The Price Club judgement on fraudulent trading : a critical analysis of the concept and of developments in Malta and overseas from 1998 to 2008

Abstract

The action of fraudulent trading was incorporated into our law by Act XXV of 1995. However, it was only very recently that the courts had the opportunity to apply this provision in practice. This change came about with the Price Club Judgment decided on the l21h October 2007. This thesis focuses on this landmark judgment along with other recent foreign case law, comparing and contrasting this foreign case law with both the position and decision in the Price Club Judgment. Although the fraudulent trading provision under section 315 of the Maltese Companies Act is modelled on English law, our legislature decided not to include the more recent amendments that took place in England. However, due to the similarity of section 315 to that found under English law, both English case law and text writers play an important part in defining and describing the elements of this action. Thus, in my thesis there are various references to English judgments and authors. One should also note, that due to the high level of proof required to successfully raise the fraudulent trading action, with the introduction of the wrongful trading provision under English law, which requires a much lighter burden of proof, liquidators in England have been more willing to bring an action under the wrongful trading provision as opposed to the fraudulent trading provision. As a result, the fraudulent trading provision was overshadowed, due to which recent case law on fraudulent trading is somewhat scarce.