Edwards v Australian Securities and Investments Commission

The proceeding concerned appeals by Mr Edwards against decisions of the Australian Securities and Investments Commission (ASIC) and the Supreme Court of New South Wales. The dispute involved allegations of insolvent trading by Mr Edwards as a director of a company, and challenges to a disqualification order made by ASIC. A key element of the dispute related to whether liabilities arising under a quantum meruit claim constituted "debts" for the purposes of section 588G of the *Corporations Act 2001* (Cth).

The court was required to determine several legal issues. Firstly, it had to consider whether liabilities incurred on a quantum meruit basis, arising from building work commenced before a formal contract was executed, were to be treated as debts for the purposes of the insolvent trading provisions under section 588G of the *Corporations Act 2001* (Cth). Secondly, the court needed to assess whether Mr Edwards was aware of the company incurring these debts at a time when it was insolvent or became insolvent by incurring them. Finally, the court had to determine the validity and appropriateness of the disqualification order made against Mr Edwards.

The court reasoned that a quantum meruit claim arises when work is performed at the request of another party, and the law implies a promise to pay a reasonable remuneration for that work, even in the absence of a formal contract. It held that such a liability, once incurred, constitutes a debt for the purposes of section 588G of the *Corporations Act 2001* (Cth). The court further found that Mr Edwards had sufficient awareness of the company incurring these liabilities and the company's financial position to engage the provisions of section 588G. Consequently, the appeals were dismissed, and the disqualification order was upheld.