Injunctions and Damages Under S 1324 of the Corporations Act: Will McCracken v. Phoenix Constructions Revive the Narrow Approach?

Abstract

Is s 1324(10) of the Corporations Act 2001 (Cth) the corporate lawyer’s secret weapon or a damp squib? On its face, s 1324(10) would appear to allow a court to award damages to any person with standing to apply for an injunction under the Act. There has been some debate, however, about the extent to which s 1324(10) must be limited by its apparent contradiction with other portions of the Act. This article examines McCracken v Phoenix Constructions (Qld) Pty Ltd [2013] 2 Qd R 27; [2012] QCA 129 in light of the previous case law interpreting s 1324 to see what opening remains for affected parties, in particular creditors, to access damages or injunctions under s 1324. The article concludes that while McCracken presents compelling reasons for not awarding s 1324(10) damages to creditors, arguments remain in favour of a broad interpretation of s 1324 for creditors in certain scenarios.

Keywords: corporations, corporate law, Corporations Act, Australia, injunctions, damages, creditors, s 1324, s 1324(10), reflective loss, derivative loss, Prudential principle, Mesenberg

JEL Classification: G38, G30, G33