McLellan, in the matter of The Stake Man Pty Ltd v Carroll (No 2) [2009] FCA 1540

McLellan, in the matter of The Stake Man Pty Ltd v Carroll (No 2) [2009] FCA 1540

Although the defendant was found to have contravened s 588G(2) by failing to prevent incurring of debts while insolvent, the court exercised its discretion to wholly excuse the defendant under s 1317S(2), having regard to all the circumstances. However, as the plaintiffs established all elements of the cause of action and were justified in commencing the proceedings, and since only the court could grant the relief that excused the defendant, a special departure from the usual rule was warranted. Accordingly, the defendant was ordered to pay the plaintiffs' costs, except for the costs relating to the interlocutory process where no order as to costs was made.

Parties
First Plaintiff: Andrew James McLellan (in his capacity as liquidator of The Stake Man Pty Ltd) ACN 006 602 919; Second Plaintiff: The Stake Man Pty Ltd (In Liquidation) ACN 006 602 919; Defendant: Anthony Paul Carroll
Jurisdiction
Australia
Judgment Date
14 December 2009
Procedural Posture
Civil / Final Judgment, Orders as to Costs
Outcome
Defendant found to have contravened statutory duty but wholly excused from liability; costs orders made.
Legal Topics
Director's Duty to Prevent Insolvent Trading, Judicial Discretion on Costs, Relief From Liability for Contravention, Costs in Litigation
Corporations Law Insolvency Practice and Procedure Director's Duty to Prevent Insolvent Trading Judicial Discretion on Costs Relief From Liability for Contravention Costs in Litigation

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Parties

Andrew James McLellan (in his capacity as liquidator of The Stake Man Pty Ltd) ACN 006 602 919

First Plaintiff

The Stake Man Pty Ltd (In Liquidation) ACN 006 602 919

Second Plaintiff

Anthony Paul Carroll

Defendant

Procedural Posture

Civil / Final Judgment, Orders as to Costs

Legal Issues

  1. 1 Whether the defendant contravened s 588G(2) of the Corporations Act by failing to prevent the company from incurring debts while insolvent
  2. 2 Whether the defendant ought fairly to be excused for the contravention under s 1317S(2)
  3. 3 Appropriate orders as to costs in light of outcome and conduct

Ratio Decidendi

Although the defendant was found to have contravened s 588G(2) by failing to prevent incurring of debts while insolvent, the court exercised its discretion to wholly excuse the defendant under s 1317S(2), having regard to all the circumstances. However, as the plaintiffs established all elements of the cause of action and were justified in commencing the proceedings, and since only the court could grant the relief that excused the defendant, a special departure from the usual rule was warranted. Accordingly, the defendant was ordered to pay the plaintiffs' costs, except for the costs relating to the interlocutory process where no order as to costs was made.

Court Disposition

Defendant found to have contravened statutory duty but wholly excused from liability; costs orders made.

Orders

  • Declaration: The defendant contravened s 588G(2) of the Corporations Act 2001 (Cth) by failing to prevent The Stake Man Pty Ltd from incurring debts totalling $356,952.02.
  • Declaration: Pursuant to s 1317S(2) of the Act, the defendant ought fairly to be excused for the contravention of s 588G(2).