Opac Pty. Ltd v. Coxhead J.B. & Anor [1995] FCA 600

Opac Pty. Ltd v. Coxhead J.B. & Anor [1995] FCA 600

BBC was indebted to two banks and had a history of indebtedness and inability to pay, its financial statements showed current liabilities substantially exceeding current assets and a loss, and Mr Coxhead's statements to Opac showed that BBC lacked available funds. The Court preferred Mr Keness's evidence where it conflicted with Mr Coxhead's. Accordingly, immediately before BBC incurred the 5 May 1989 debt there were reasonable grounds to expect that BBC could not pay all its debts as and when they became due and that, if it incurred the debt, it would not be able to do so. Mr Coxhead did not establish the s. 592(2)(b) defence and was personally liable for the unpaid portion of the debt.

Jurisdiction
Australia
Judgment Date
11 August 1995
Procedural Posture
Application Pursuant to S. 592 of the Corporations Law for Orders Rendering a Director Personally Liable for a Company Debt / Reasons for Judgment and Final Orders
Outcome
Application against Jonathan Bruce Coxhead allowed; claim against IDB Communications Pty Limited dismissed as framed under s. 592; costs ordered.
Legal Topics
['insolvent Trading' 'director Personal Liability for Company Debts' 'reasonable Grounds to Expect Inability to Pay Debts' 'defence Under S. 592(2)' 'interest and Costs']
['corporations Law'] ['insolvent Trading' 'director Personal Liability for Company Debts' 'reasonable Grounds to Expect Inability to Pay Debts' 'defence Under S. 592(2)' 'interest and Costs']

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 1 Authorities cited 2 Party arguments 2 Amounts and remedies 1
Sign in to unlock

Procedural Posture

Application Pursuant to S. 592 of the Corporations Law for Orders Rendering a Director Personally Liable for a Company Debt / Reasons for Judgment and Final Orders

Legal Issues

  1. 1 ['Whether immediately before BBC incurred the debt to Opac on or about 5 May 1989 there were reasonable grounds to expect that BBC would not be able to pay all its debts as and when they became due under s. 592(1)(b)(i) of the Corporations Law.' 'Whether immediately before BBC incurred the debt there were reasonable grounds to expect that, if BBC incurred the debt, it would not be able to pay all its debts as and when they became due under s. 592(1)(b)(ii) of the Corporations Law.' 'Whether Jonathan Bruce Coxhead established a defence under s. 592(2)(b) of the Corporations Law.' "Whether Opac's claim against IDB Communications Pty Limited could be maintained as a s. 592 claim."]

Ratio Decidendi

BBC was indebted to two banks and had a history of indebtedness and inability to pay, its financial statements showed current liabilities substantially exceeding current assets and a loss, and Mr Coxhead's statements to Opac showed that BBC lacked available funds. The Court preferred Mr Keness's evidence where it conflicted with Mr Coxhead's. Accordingly, immediately before BBC incurred the 5 May 1989 debt there were reasonable grounds to expect that BBC could not pay all its debts as and when they became due and that, if it incurred the debt, it would not be able to do so. Mr Coxhead did not establish the s. 592(2)(b) defence and was personally liable for the unpaid portion of the debt.

Court Disposition

Application against Jonathan Bruce Coxhead allowed; claim against IDB Communications Pty Limited dismissed as framed under s. 592; costs ordered.

Orders

  • ['The Court declares that Jonathan Bruce Coxhead, a director of BBC Computer and Communication Services Pty Limited, contravened s. 592(1) of the Corporations Law in relation to the incurring by that company of a debt to Opac Pty Limited on or about 5 May 1989 in the sum of $18,205 and that he is liable for the...