Re BBY Limited (Receivers and Managers Appointed) (in liq) and BBY Holdings Pty Limited (Receivers and Managers Appointed) (in liq) [2022] NSWSC 29

Supreme Court New South Wales

Medium Neutral Citation: Re BBY Limited (Receivers and Managers Appointed) (in liq) and BBY Holdings Pty Limited (Receivers and Managers Appointed) (in liq) [2022] NSWSC 29 Hearing dates: 10-12 November 2020 & 14 December 2020 Date of orders: 28 January 2022 Decision date: 28 January 2022 Jurisdiction: Equity - Corporations List Before: Gleeson J Decision: (1) Order pursuant to s 588FF(1)(a) and (c) of the Corporations Act 2001 (Cth), that Ficema Pty Ltd pay to BBY Limited (receivers and managers appointed) (in liq) the sum of $3,000,000, together with interest from 15 May 2018 to the date of judgment calculated at the rates provided under s 100 of the Civil Procedure Act 2005 (NSW). (2) Order pursuant to s 588FF(1)(a) and (c) of the Corporations Act 2001 (Cth), that Ficema Pty Ltd pay to BBY Holdings Pty Ltd (receivers and managers appointed) (in liq) the sum of $341,890.37, together with interest from 15 May 2018 to the date of judgment calculated at the rates provided under s 100 of the Civil Procedure Act 2005 (NSW). (3) Order that Ficema Pty Ltd pay the plaintiffs' costs of the proceedings. (4) Direct the parties to provide an agreed calculation of the amount of pre-judgment interest, calculated in accordance with orders 1 and 2 above within 14 days, and that judgment be entered for those amounts in favour of BBY Limited and BBY Holdings Pty Ltd respectively. (5) Direct that if the plaintiffs seek a special order as to costs, then in the absence of agreement as to the form of the order, the plaintiffs shall file and serve short written submissions together with any supporting affidavit evidence within 10 days of this judgment, and the defendant shall file and serve its short written submissions, together with any affidavits in response with a further 10 days, and the question of variation of the costs order will be dealt with on the papers. Catchwords: CORPORATIONS – winding up – voidable transactions – whether unfair preferences and insolvent transactions – payments to related entity within extended 4-year relation-back period – where presumption of insolvency of one company under Corporations Act 2001 (Cth), s 588E(8) – whether companies insolvent in fact CORPORATIONS – winding up – loan by related entity to company – money subsequently repaid – whether unfair preference under Corporations Act 2001 (Cth), s 588FA – whether a Quistclose trust existed Legislation Cited: Australian Securities and Investments Commission Act 2001 (Cth), s 19 Civil Procedure Act 2005 (NSW), s 100 Corporations Act 2001 (Cth), ss 9, 91, 95A, 206B(3), 446A, 588E, 588FA, 588FC, 588FE, 588FF, Pt 5.7B, Div 2, Pt 7.8 Corporations Regulations 2001 (Cth) Evidence Act 1995 (NSW), ss 69, 136 Uniform Civil Procedure Rules 2005 (NSW), r 42.1 Cases Cited: Alston v Cormack Foundation Pty Limited (2018) 358 ALR 263; [2018] FCA 895 Associated Alloys Pty Limited v ACN 001 452 106 Pty Limited (in liq) (2000) 202 CLR 588; [2000] HCA 25 Australian Securities and Investments Commission v Plymin [2003] VSC 123; (2003) 46 ACSR 126 Australian Securities and Investments Commission v Rich [2009] NSWSC 1229; (2009) 236 FLR 1 Australian Securities and Investments Commission v Edwards [2005] NSWSC 831; (2005) 220 ALR 148 Australasian Conference Association Ltd v Mainline Constructions Pty Ltd (1978) 141 CLR 335 Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 Bellis v Challinor [2015] EWCA Civ 59 Byrnes v Kendle (2011) 243 CLR 253; [2011] HCA 26 Cadwallader v Bajco Pty Ltd [2002] NSWCA 328 Campbell Street Theatre Pty Ltd v Commercial Mortgage Trade Pty Ltd [2012] NSWSC 669 Capital Finance Australia Ltd v Tolsher (2007) 164 FCR 83; [2007] FCAFC 185 Chan v First Strategic Development Corporation (in liq) [2015] QCA 28 Cohen v Cohen (1929) 42 CLR 91; [1929] HCA 15 Commissioner of State Revenue (Vic) v Snowy Hydro Limited (2012) 43 VR 109; [2012] VSCA 145 Compass Resources Ltd v Sherman (2010) 42 WAR 1; [2010] WASC 41 Federal Commissioner of Taxation v Kassem (2012) 205 FCR 156; [2012] FCAFC 124 Ferrier & Knight (as liquidators of Compass Airlines Pty Ltd) v Civil Aviation (1994) 55 FCR 28 George v Webb [2011] NSWSC 1608 Georges (in his capacity as joint and several liquidator of Sonray Capital Markets Pty Ltd (in liq)) v Seaborn International Pty Ltd (as trustee for the Seaborn Family Trust) (2012) 206 FCR 408; [2012] FCAFC 140 Gliderol International Pty Ltd v Hall (2001) 80 SASR 541; [2001] SASC 355 G & M Aldridge Pty Ltd v Walsh (2001) 203 CLR 662; [2001] HCA 27 Henry v Hammond [1913] 2 KB 515 International Cat Manufacturing Pty Ltd (in liq) v Roderick (2013) 97 ACSR 200 Jin Niu Investments Pty Ltd v Wang (No 2) [2020] NSWSC 649 Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 Kazar (liquidator) v Kargarian; In the matter of Frontier Architects Pty Ltd (in liq) (2011) 197 FCR 113; [2011] FCAFC 136 Korda v Australian Executor Trustees (SA) Limited (2015) 255 CLR 62; [2015] HCA 6 Legal Services Commission v Brereton (2011) 33 VR 126; [2011] VSCA 241 Lewis (as liq of Doran Constructions Pty Ltd (in Liq)) v Doran [2005] NSWCA 243; (2005) 54 ACSR 410 Lewis v Doran [2004] NSWSC 608; (2004) 50 ACSR 175 Liquidator of MJ Woodman Electrical Contractors Pty Ltd v Metal Manufactures Pty Ltd [2021] FCAFC 228 Manly Council v Byrne [2004] NSWCA 123 Marriner v Australian Super Developments Pty Ltd (2012) 46 VR 213; [2012] VSCA 171 M & R Jones Shopfitting Co Pty Ltd (in liq) v National Bank of Australasia Ltd (1983) 68 FLR 282; (1983) 7 ACLR 445 NewCap Reinsurance Corporation Ltd v AE Grant, Lloyds Syndicate No 991 [2009] NSWSC 662; (2009) 72 ACSR 638 Payne v Parker [1976] 1 NSWLR 191 Pegulan Floor Coverings Pty Ltd v Carter (1997) 24 ACSR 651 Peter Cox Investments Pty Ltd (in liq) v International Air Transport Association [1999] FCA 27; (1999) 161 ALR 105 Quistclose Investments Ltd v Rolls Razor Ltd [1970] AC 567 Rambaldi v Federal Commissioner of Taxation [2017] FCAFC 217; (2017) 107 ATR 1 Raulfs v Fishy Bite Pty Ltd [2012] NSWCA 135 Re Antqip Hire Pty Limited (subject to deed of company arrangement) (in liquidation) [2020] NSWSC 487 Re Armstrong (1960) VR 202 Re Ashington Bayswater Pty Ltd (in liq) [2013] NSWSC 1008 Re Australian Elizabethan Theatre Trust; Lord v Commonwealth Bank of Australia (1991) 30 FCR 491 Re BBY Limited (Receivers & Managers Appointed) (in liquidation) [2019] NSWSC 1271 Re Kit Digital Australia Pty Ltd (in liq) [2014] NSWSC 1547 Salvo v New Tel Limited [2005] NSWCA 281 Samm Property Holdings Pty Ltd v Shye Properties Pty Ltd [2017] NSWCA 132 Soundwave Festival Pty Ltd v Altered State (W.A.) Pty Ltd (No 2) [2014] FCA 562 Southern Cross Interiors Pty Ltd (in liq) v Deputy Commissioner of Taxation (2001) 53 NSWLR 213; [2001] NSWSC 621 Sutherland & Another (as joint liquidators of Australian Coal Technology) v Hanson Construction Materials Pty Ltd and Others [2009] NSWSC 322; (2009) 254 ALR 650 Treloar Constructions Pty Ltd v McMillan [2017] NSWCA 72; (2017) 120 ACSR 130 Twinsectra Ltd v Yardley [2002] 2 AC 164 Walker v Corboy (1990) 19 NSWLR 382 Warner Capital Pty Ltd v Shazbot Pty Ltd [2020] NSWCA 121 Watson v Foxman (1995) 49 NSWLR 315 Welcome Homes Real Estate Pty Limited v Ziade Investments Pty Limited [2007] NSWCA 167 Williams (as liquidator of Scholz Motor Group Pty Ltd (in liq)) v Scholz [2008] QCA 94 Woodgate v Network Associates International BV [2007] NSWSC 1260 Texts Cited: Cross on Evidence, Australian Edition, LexisNexis (loose-leaf) JD Heydon and MJ Leeming, Jacobs' Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths) Young, Croft and Smith, On Equities (2009, Law Book Co) Category: Principal judgment Parties: Ian Richard Hall and Stephen Ernest Vaughan (First plaintiff) BBY Limited (Receivers and Managers Appointed) (in liq) (Second plaintiff) BBY Holdings Pty Limited (Receivers and Managers Appointed) (in liq) (Third plaintiff) Ficema Pty Ltd (Defendant) Representation: Counsel: Mr D Krochmalik (Plaintiffs) Mr R Scruby SC / Mr J Anderson (Defendant)