New England Agricultural Traders P/L v. Adams, J.T. & Anor [1994] FCA 824

JUDGMENT No. snd Stool 1%. CATCHWORDS

TRADE PRACTICES - misleading or deceptive conduct - representations relating to solvency of company and ability to pay debts.

CORPORATIONS - directors' liability - insolvent trading - whether there were reasonable grounds for director to expect that the company would not be able to pay all its debts as and when they became due - defence under s 592(2)(b) - whether absence of reasonable cause for expectation.

CORPORATIONS - management and administration - insolvent trading - resignation of director - liability for debts incurred - whether involved in management of company at time debt incurred.

Trade Practices Act 1974, s 52 Fair Trading Act 1987 (NSW) s 42 Corporations Law, s 592

Holpitt Pty Lid v Swaab (1992) 33 FCR 474

w_ Wi e td : td_v_Basele: (1994) 122 ALR 531

wW icultural Traders P imited v_ J s Adams and Graha

Richard Catto No. NG 87 of 1992

Coram: Whitlam J Place: Sydney RECEIVED Date: 3 November 1994 -9 NOV 1994 FEDERAL COURT OF AUSTRALIA

PRINCIPAL REGISTRY

IN THE FEDERAL COURT OF AUSTRALIA ) W. W. STR 3 NG 87 of 1992

)

GENERAL DIVISION )

NEW ENGLAND AGRICULTURAL TRADERS PTY LIMITED Applicant

JOHN THOMAS ADAMS First Respondent

GRAHAM RICHARD CATTO Second Respondent

Coram: Whitlam J Place: Sydney Date: 3 November 1994

RE S FOR JUDG

The applicant, New England Agriculture Traders Pty Ltd ("NEAT"), 1s a grain trader. The respondents, Mr John Adams and Mr Graham Catto, were respectively a

director and the accountant of a company called Alfla & Co Pty Ltd ("Alfla").

Alfla operated a cattle feedlot at a property "Birralee" outside the town of Merriwa. Between May and September 1991 NEAT sold large quantities of grain to Alfla, which failed to pay $210,807.12 of the price of such grain, On 20 December 1991 a winding-up order was made against Alfla. In this proceeding NEAT seeks to recover