Joe owned and ran a radio repair business. It was quite successful but Joe was worried about the long term prospects because of the far reaching changes being made in radio technology. Joe foresaw the eventual decline of his type of business and decided that while it was still relatively prosperous, he would transfer it to a company (especially incorporated for the purpose). Of the nominal capital of $100, ten $1 shares were issued to Joe and his wife. Joe was elected the sole director of the company and the company employed three mechanics. Although, the business was worth approximately $50,000, the company agreed to buy it from Joe for $80,000. In exchange for the business, the company issued a debenture for $80,000 to Joe, secured by a fixed charge on the company's fixed assets and a floating charge on all its other assets.
In January 2005, a fire in the workshop caused extensive damage to the premises (which were at all material times owned by Joe and which the company was licensed to use for the purpose of its business). The business had to cease operating for 4 weeks resulting in a loss of some $10,000 and physical damage to the premises amounted to $15,000. Joe had effected insurance against such risks, both to the premises and to the business, but when the business was sold to the company, there was no assignment of the benefit of the insurance policy to the company, nor did the company effect its own insurance against such risks. The insurance company is now refusing to pay out in respect of the loss suffered by the company from the interruption to the business.
In January 2006, the local council gave notice of its intention to exercise its compulsory purchase power to expropriate the premises but offered compensation which took account only of the fact that Joe owned the premises and refused to consider compensation for the loss of the right to use the premises for business purposes which would result from the expropriation.
From January to April 2007, the business continued to decline and despite advice to the contrary from his accountant and workforce, Joe continued to trade through the company in the hope that it would return to solvency. In May, however, the company went into a creditor's voluntary winding up with debts exceeding assets by close to $100,000.
So was wondering that someone would help discuss the following:
(a) A claim by the liquidator against the insurance company in respect of the loss arising out of the interruption of the business owing to the fire.
(b) A claim by the liquidator against Joe in respect of the company's debts.
(c) A claim by Joe against the local council for compensation in respects of the loss of business user rights arising out of the premises.
In January 2005, a fire in the workshop caused extensive damage to the premises (which were at all material times owned by Joe and which the company was licensed to use for the purpose of its business). The business had to cease operating for 4 weeks resulting in a loss of some $10,000 and physical damage to the premises amounted to $15,000. Joe had effected insurance against such risks, both to the premises and to the business, but when the business was sold to the company, there was no assignment of the benefit of the insurance policy to the company, nor did the company effect its own insurance against such risks. The insurance company is now refusing to pay out in respect of the loss suffered by the company from the interruption to the business.
In January 2006, the local council gave notice of its intention to exercise its compulsory purchase power to expropriate the premises but offered compensation which took account only of the fact that Joe owned the premises and refused to consider compensation for the loss of the right to use the premises for business purposes which would result from the expropriation.
From January to April 2007, the business continued to decline and despite advice to the contrary from his accountant and workforce, Joe continued to trade through the company in the hope that it would return to solvency. In May, however, the company went into a creditor's voluntary winding up with debts exceeding assets by close to $100,000.
So was wondering that someone would help discuss the following:
(a) A claim by the liquidator against the insurance company in respect of the loss arising out of the interruption of the business owing to the fire.
(b) A claim by the liquidator against Joe in respect of the company's debts.
(c) A claim by Joe against the local council for compensation in respects of the loss of business user rights arising out of the premises.
