Grant Baines Transport Pty Ltd v John Zappia

[2009] NSWLC 28

Local Court of New South Wales

CITATION:	Grant Baines Transport Pty Ltd v John Zappia [2009] NSWLC 28
JURISDICTION:	Civil
PARTIES:	Plaintiff: Grant Baines Transport Pty Ltd Defendant: John Zappia
FILE NUMBER:	240 of 2006
PLACE OF HEARING:	Newcastle Local Court
DATE OF DECISION:	05/26/2009
MAGISTRATE:	Magistrate Truscott
CATCHWORDS:	Breach of duty as a Director, Company presumed insolvent or actually insolvent, debts incurred when there were reasonable grounds for suspecting the company was insolvent
LEGISLATION CITED:	Corporations Act, 2001 (Cth)
CASES CITED:	Lewis v Doran [2004] NSWSC 608; (2004) 50 ACSR Southern Cross Interiors Pty Ltd (in liq) v Deputy Commissioner of Taxation [2001] NSWSC 621 Robert Mackay Sutherland & Anor as joint liquidators of Australian Coal Technology & Anor v Hanson Construction Material Pty Ltd &Ors (3 April 2009 NSWSC)
TEXTS CITED:
REPRESENTATION:	M Holmes instructed by Perry Legal T Hall of Hall Partners
ORDERS:	Judgment entered for the Plaintiff in the sum of $53,504.58, plus filing costs and interest to be calculated on the usual basis.

Reasons for Decision

1. In February 2004 Grant Baines Transport Pty Ltd (“Transport”) reached an agreement with Zap Logistics Pty Ltd (“Zaps”) to provide transport services collecting and delivering goods. Between 30 December 2004 and 14 March 2005 Transport rendered a number of invoices for such services to Zaps, totalling $53,504.58, which remained unpaid. On 13 July 2005 an administrator was appointed to Zaps and on 7 September 2006 a liquidator was appointed. Zaps later changed its name to Quez Removals Pty Ltd.

2. John Zappia was the director of Zaps at the time the invoices fell due. Transport has brought proceedings pursuant to s558M of the Corporations Act , 2001 (Cth) seeking to recover the outstanding $53,504.58 from the Defendant who at the time was the Director of the company when the invoices fell due and payable (“the relevant period”). It is common ground that the debt was incurred when the service was provided, those dates being 14 days prior to the date each invoice was issued.

3. The plaintiff pleads : - the Company is either presumed insolvent (s588E) or - that it was actually insolvent (s95A) - the Defendant failed to prevent the Company incurring the relevant debts and was accordingly in breach of his duty as a Director– s588G - when the debts fell due and payable there were reasonable grounds for suspecting that the company was insolvent, or would become insolvent – s588G(1)(c) - the defendant was aware at the time the debts were incurred that there were grounds for suspecting the company was insolvent (s588G(2)(a));

- or, a reasonable person in a like position in a company in the company’s circumstances would be so aware (s588G(2)(b))

4. There are statutory defences under s588H(1):

(a) the Defendant had reasonable grounds to expect, and did expect, that at that time the company was solvent or would remain solvent even if it incurred that debt and any other debts that it incurred at that time (588H(2).
(b) The…