National Australia Bank Ltd v KDS Construction Services Pty Ltd (In Liq) [1987] HCA 65

High Court of Australia Mason C.J. Brennan, Deane, Dawson and Toohey JJ. National Australia Bank Ltd v KDS Construction Services Pty Ltd (In Liq) [1987] HCA 65

ORDER Appeal allowed. Order of the Full Court of the Supreme Court of Queensland dated 19 December 1986 set aside. In lieu thereof order that the appeal be dismissed with costs and restore the orders made by Kelly A.C.J. on 1 May 1986.

Cur. adv. vult.

The Court delivered the following written judgment:—

Dec. 23 Mason C.J., Brennan, Deane, Dawson and Toohey JJ.

The respondent company maintained three current accounts with the appellant bank at its Mt Gravatt branch. In August 1980 Mr. Appleton, who was a director of the respondent, and his wife guaranteed the respondent's accounts with the appellant up to a limit of $30,000. At the same time Mr. Horne, who was also a director of the respondent, and his wife guaranteed the accounts up to a limit of $20,000. On the basis of these guarantees the appellant agreed to an overdraft limit of $50,000 on the accounts.

On 15 September 1981 a creditor presented a petition seeking the winding up of the respondent. On 7 October 1981 the Supreme Court of Queensland made a winding up order, appointing Mr. R. A. Duus as official liquidator.

By a summons dated 17 February 1984 Mr. Duus sought a declaration that a sum of $102,030.33 paid by the respondent to the appellant on 3 September 1981 had the effect of giving the appellant a preference and that the payment was void against the liquidator. By way of amendment the liquidator sought a declaration to the effect that the payment of a sum of $40,000 by the respondent to the Manager's Suspense Account on or about 4 September 1981 had the effect of giving the appellant a preference and that it was void; or, alternatively, a declaration that a sum of $40,000 transferred from the funds of the respondent to the Manager's Suspense Account on or about 4 September 1981 remained the property of the respondent and that any disposition of that sum or any part of that sum subsequent to the filing of the petition on 15 September 1981 was void against the liquidator.