Liquidators of Y Pty Ltd and Diboll

The liquidators of Y Pty Ltd (in liquidation) sought to recover from Mr Diboll, a former director, amounts allegedly owed to the company. The dispute concerned the liquidators' claim that Mr Diboll had breached his duties as a director by failing to ensure the company paid its debts as they fell due, thereby causing loss to the company. The matter came before Gill J in the Supreme Court of Western Australia.

The central legal issue before the Court was whether Mr Diboll had contravened section 588G of the Corporations Act 2001 (Cth) by allowing Y Pty Ltd to incur debts when he was aware, or reasonable grounds existed to suspect, that the company was insolvent and that the incurring of the debt would make it insolvent. The Court was required to determine if the liquidators had established the necessary elements of this statutory claim, including the existence of insolvency and Mr Diboll's state of knowledge or suspicion.

Gill J considered the evidence presented regarding the financial position of Y Pty Ltd at the relevant times. The Court applied the principles established in cases concerning directors' duties and insolvency, focusing on the objective test for reasonable grounds for suspicion and the subjective knowledge of the director. The Court found that the liquidators had not discharged their onus of proof in establishing the necessary elements of the claim under section 588G.

The Wife's Response to an Application in a Case filed 31 October 2019 was dismissed. The proceedings were adjourned to the Registrar’s List pending further application or the listing of the matter for trial directions.