Sheahan v Ren [2017] FCA 1163

Sheahan v Ren [2017] FCA 1163

The respondent, as director, allowed each company to incur debts while insolvent or by so doing became insolvent. Neither company kept books or records as required, triggering the presumption of insolvency. The evidence established reasonable grounds for suspecting insolvency, and thus a contravention of s 588G(2), entitling liquidators to recover under s 588M. The respondent failed to defend or appear, and the requirements for summary or default judgment were met.

Parties
First Applicant: John Sheahan and Ian Russell Lock as joint and several liquidators of Territory Heavy Industries Limited (in liquidation) ACN 149 466 142; Second Applicant: John Sheahan and Ian Russell Lock as joint and several liquidators of Cascade Infrastructure Pty Limited (in liquidation) ACN 147 019 654; Respondent: Jerry Ren
Jurisdiction
Australia
Judgment Date
29 September 2017
Procedural Posture
Civil Commercial/insolvency / Application for Summary Judgment or Default Judgment
Outcome
Application for summary judgment upheld, order made to hear applicants on interest before entering final judgment.
Legal Topics
Insolvent Trading, Director's Duties, Summary Judgment, Default Judgment
Corporations Law Insolvent Trading Director's Duties Summary Judgment Default Judgment

Case Brief

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Parties

John Sheahan and Ian Russell Lock as joint and several liquidators of Territory Heavy Industries Limited (in liquidation) ACN 149 466 142

First Applicant

John Sheahan and Ian Russell Lock as joint and several liquidators of Cascade Infrastructure Pty Limited (in liquidation) ACN 147 019 654

Second Applicant

Jerry Ren

Respondent

Procedural Posture

Civil Commercial/insolvency / Application for Summary Judgment or Default Judgment

Legal Issues

  1. 1 Whether the respondent contravened s 588G(2) of the Corporations Act by permitting the companies to incur debts while insolvent
  2. 2 Whether the liquidators may recover loss or damage pursuant to s 588M of the Corporations Act
  3. 3 Whether the presumption of insolvency applies under s 588E due to failure to keep books and records

Ratio Decidendi

The respondent, as director, allowed each company to incur debts while insolvent or by so doing became insolvent. Neither company kept books or records as required, triggering the presumption of insolvency. The evidence established reasonable grounds for suspecting insolvency, and thus a contravention of s 588G(2), entitling liquidators to recover under s 588M. The respondent failed to defend or appear, and the requirements for summary or default judgment were met.

Court Disposition

Application for summary judgment upheld, order made to hear applicants on interest before entering final judgment.

Orders

  • The applicants be heard on interest before final judgment is entered.