In CGES Limited (in liquidation and receivership) v Kelly [2016] NZHC 1465, the liquidator of CGES Limited brought claims against the former directors of the company for breaches of duties owed to the company.  The High Court held:

  • The directors failed to act in good faith and the best interests of the company by allowing the company to continue trading and incurring further debts to creditors after it had become insolvent
  • Despite being aware of the troubled circumstances that the company was in, the directors continued to incur further liabilities, thus creating a substantial risk of serious loss to the company and to its creditors
  • At the time the liabilities were incurred, the directors could not reasonably have believed that the company would be able to satisfy its debts
  • The directors failed to exercise the care, diligence and skill that a reasonable director would exercise in the circumstances.

As a consequence, the High Court ordered the directors to reimburse the company for the loss which it suffered as a consequence of their breaches of duty.  

See Court decision here.