Fitzgerald, in the matter of Tempo Holidays Pty Ltd (in liq) v Tully [2024] FCA 391

FEDERAL COURT OF AUSTRALIA

Fitzgerald, in the matter of Tempo Holidays Pty Ltd (in liq) v Tully [2024] FCA 391 File number(s): VID 742 of 2021

Judgment of: MCELWAINE J

Date of judgment: 19 April 2024

Catchwords: INSOLVENCY – application by liquidator against first defendant director for compensation for breach of director's duties and insolvent trading – where liquidators and director settled claim ahead of hearing – where liquidators contend second defendant insurer is liable in consequence of the settlement CORPORATIONS – breach of director's duties – ss 180 and 181 of the Corporations Act 2001 (Cth) – where sole Australian director of subsidiary of a global travel group permitted participation in a global treasury arrangement whereby substantial sums transferred to other group companies on undocumented and unsecured basis – funds exceeding $5.8 million transferred – where contended that director failed to monitor company affairs and failed to prevent payments being made – claim not proven INSURANCE CONTRACTS – where company was insured pursuant to a Management Liability Insurance Policy – where insurer denies liability – where claim was made within policy period – where liquidators have failed to establish a claim for loss withing the meaning of the Policy – where company breached duty of disclosure

Legislation: Corporations Act 2001 (Cth) ss 180, 181, 1317H Insurance Contracts Act 1984 (Cth) ss 21, 28, 48 Explanatory Memorandum, Insurance Contracts Amendments Bill 2013 (Cth)

Cases cited: AIG Europe (Ireland) Ltd v Faraday Capital Ltd [2007] 1 Lloyd's Rep IR 267 All Class Insurance Brokers Pty Ltd (In liq) v Chubb Insurance Australia Ltd (No 2) [2021] FCA 782 AMP Financial Planning Pty Ltd v CGU Insurance Ltd [2005] FCAFC 185; 146 FCR 447 Aquagenics Pty Ltd (in liq) v Certain Underwriters at Lloyd's Subscribing to Contract Number NCP106108663 [2017] FCA 634 Australian Securities and Investments Commission v Adler [2002] NSWSC 171; 168 FLR 253 Australian Securities and Investments Commission v GetSwift Limited (Liability Hearing) [2021] FCA 1384 Australian Securities and Investments Commission v Healey [2011] FCAFC 717; 196 FCR 291 Australian Securities and Investments Commission v Maxwell [2006] NSWSC 1052; 59 ACSR 373 Australian Securities and Investments Commission v Plymin [2003] VSC 123; 175 FLR 124 Badenach v Calvert [2016] HCA 18; 257 CLR 440 Bell Group (in liq) v Westpac Banking Corporation (No 9) [2008] WASC 239; 39 WAR 1 Blakeley, Ryan & Olde (as liquidators of Akron Roads Pty Ltd (in liq)) v Insurance Australia Ltd [2017] VSCA 378; 53 VR 733 Cassimatis v Australian Securities and Investments Commission [2020] FCAFC 52; 275 FCR 533 Certain Underwriters at Lloyd's Subscribing to Contract Number NCP106108663 v Aquagenics Pty Ltd (in liq) [2018] FCAFC 9; 352 ALR 131 CGU Insurance Limited v Blakeley [2016] HCA 2; 259 CLR 339 CGU Insurance Limited v Porthouse [2008] HCA 30: 235 CLR 103 Distillers Company Biochemicals (Australia) Pty Limited v AJAX Insurance Company Limited (1974) 130 CLR 1 Drayton v Martin (1996) 67 FCR 1 Edwards v Insurance Office of Australia Ltd (1934) 34 SR (NSW) 88 Enterprise Oil Ltd v Strand Insurance Co Ltd [2006] 1 Lloyd's Rep 500 GRE Insurance Ltd v QBE Insurance Ltd [1985] VR 83 Hanwood Pastoral Co Pty Limited v Kelly (No 2) [2022] FCA 850 Hussain v CSR Building Products Limited [2016] FCA 392; 246 FCR 62 Igloo Homes Pty Ltd v Sammut Constructions Pty Ltd [2005] NSWCA 280 Lewis v Australian Capital Territory [2020] HCA 26; 271 CLR 192 Liberty Mutual Insurance Company Australian Branch trading as Liberty Specialty Markets v Icon Co (NSW) Pty Ltd [2021] FCAFC 126: 396 ALR 193 Lumberman's Mutual Casualty Co v Bovis Lend Lease [2005] 1 Lloyd's Rep 494 Maronis Holdings Ltd v Nippon Credit Australia Pty Ltd [2001] NSWSC 448; 38 ACSR 404 McCarthy v St Paul International Insurance Co Ltd [2007] FCAFC 28; 157 FCR 402 Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146 PC Case Gear Pty Ltd v Instrat Insurance Brokers Pty Ltd (in liq) [2020] FCA 137 Permanent Trustee Australia Ltd v FAI General Insurance Company Limited (in liq) [2003] HCA 25; 214 CLR 514 Quick v Stoland Pty Ltd (1998) 87 FCR 371 Re Akron Roads Pty Ltd (in liq) (No 3) [2016] VSC 657; 348 ALR 704 Re Alsafe Security Products Pty Ltd [2016] NSWSC 377 Re Colorado Products Pty Ltd (in liq) [2014] NSWSC 789; 101 ACSR 233 Re Custom Bus Australia Pty Ltd (in liq) [2021] NSWSC 1036 Re IW4U Pty Ltd (in liq) (2021) 150 ASCR 146; [2021] NSWSC 40 Reid Crowther & Partners Ltd v Simcoe & Erie General Insurance Co (1993) 99 DLR (4th) 741 Sandell v Porter (1966) 115 CLR 666 Shafron v Australian Securities and Investments Commission [2012] HCA 18; 247 CLR 465 Smart v AAI Ltd [2015] NSWSC 392 Southern Cross Interiors Pty Ltd v Deputy Commissioner of Taxation [2001] NSWSC 621; 53 NSWLR 213 Statewide Tobacco Services Ltd v Morley (1990) 2 ACSR 405 Strategic Management Australia AFL Pty Ltd v Precision Sports & Entertainment Group Pty Ltd [2016] VSC 303; 114 ACSR 1 Termite Resources NL (in liq) v Meadows (in liq) (No 2) [2019] FCA 354; 370 ALR 191 Thorman v New Hampshire Insurance Co (UK) Ltd [1988] 1 Lloyd's Rep 7 Tosich v Tasman Investment Management Limited [2008] FCA 377; 250 ALR 274 Treloar Constructions Pty Ltd v McMillan [2017] NSWCA 72; 318 FLR 58 Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd [1998] HCA 38; 192 CLR 603 Vero Insurance Limited v Baycorp Advantage Limited [2004] NSWCA 390 Walker v Wimborne (1976) 137 CLR 1 West Wake Price & Co v Ching [1957] 1 WLR 45 Zurich General Accident and Liability Insurance Company Ltd v Morrison [1942] 2 KB 53 Cannon M and McGurk B, Professional Indemnity Insurance (2nd ed, Oxford University Press, 2015) Derrington DK and Ashton RS, The Law of Liability Insurance (3rd ed LexisNexis 2013) Enright WIB and Merkin M, Sutton on Insurance Law (4th ed, Thomson Reuters, 2015) Ramsay I, Company Directors Principles of Law and Corporate Practice (2nd ed, LexisNexis, 2023)