The need to pick up the phone….

An appeal court has confirmed a finding that a liquidator who did not telephone a director to inquire about  money apparently transferred by the company before its liquidation had breached his duties to the company under s 180(1) of the Corporations Act; but because the company suffered no loss as a consequence, no compensation was payable under s 1317H: Asden Developments Pty Ltd (in liq) v Dinoris [2017] FCAFC 117.

“the test is an objective one. It requires an assessment as to whether [a liquidator’s] conduct as a professional liquidator demonstrated the requisite degree of care and diligence that was reasonable in all the relevant circumstances. That assessment is to be made at the time of [the liquidator’s] alleged breach and not with the benefit of hindsight. It is to have regard to the degree of care and diligence expected of a skilled and professional accountant performing the role of a liquidator. It also requires care to be taken to distinguish between conduct amounting to a breach of the statutory duty and that amounting to a mistake or error of judgment”.

Perhaps an instructive lesson for all practitioners.

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