Smith v Bone (No 2)

In Smith v Bone (No 2), the plaintiffs sought a declaration that the defendants had caused the company to trade while insolvent, thereby contravening section 588G of the Corporations Act 2001 (Cth). The case was heard in the Federal Court of Australia. The plaintiffs also sought damages for insolvent trading and pre-judgment interest. The defendants, Mr Bone and Valvelink, contested the claims, with Valvelink arguing that it was not liable for any insolvent trading.

The primary legal issues involved determining whether the court should make certain declarations regarding insolvent trading, the calculation of pre-judgment interest, and the allocation of costs. The court had to decide if there was a benefit in making the proposed declarations and whether the defendants were liable for pre-judgment interest. The court also considered the plaintiffs' request for an order for interest from the date of the liquidator's appointment, as per the precedent set in Powell v Fryer.

The court declined to make the proposed declarations as there was no evident good purpose for doing so. The court reasoned that the first declaration would not advance the plaintiffs' position in other void transaction proceedings, and the second declaration was within the reasoning of Barrett J in Edenden. Regarding pre-judgment interest, the court held that Mr Bone was liable for interest under section 51A(1) of the Federal Court of Australia Act 1976 (Cth), while Valvelink was not liable for interest on unpaid tax. The court ordered that the defendants pay the plaintiffs the specified amounts, along with interest and costs. The proceedings were dismissed otherwise.