Go Electrical Pty Limited v Neil Gregory McGarvey & Ors [2009] NSWDC 312

New South Wales District Court

CITATION: Go Electrical Pty Limited v Neil Gregory McGarvey & Ors [2009] NSWDC 312

HEARING DATE(S): 4 November 2009 EX TEMPORE JUDGMENT DATE : 4 November 2009

JURISDICTION: Civil

JUDGMENT OF: Rolfe DCJ

DECISION: See paras 29 & 30 of Judgment

CATCHWORDS: Insolvent trading claim under s 588G (2) of the Corporations Act (2001) - Proof of matters necessary for showing that directors knew or a reasonable person in their position ought to have known of debtor company's insolvency - Consideration of balance sheet - Financial statements and Opinions of liquidator.

LEGISLATION CITED: Corporations Act (2001)

CASES CITED: Quick v Stoland (1998) 87 FCR 371

PARTIES: Go Electrical Pty Limited (Plaintiff) Neil Gregory McGarvey & Ors (Defendant)

FILE NUMBER(S): 5567/08

COUNSEL: M A Jones (Plaintiff) R Kato (Defendants)

JUDGMENT

1 These proceedings arise out of the supply of goods provided by the plaintiff, Go Electrical Pty Limited, to a company known as Rolls Electrical (Qld) Pty Limited, which I will refer to as the "Debtor". The plaintiff's case is that the Debtor was indebted to it in the sum of $144,000, in round figures, as at 22 January 2007, which is the date upon which Mark Pearce and Christopher Palmer, Chartered Accountants, were appointed administrators of the Debtor. The Debtor has not paid the amount owing to the plaintiff and that is not disputed on the evidence.

2 The plaintiff's claim is against the three defendants in their capacities as directors of the Debtor. The plaintiff's claim is that, in contravention of s 588G(2) of the Corporations Act (2001), (the "Act"), the three defendants failed to prevent the Debtor from incurring debts when they were aware, or a reasonable person in their position in the circumstances that the Debtor was in, would have been aware, that the Debtor was insolvent, that the Debtor became insolvent by incurring the debts owing to the plaintiff and that there were reasonable grounds for suspecting that the Debtor was insolvent.