Rambaldi v Rice Bar Restaurant - [2018] VSC 218

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S CI 2017 04950

IN THE MATTER OF Rice Bar Restaurant Pty Ltd (In Liquidation) (ACN 119 396 655)

GESS MICHAEL RAMBALDI & DAVID RAJ VASUDEVAN AS JOINT AND SEVERAL LIQUIDATORS OF RICE BAR RESTAURANT PTY LTD (IN LIQUIDATION) (ACN 119 396 655)	Plaintiffs
v
RICE BAR RESTAURANT PTY LTD (IN LIQUIDATION) (ACN 119 396 655)	Defendant

---

JUDGE:	GARDINER AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	1 May 2018
DATE OF JUDGMENT:	4 May 2018
CASE MAY BE CITED AS:	Rambaldi & anor v Rice Bar Restaurant & anor
MEDIUM NEUTRAL CITATION:	[2018] VSC 218

---

CORPORATIONS – External administration – Sections 588E, 588G and 588M of the Corporations Act (2001) (Cth) – Defendant a director of company in liquidation – Defendant alleged to have been involved in insolvent trading – Company incurred liabilities to Commissioner of Taxation at a time when defendant was a director – Company did not maintain proper books – Presumption of insolvency arising by operation of section 286 of the Corporations Act (2001) (Cth) – Declarations and orders made in favour of the plaintiffs.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr B Devanny	Mendelsons Lawyers
The Defendant did not appear at trial

HIS HONOUR:

By originating process filed 4 December 2017 the plaintiffs seek relief under ss 286, 588E, 588G, 588M and 1317H of the Corporations Act 2001 (Cth) (‘the Act’). The plaintiffs seek orders directing the defendant to pay to the second plaintiff, Rice Bar Restaurant Pty Ltd (In Liquidation) (‘the company’), the sum of $147,204.87 as compensation and/or loss of damage for breach of the duty to prevent insolvent trading. The defendant is the sole director of the company.

In the originating process the plaintiffs claim:

(1) a declaration that the defendant director breached his duty to prevent insolvent trading within the meaning of s 588G(2) of the Act in respect of failing to prevent the company from incurring the debts totalling at least $147,204.87;

(2) an order that the defendant pay to the plaintiff the sum of $147,204.87;

(3) an order pursuant to s 588M(2) of the Act that the defendant pay to the plaintiffs as a debt to the company an amount equal to the amount of loss or damage suffered by the company’s creditors because of the insolvency of the company; and

(4) alternatively to (3) orders pursuant to s 1317H of the Act for compensation of $147,204.87.

The plaintiffs also seek interest pursuant to statute and costs. At the trial of this

proceeding the plaintiffs did not press for orders to be made pursuant to s1317H.

By order made 18 January 2018 J Forrest J ordered that the originating process be referred to an Associate Judge for hearing and determination pursuant to r 77.05 of the Supreme Court (General Civil Procedure) Rules 2015 (‘Rules’) and, if required, also pursuant to r 16.1(3) of the Supreme Court (Corporations) Rules 2013.

The defendant filed…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Rambaldi v Rice Bar Restaurant

Details

AGLC: Rambaldi v Rice Bar Restaurant [2018] VSC 218
Case: [2018] VSC 218
Decision Date: 4 May 2018

CaseChat Overview and Summary

In the matter of Rambaldi v Rice Bar Restaurant, the plaintiffs sought to hold the defendant, who was a director of a company in liquidation, accountable for alleged insolvent trading. The plaintiffs argued that the company incurred debts to the Commissioner of Taxation during the defendant’s tenure as director, and that the company failed to maintain proper accounting records. The legal issues before the court were whether the defendant had engaged in insolvent trading and whether the company was insolvent at the time the debts were incurred. The court needed to determine if the presumption of insolvency under section 286 of the Corporations Act applied, and if so, whether the defendant’s actions warranted a declaration of insolvent trading.

The court examined the evidence presented regarding the company’s financial status and the defendant’s knowledge of the company’s financial position. It assessed the lack of proper books and records and considered the impact of the presumption of insolvency. The court found that the company had indeed incurred debts while the defendant was a director, and that the absence of proper accounting records supported the presumption of insolvency. The court concluded that the presumption was not rebutted and that the company was insolvent at the relevant time. Consequently, the court held that the defendant had engaged in insolvent trading, warranting the orders sought by the plaintiffs.

The court issued declarations and orders in favour of the plaintiffs, confirming the defendant's liability for insolvent trading. The final orders included a declaration that the defendant had engaged in insolvent trading, and that the company was insolvent at the relevant time. The court also ordered that the defendant compensate the company for losses incurred due to the insolvent trading. This decision underscores the importance of maintaining proper financial records and the consequences for directors who fail to do so in companies that are, or become, insolvent.

Orders