Toomey Leasing Group Ltd -v- Sedgwick & Ors [2016] IECA 280 (13 October 2016)

Toomey Leasing Group Ltd -v- Sedgwick & Ors [2016] IECA 280 (13 October 2016)

The requirements of s. 297A(2)(a) of the Companies Act 1963 are not satisfied because, although the company was in a perilous financial position, there was no evidence that the director (Mr. Sedgwick) ought to have known that accepting advance payment from Toomey Leasing would cause loss to that creditor. The withdrawal of bank support was not foreseeable and occurred only after the payment was received. The statutory test for personal liability is not met.

Citation
[2016] IECA 280
Parties
Applicant/respondent: Toomey Leasing Group Limited; Respondent/appellant: Graham Sedgwick; Respondent: Colin Farrell; Respondent: Paul Greene; Respondent: Christopher Pratt
Jurisdiction
Ireland
Judgment Date
13 October 2016
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Appeal From High Court
Outcome
appeal allowed
Legal Topics
Reckless Trading, Director Liability, Personal Liability of Directors, Creditor Protection, Liquidation
Company Law Insolvency Law Reckless Trading Director Liability Personal Liability of Directors Creditor Protection Liquidation

Case Brief

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Parties

Toomey Leasing Group Limited

Applicant/respondent

Graham Sedgwick

Respondent/appellant

Colin Farrell

Respondent

Paul Greene

Respondent

Christopher Pratt

Respondent

Procedural Posture

Civil Appeal / Court of Appeal Judgment on Appeal From High Court

Legal Issues

  1. 1 Whether the director (Mr. Sedgwick) ought to have known that his actions or those of the company would cause loss to the creditor (Toomey Leasing) under s. 297A(2)(a) of the Companies Act 1963
  2. 2 Whether the statutory test for personal liability for reckless trading was met

Ratio Decidendi

The requirements of s. 297A(2)(a) of the Companies Act 1963 are not satisfied because, although the company was in a perilous financial position, there was no evidence that the director (Mr. Sedgwick) ought to have known that accepting advance payment from Toomey Leasing would cause loss to that creditor. The withdrawal of bank support was not foreseeable and occurred only after the payment was received. The statutory test for personal liability is not met.

Court Disposition

appeal allowed

Orders

  • Refusal to make declarations of personal liability against Mr. Sedgwick under s. 297A(2)(a) of the Companies Act 1963