Powell & Duncan (Noelex Yachts Aust) v Fryer & Anr No. SCGRG-98-431

(2001) 159 FLR 433; [2001] SASC 59

Supreme Court of South Australia

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Interrogate

Catchwords

1. Corporations
2. › Directors and other officers
3. › Criminal and statutory civil liability of officers
4. › Insolvent trading
5. › Incurring of debt while company insolvent
6. › Whether statutory imposts and penalties constitute 'debts' 'incurred'
7. › Corporations Law, ss 588G, 588M
1. Corporations
2. › Directors and other officers
3. › Criminal and statutory civil liability of officers
4. › Insolvent trading
5. › Loss or damage suffered by creditors
6. › Whether loss or damage is quantum of unpaid debt
7. › Corporations Law, s 588M(2)
1. Corporations
2. › Directors and other officers
3. › Criminal and statutory civil liability of officers
4. › Insolvent trading
5. › Defences
6. › Reasonable expectation of solvency
7. › Whether directors had reasonable grounds to expect solvency
8. › Corporations Law, ss 588H(2), 1318
1. Insolvency
2. › Debts
3. › Meaning of insolvency
4. › Inability to pay debts as and when they fall due
5. › Whether creditor indulgences relevant to assessment of solvency
6. › Corporations Law, s 95A

Quick Take

Statutory imposts including taxes, levies, WorkCover premiums, and penalties for late payment of such imposts are 'debts' 'incurred' within s 588G of the Corporations Law. The 'loss or damage' recoverable under s 588M(2) is the quantum of unpaid debts without abatement for prospective dividends, profit components, or the value of statutory charges. Directors who continue to trade an insolvent company knowing of extant statutory liabilities and the risk of penalties, without appointing an administrator under Part 5.3A, will be liable for those penalties as debts incurred.