Yeo, in the matter of Bradi Transport Pty Ltd (in liq) v Sklenovski

The matter before the Court involves proceedings brought by the liquidators of Bradi Transport Pty Ltd, a company that was wound up in insolvency on 7 December 2018. The liquidators claim against the first and second defendants, Mrs Sklenovski and Mr Sklenovski respectively, for breaches of director duties and insolvent trading. The central issues before the Court were whether the second defendant was a "de facto" director of the company, whether there were sufficient grounds to suspect insolvency, whether the defendants were aware of these grounds, and whether certain debts incurred by the company were to be characterised as voidable transactions under the Corporations Act. The Court was required to determine the liability of the defendants in respect of the debts owed by the company and to make appropriate orders for compensation and interest.

The Court found that the second defendant, Mr Sklenovski, was indeed a "de facto" director of the company. This was based on his active involvement in the management and operations of the company, performing functions that a director would reasonably be expected to perform. The Court also found that there were sufficient grounds for a reasonable person in the directors’ position to suspect insolvency from 30 June 2013 onwards, due to the company’s inability to meet its taxation obligations. Furthermore, the Court concluded that the defendants were aware, or ought to have been aware, that the company was not in a position to meet its taxation obligations, as they were continuously withdrawing money from the company. The Court held that the defendants contravened their duties under the Corporations Act by failing to prevent the company from incurring debts while insolvent. As a result, the Court ordered that the defendants pay various sums to the plaintiffs, including compensation for insolvent trading, overpayments, and loans, along with interest.

The Court's decision was grounded in the principles of directorship outlined in relevant case law, and it applied the statutory provisions of the Corporations Act to the facts of the case. The Court meticulously reviewed the evidence presented and the arguments made by the parties, ultimately finding in favour of the plaintiffs on all counts. The Court ordered the defendants to pay substantial amounts to the plaintiffs, reflecting the losses incurred by the company due to the defendants’ actions. Additionally, the Court ordered the defendants to pay interest on the amounts owed and the plaintiffs’ costs of the proceeding.