A company ordered goods but bank checks with which the company paid were not honored. The supplier sued both company and two executives personally.
Despite the principle of separate legal personality of the company the Court found one of the company managers responsible for the debt of the company up to the amount of the check. The Court held that in a situation where a company manager was well aware of the lack of a reasonable chance that the company will be able to pay its creditors and despite such fact continues to issue checks, the manager may be held personally liable to the debts in respect of checks issued. The liability will arise whether the manager personally signed the checks or not. It is sufficient that the manager knows of the status of the company to raise the obligation to provide the counterparty with a warning of the risks the counterparty assumes.
The Court did not impose liability on the other manager that although registered as a director and shareholder, it was not proven that he was in fact managing the company or taking part in the ordering of goods or tendering the checks against it.