BENTLEYS (SUNSHINE COAST) PTY LTD (formerly known as PWA FINANCIAL GROUP PTY LTD) ACN 010 527 876) (First Third Party)
AND
PETA WENDY GENFELL (Second Third Party)
AND
ULRIKE BENDLE (Third Third Party)
AND
CHERYL BLINCO (Fourth Third Party)
FILE NO/S:
DC No 3868 of 2017
DIVISION:
Civil
PROCEEDING:
Trial
ORIGINATING COURT:
District Court at Brisbane
DELIVERED ON:
12 June 2018
DELIVERED AT:
Brisbane
HEARING DATE:
16, 17, 18, 19, 20, 23, 24, 26 April 2018, 3 May 2018
JUDGE:
Porter DCJ QC
ORDER:
1. Judgment be entered in favour of the plaintiff in the amount of $372,016.10 plus interest pursuant to Section 58 Civil Proceedings Act2011 (Qld).
CATCHWORDS:
CORPORATIONS – MANAGEMENT AND ADMINISTRATION – DUTIES AND LIABILITIES OF OFFICERS OF A CORPORATION – OFFICERS OF INSOLVENT CORPORATION – DUTY TO PREVENT INSOLVENT TRADING – where from about March 2010 the Company ceased paying the plaintiff’s invoices – where the Company had one director formally appointed – where the plaintiff alleges the defendant was at all times a de facto director and seeks to recover compensation from the defendant – whether the alleged insolvent trading debts were incurred by the Company – whether the defendant was a director at the time the alleged insolvent trading debt – whether the alleged insolvent trading debt was proved to have been incurred during the relevant period or became insolvent from incurring those debts and others – whether there were reasonable groups for suspecting insolvency during the relevant period – whether the defendant was aware of those grounds or a reasonable person would have been so aware – whether the defendant has a defence – whether the plaintiff is entitled to recover loss or damage in relation to the plaintiff debts suffered because of the Company’s insolvency – whether costs of obtaining judgment for the relevant debt prior to insolvency are recoverable.
[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.
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AGLC
Tremco Pty Ltd v Thomson [2018] QDC 101
Case
[2018] QDC 101
Decision Date
CaseChat Overview and Summary
The case of Tremco Pty Ltd v Thomson involved a dispute regarding the liability of the defendant, Mr. Thomson, for debts incurred by the insolvent company, Tremco Pty Ltd. The plaintiff, Tremco Pty Ltd, sought compensation from Mr. Thomson, alleging that he was a de facto director of the company at the time it incurred the debts. The legal issues before the court included whether the alleged insolvent trading debts were incurred by the company, whether Mr. Thomson was a director at the relevant time, and whether he had a defence against the claim. Additionally, the court had to consider whether the plaintiff was entitled to recover loss or damage in relation to the debts suffered due to the company's insolvency and whether the costs of obtaining judgment for the relevant debt prior to insolvency were recoverable.
The court examined the evidence regarding Mr. Thomson's involvement with the company, including his role and the grounds for suspecting insolvency. It found that Mr. Thomson was indeed a de facto director and that the company had incurred the debts during the relevant period. The court further determined that there were reasonable grounds for suspecting insolvency and that Mr. Thomson was aware of these grounds. As a result, the court held that Mr. Thomson was liable for the debts incurred by the company and that the plaintiff was entitled to recover the loss or damage suffered. The court also ruled that the costs of obtaining judgment for the relevant debt prior to insolvency were recoverable.
In summary, the court found in favor of the plaintiff, ordering judgment in the amount of $372,016.10 plus interest. The decision established that Mr. Thomson was liable for the debts incurred by the insolvent company due to his role as a de facto director and the company's insolvency.
Orders
Orders of the court
1. Judgment be entered in favour of the plaintiff in the amount of $372,016.10 plus interest pursuant to Section 58 Civil Proceedings Act 2011 (Qld).
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
These objections were made on 7 October 2014 and the objection decisions were given on 19 November 2014 (the 2014 Objection Decisions). They overturned the 2010 personal assessments to tax as beneficiaries on the basis that because the settlement sum was not paid, there was no trust and therefore the Thomsons could not as a matter of law be assessed to a distribution as beneficiaries. The reasons are brief and contain no detailed legal reasoning. At first blush, the conclusion sounds an odd one (even if the settlement sum was not paid, which has never been properly determined). Given that the settlor plainly intended to create a trust and Kadoe knew that and acted in all respects as a trustee, one would imagine that the possibility of some form of constructive trust should have been at least considered. The 2014 Objection Decision relating to Mr Thomson also purports to include the whole of the income assessed to him and Mrs Thomson as beneficiaries in Mr Thomson’s assessable income because he was a sole trader. This surprising conclusion is accompanied by no further reasoning. Mr Thomson swears that an amended assessment was issued on 29 November 2014 giving effect to this conclusion. Third, Mr Thomson then objected to his amended assessment on 24 December 2014, submitting that the income in question was assessable in the hands of Kadoe or even Ms Blinco. On 25 March 2015, the relevant Deputy Commissioner gave his objection decision (the 2015 Objection Decision). He concluded again that the Trust was invalidly created because of the failure to pay the settlement sum. He continued that therefore Kadoe could not be liable for the tax, nor could Ms Blinco. But because Mr Thomson held a QBCC licence which could have authorised the work done, and be because Mr Thomson operated as a sole trader, he must be liable for the tax. The reasons show that this conclusion was based on Mrs Thomson’s advice to the ATO in those terms, something which also seems rather odd.[25] Mrs Thomson gave evidence that she informed the ATO of those matters because an officer of the ATO had earlier informed her of the same matters. There is no mention of this in the 2015 Objection Decision. [25] Affidavit of Wayne Thomson sworn 4 April 2017 (filed 4 April, DC proceeding 3868/17, Court Doc 46) at Ex No. WRT-3, pages 94-95. Fifth, all the above relates only to the liability for the assessable income of the business for the 2010 year, not the taxation liabilities incurred by Kadoe. In particular, the 2014 and 2015 Objection Decisions do not deal with the GST and Superannuation liabilities of Kadoe, which were the subject of the tax debts incurred by Kadoe. It seems these issues were not considered. Following the winding up of the Company, the ATO began to grapple with these issues. Ultimately on 7 December 2017, Deputy Commissioner Hastings wrote to the Liquidators confirming the position that the ATO considered that the Trust was invalid, but that Kadoe was liable for outstanding GST and Superannuation liabilities in its own right rather than as trustee.[26] [26] Affidavit of Terrence Rose sworn on 23 February 2017 (filed 24 February 2017, DC proceeding 3868/17, Court Doc 28) at Ex. No. TJR-17, pages 579-581.