Director ordered to pay $2m after ‘bare denial’ does not stand against insolvency presumption

Liquidators have won their case against a director after the Supreme Court of Victoria found that a bare denial was insufficient to rebut the presumption of insolvency.

The company, Melbourne Container Transport Pty Ltd, was found to be insolvent by presumption due to its director, Jodie May Lightowler’s failures to prevent the company from incurring debts after it was found to have unpaid superannuation, ATO debts, and payroll.

In her 5 August 2026 judgment, Justice Patricia Anne Matthews determined that the director was liable for the company's insolvent trading.

The company was incorporated on 16 September 2013, with the defendant as its sole director and secretary.

Following an unmet statutory demand, an application to wind up the company was filed, and in late 2023 the company entered into a deed of company arrangement (DOCA), after which the liquidators were appointed.

In the DOCA, Lightowler proposed terms that included her payment of $300,000 into the deed fund within seven days.

The court found that the defendant failed to make the initial $300,000 payment to the fund pursuant to the DOCA. In early 2024, the DOCA was terminated following defaults under its terms, which were not remedied.

Liquidators were appointed to the company later that year.

“The [liquidators] allege that pursuant to s 588E(4) of the Corporations Act, the Company is presumed to have been insolvent from on or about 1 July 2018 to the Administration Date. The defendant denies this allegation,” the court found.

The liquidator’s insolvency claim was on the basis that a winding up application was made against Melbourne Container Transport, and that there was a debt with the ATO for $1,042,446.68 in respect of unpaid superannuation guarantee charge (SGC) and BAS by the Company as of early 2024.

There was also “a proof of debt submitted on around 11 April 2024 by the Commissioner of State Revenue for $38,068.92 in respect of unpaid taxes and penalties by the Company”.

“The plaintiffs allege that between on or about 1 July 2018 and 2 November 2023 (Relevant Period), the Company incurred debts to a number of creditors totalling $3,422,951.32,” the court found.

Further, the plaintiff gave evidence that the company changed its accounting software to MYOB on or around early 2019, before which it did not retain records. The court said that there can be no question that the company failed to keep written financial records during this time.

Based on the company’s MYOB records, the net loss before tax was suggested for FY2023 to be $777,900.90 and for FY2024 to the Administration Date to be $533,659.18.

Lightowler denied the allegations of insolvency. The court found that she had given no particulars in light of her defence.

“The failure to prepare financial statements for FY2019 through to FY2023 is a clear failure to keep financial records,” the court found.

“That presumption not having been rebutted, the Company is to be taken as having been insolvent throughout the Unrecorded Period and the Recorded Period, such that the Company is presumed insolvent from 2 November 2016 to the Administration Date.

“Beyond her bare denial in the Defence as to actual insolvency, the defendant has not pleaded any material facts or adduced any evidence to support her denial.”

The judge ruled that there were reasonable grounds for suspecting insolvency at all times during the revised relevant period due to failing to keep and retain reliable financial records, being unable to pay the ATO balance amount, not making payments to reduce assessments for payroll tax, and a financial position that was materially overstated, “such that it was likely to be in a net loss position”.

“I am satisfied that the evidence is sufficient to establish that the Company was actually insolvent from at least 2 August 2023,” the judge said.

“Further, it is apparent that, despite these matters, the defendant failed to prevent the Company from incurring the Debts,” the judge found, determining that she contravened the Corporations Act.

Upon consideration of all evidence, Justice Matthews determined that there was a presumption of insolvency of Melbourne Container Transport and ruled that the liquidators were entitled to recover 2,504,836.99 from the director, thereby awarding the case to the plaintiff.

The case citation: Crispino & Ors v Lightowler [2026] VSC 500 (5 August 2026)