Legal Research
Cases
Woodgate v Davis

Woodgate v Davis

Case [2002] NSWSC 616 12 July 2002

Unjust Enrichment

Insolvent Trading

Directors' Liability

Corporate Law & Governance

No judgment structure available for this case.

Type to search within this case.

Reported Decision:
(2002) 42 ACSR 286
(2002) 55 NSWLR 222
(2002) 20 ACLC 1314

New South Wales

Supreme Court

CITATION: Woodgate v Davis [2002] NSWSC 616

CURRENT JURISDICTION: Equity Division

FILE NUMBER(S): SC 5401/01

HEARING DATE(S): 01/07/02

JUDGMENT DATE: 12 July 2002

PARTIES :

Giles Geoffrey Woodgate - Liquidator - First Plaintiff
Chircan Holdings Pty Limited - Second Plaintiff
Mahiya HoldingsPty Limited - Third Plaintiff
Lessel George Davis - Defendant

JUDGMENT OF: Barrett J

COUNSEL : Mr M.R. Aldridge SC - Plaintiffs
Mr J.T. Svehla - Defendant

SOLICITORS: P.W. Turk & Associates - Plaintiffs
Hugh & Associates - Defendant

CATCHWORDS: CORPORATIONS - liability of directors for insolvent trading - companies carrying on business in partnership - common sole director - both companies subject to creditors voluntary winding up - whether director's liability for insolvent trading applies to incurring of partnership debts

LEGISLATION CITED: Bankruptcy Act 1966 (Cth)
Corporations Act 2001 (Cth)
Partnership Act 1892
Supreme Court Act 1970

CASES CITED: ANMI Pty Ltd v Williams (1981) 36 ALR 171
Birtchnell v Equity Trustees Executors and Agency Co Ltd (1929) 42 CLR 384
Re Brisbane Meat Agencies Pty Ltd [1963] QdR 525
Re Budgett; Cooper v Adams [1894] 2 Ch 557
Construction Engineering (Aust) Pty Ltd v Hexyl Pty Ltd (1984) 155 CLR 541
Hawkins v Bank of China (1992) 26 NSWLR 562
Re Hodgson; Beckett v Ramsdale (1885) 31 ChD 177
Kendall v Hamilton (1879) 4 App Cas 504
Re Owen; Ex p G James Pty Ltd (1987) 15 FCR 150
Standard Chartered Bank of Australia Ltd v Antico (1995) 38 NSWLR 290
Sumner v Powell (1816) 2 Mer 30
Tate v Barry (1928) 28 SR (NSW) 380
The Peninsular Group Ltd v Kintsu Co Ltd (1998) 28 ACSR 632

DECISION: Refer paragraph 37

- 14 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

FRIDAY, 12 JULY 2002

5401/01 – WOODGATE & ORS v DAVIS

JUDGMENT

Background

1 These proceedings concern the affairs of two companies, Chircan Holdings Pty Limited and Mahiya Holdings Pty Limited (respectively the second and third plaintiffs), which are in liquidation following earlier steps by their sole director, Mr Davis (the defendant), to place them in voluntary administration. The winding up is, in each case, of the kind deemed by s.446A of the Corporations Act 2001 (Cth) to arise upon the passing of a resolution of creditors under s.439C(c) and is accordingly a creditors voluntary winding up. Mr Woodgate (the first plaintiff) became liquidator of each company and remains in office.

2 The two companies carried on business in partnership. At the centre of the present litigation are claims that the defendant who, as I have said, was the sole director of each company, failed to prevent the company from incurring certain debts at a time when the company was insolvent and thereby contravened s.588G of the Act in respect of each such debt. The plaintiffs seek, on this basis, to recover from the defendant pursuant to s.588M a total of…

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 Woodgate v Davis

Details

AGLC: Woodgate v Davis [2002] NSWSC 616
Case: [2002] NSWSC 616
Decision Date: 12 July 2002

CaseChat Overview and Summary

The dispute in Woodgate v Davis involved a claim for insolvent trading against the director of two companies which had carried on business in partnership. The plaintiff, Woodgate, sought to hold the defendant, Davis, liable for insolvent trading under section 588G of the Corporations Act 2001 (Cth) in respect of debts incurred by the companies while they were trading insolvently. Both companies were subject to creditors' voluntary winding up, and Davis was the sole director of both companies. The central legal issue before the court was whether the director's liability for insolvent trading applied to incurring of debts in a partnership context, particularly when the director is a common sole director of two companies.

The court considered whether the statutory provisions for insolvent trading applied to a partnership arrangement and whether the liability of the director extended to debts incurred by the companies while they were trading insolvently. The court examined the relevant provisions of the Corporations Act and the nature of the partnership arrangement between the two companies. The court also considered whether the debts incurred by the companies were partnership debts, and if so, whether the director's liability for insolvent trading applied in this context. The court found that the statutory provisions for insolvent trading applied to the partnership arrangement and that the director's liability for insolvent trading did extend to incurring of partnership debts when the director is a common sole director of two companies.

The court held that the director's liability for insolvent trading did apply to incurring of partnership debts in this case. The court found that the statutory provisions for insolvent trading were not limited to situations where a director was solely responsible for one company, and that the director's liability extended to incurring of partnership debts when they were the common sole director of two companies. The court found that Davis was liable for insolvent trading in respect of the debts incurred by the companies while they were trading insolvently. The court ordered Davis to contribute to the assets of the companies for the benefit of the creditors in accordance with the Corporations Act.

Orders