McLellan, in the matter of The Stake Man Pty Ltd v Carroll [2009] FCA 1415

McLellan, in the matter of The Stake Man Pty Ltd v Carroll [2009] FCA 1415

The Company was insolvent throughout the relevant period, Mr Carroll failed to prevent the Company incurring debts, and creditors suffered loss and damage. However, Mr Carroll acted honestly, sought and relied on professional advice, and in all circumstances ought fairly to be excused from liability pursuant to s 1317S(2) of the Corporations Act.

Parties
First Plaintiff: Andrew James McLellan (in his capacity as Liquidator of The Stake Man Pty Ltd); Second Plaintiff: The Stake Man Pty Ltd (In Liquidation); Defendant: Anthony Paul Carroll
Jurisdiction
Australia
Judgment Date
30 November 2009
Procedural Posture
Corporate Insolvency/insolvent Trading Civil Claim / Final Judgment With Declaration and Directions for Further Submissions
Outcome
Declaration of contravention; director excused; no liability to pay loss and damage under s 588M.
Legal Topics
Insolvent Trading, Directors' Duties, Reasonable Expectation of Solvency, Reliance on Professional Advice, Relief From Liability
Bankruptcy and Insolvency Corporations Insolvent Trading Directors' Duties Reasonable Expectation of Solvency Reliance on Professional Advice Relief From Liability

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Parties

Andrew James McLellan (in his capacity as Liquidator of The Stake Man Pty Ltd)

First Plaintiff

The Stake Man Pty Ltd (In Liquidation)

Second Plaintiff

Anthony Paul Carroll

Defendant

Procedural Posture

Corporate Insolvency/insolvent Trading Civil Claim / Final Judgment With Declaration and Directions for Further Submissions

Legal Issues

  1. 1 Whether debts were incurred during relevant period
  2. 2 Whether company was insolvent at time debts incurred or became insolvent by incurring debts
  3. 3 Whether director was aware of grounds for suspecting insolvency

Ratio Decidendi

The Company was insolvent throughout the relevant period, Mr Carroll failed to prevent the Company incurring debts, and creditors suffered loss and damage. However, Mr Carroll acted honestly, sought and relied on professional advice, and in all circumstances ought fairly to be excused from liability pursuant to s 1317S(2) of the Corporations Act.

Court Disposition

Declaration of contravention; director excused; no liability to pay loss and damage under s 588M.

Orders

  • Declaration Mr Carroll contravened s 588G(2) by failing to prevent incurring debts referred in schedule.
  • Declaration under s 1317S(2) that Mr Carroll ought fairly to be excused for the contravention.