Capital Finance Australia Limited v Tolcher [2007] FCAFC 185

FEDERAL COURT OF AUSTRALIA

Capital Finance Australia Limited v Tolcher [2007] FCAFC 185 CORPORATIONS – winding up – attempt by liquidator and company in liquidation to recover payments under the "unfair preferences" and "uncommercial transactions" provisions of the Corporations Act 2001 (Cth) – finance companies had, acting as undisclosed principals through a corporate agent, leased out photocopying equipment to substantial hirers – discovery that agent guilty of duplicative leasing of some of the same equipment as agent for another finance company as undisclosed principal, and, in some instances of effecting leases of non-existent equipment – finance companies insisting that agent cause all of the Equipment Rental Agreements to be paid out – agent executed deed promising finance companies that it would pay them all out – agent arranges for bank to "refinance" – bank purchases particular equipment from the finance companies for prices equal to the payout figures on the Equipment Rental Agreements, then leases that equipment to the agent – the leases from the agent to the end hirers remain in place throughout and, so far as end hirers concerned, agent has been the owner of the equipment throughout because existence of the finance companies as undisclosed principals and of the bank as refinancier never disclosed to them – question whether the payout amounts paid by bank to finance companies recoverable by liquidator and company in liquidation as unfair preferences (s 588FA of Act) or under uncommercial transactions provision (s 588FB of Act) – meaning of "transaction" – transaction constituted by composite of circumstances. Held: (1) there was a composite of circumstances constituting a transaction of the agency company, and the primary judge's order that the finance companies should disgorge the amounts paid to them by the bank should stand; (2) the transactions were not unfair preferences because at the time when the transactions were entered into the finance companies were not creditors of the company.