In the matter of Trinco (NSW) Pty Ltd (in liq)

In the matter of Trinco (NSW) Pty Ltd (in liq), the plaintiffs sought to hold the second defendant liable for insolvent trading pursuant to section 588M of the Corporations Act 2001 (Cth). They alleged that the second defendant was a de facto director of the company, as defined by section 9AC(1)(b) of the Corporations Act, and was therefore subject to the same obligations as a de jure director. The plaintiffs sought to establish that the company was insolvent at the time the debts in question were incurred, and that the second defendant had reasonable grounds to suspect this insolvency. They further alleged that the second defendant failed to prevent the company from incurring debts, and that a reasonable person in their position would have been aware of the grounds for suspecting insolvency. The plaintiffs sought compensation for losses suffered due to the company's insolvency.

The legal issues before the court involved determining whether the second defendant was indeed a de facto director, and whether the company was insolvent within the meaning of section 95A of the Corporations Act. The court had to consider whether there were reasonable grounds for the second defendant to suspect the company's insolvency, and whether the second defendant failed to prevent the company from incurring debts. Additionally, the court needed to assess whether a reasonable person in the second defendant's position would have been aware of the grounds for suspecting insolvency. The court was required to decide whether the plaintiffs had established a breach of section 588M of the Corporations Act and, if so, the extent of the second defendant's liability.

The court found that the second defendant was indeed a de facto director of the company and that the company was insolvent at the relevant time. It was established that there were reasonable grounds for the second defendant to suspect the company's insolvency, and that the second defendant failed to prevent the company from incurring the debts in question. The court concluded that a reasonable person in the second defendant's position would have been aware of the grounds for suspecting insolvency. Consequently, the court held that the second defendant was liable for insolvent trading under section 588M of the Corporations Act and ordered the second defendant to pay the second plaintiff the specified amount of the debt.

In summary, the court found the second defendant liable for insolvent trading, establishing that they were a de facto director of the company and failed to prevent the company from incurring debts when there were reasonable grounds to suspect insolvency. The court ordered the second defendant to pay the second plaintiff the specified amount of the debt, thereby compensating the plaintiff for the loss or damage suffered due to the company's insolvency.