17 April 2015 and written submissions by 20 April 2015 for further hearing 21 April 2015.