This article examines the application of s 588G of the Corporations Law to the Water Wheel case. This section was designed to overcome some of the problems inherent in the separate legal entity doctrine. The article concludes
that on the facts, and given society’s reaction to corporate collapses, it is not surprising that the defendants, including the non-executive director, were
found to have been in breach of s 588G. However, it also shows that although directors in these circumstances may warrant being found liable under s 588G, creditors may in fact be worse off as a result of such a case.