Box Valley Pty Ltd v Kidd & Anor [2006] NSWCA 26

Reported Decision : (2006) 24 ACLC 471

New South Wales Court of Appeal

CITATION: Box Valley Pty Ltd v Kidd & Anor [2006] NSWCA 26

HEARING DATE(S): 12/8/05

JUDGMENT DATE: 24 February 2006

JUDGMENT OF: Bryson JA at 1; Basten JA at 50; Gzell J at 68

DECISION: Appeal dismissed with costs.

CATCHWORDS: CORPORATIONS - Director's duty to prevent insolvent trading - solvency and insolvency s.95A - grain trading company faced looming losses when futures sale contracts greatly exceeded purchase contracts in steeply rising market for white cottonseed, and directors took company into Voluntary Administration on 21 June 2001 followed by Creditors' resolution for liquidation on 27 June 2001 - large liabilities for damages accrued with defaults on sale contracts as they fell due after liquidation - company incurred debts to plaintiff appellant for purchases of sorghum delivered 1 to 15 June for payment no later than 30 July 2001 - whether insolvent when debts on sorghum purchases incurred - whether liabilities for damages to be incurred in future are debts within test for solvency in s.95A - held they were not. - APPEAL and NEW TRIAL - Trial Judge did not rule on an alternative case of insolvency referred to in report of plaintiff's accounting expert - on review of evidence and conduct of trial, discretionary decision against New Trial under SCR Pt51 r.23(1) (substantial wrong or miscarriage).

Corporations Act 2001 s.588G, 588H(2) & (3), 588M(1) and (3), 588R, 1317S, 1318 LEGISLATION CITED: Companies (NSW) Code s.556(1) District Court Act 1973 (NSW) s.83A Supreme Court Rules 1970 (NSW) Pt.51 r.23(1)

Alexander v Ajax Insurance [1956] VLR 436; [1956] ALR 1077 CASES CITED: Shephard & Ors v ANZ Banking Corporation Ltd & Anor (1997) 15 ACLC 1802 Shepherd v Australia & New Zealand Banking Group Ltd (1996) 14 ACLC 987 Hawkins v Bank of China (1992) 26 NSWLR 562