Director’s liability for insolvent trading, statutory forgiveness and law reform

By Anil Hargovan*

The recent decision by the Federal Court in McLellan, in the matter of The Stake Man Pty Ltd v Carroll [2009] FCA 1415 (hereinafter Stake Man) excused a director from liability for insolvent trading based on statutory considerations concerning, inter alia, honesty and fairness under the Corporations Act 2001 (Cth). Significantly, this is the first case where a director has been fully exonerated from personal liability through the exercise of judicial discretion and follows the pragmatic decision in Hall v Poolman (2007) 215 FLR 243; [2007] NSWSC 1330 where a director was partially excused from insolvent trading liability through reliance on the same statutory provisions (ss 1317S and 1318).

The full article can be accessed here: “Director’s liability for insolvent trading, statutory forgiveness and law reform” (2010) 18 Insolv LJ 96.

* Associate Professor, School of Business Law and Taxation, University of New South Wales.