SHIRLAW & ANOR. v. ASSOCIATED ALLOYS PTY. LIMITED [2000] NSWCA 224

Reported Decision : (2000) 18 ACLC 763

New South Wales Court of Appeal

CITATION : SHIRLAW & ANOR. v. ASSOCIATED ALLOYS PTY. LIMITED [2000] NSWCA 224 FILE NUMBER(S) : CA 40878/98 HEARING DATE(S) : 9 June 2000 JUDGMENT DATE : 28 August 2000

PARTIES : KEVIN R. SHIRLAW and PAUL G. WESTON as Liquidators of ACN 001 452 106 PTY. LIMITED (In Liq.) (Appellants/Cross-Respondents) ASSOCIATED ALLOYS PTY. LIMITED (Respondent/Cross-Appellant) JUDGMENT OF : Priestley JA at 1; Powell JA at 2; Foster AJA at 55

LOWER COURT JURISDICTION : District Court (Commercial List) LOWER COURT DC 2891/97 FILE NUMBER(S) : LOWER COURT Cooper DCJ JUDICIAL OFFICER :

COUNSEL : N.A. Cotman SC (Appellants/Cross-Respondents) W. Washington (Respondent/Cross-Appellant) SOLICITORS : Brown & Partners (Woolwich) (Appellants/Cross-Respondents) K.R. Minotti (Bondi Junction) (Respondent-Cross-Appellant) CATCHWORDS : COMPANIES - Winding up - Conduct and incidents of liquidation - Effect of winding up on other transactions - Preferences - Dealings "in good faith" - Onus of proof - "Ordinary course of business" - Knowledge or suspicion of debtor's insolvency D DECISION : Appeal dismissed; Cross-Appeal dismissed.

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40878/98 DC 2891/97 PRIESTLEY JA POWELL JA FOSTER AJA

28 August 2000 SHIRLAW & ANOR v. ASSOCIATED ALLOYS PTY. LIMITED

JUDGMENT

1 PRIESTLEY JA: I agree with Powell JA.

2 POWELL JA: This is an appeal and a cross-appeal, in each case by leave, from a judgment delivered and orders made by Cooper DCJ in the District Court in proceedings which had been brought by the Appellants in their capacity as liquidators of the company now known as ACN 001 452 106 Pty. Limited (In Liq.) which company was formerly known as Metropolitan Engineering & Fabrications Pty. Limited ("MEF"). 3 In those proceedings the Appellants, in reliance upon the provisions of ss. 588FA, 588FC, 588FE(1),(2), 588FF of the Corporations Law sought to recover from the Respondent sums totalling $A214,667.52 representing payments made by MEF to the Respondent in respect of invoices for goods supplied by the Respondent to MEF, those payments having been made on 5 January and 31 January 1996, that is, within 6 months prior to "the relation-back day" (ss. 9, 513B(b), 513C, 588FE(2) of the Corporations Law). To the Appellants' claim the Respondent raised a variety of defences of which only the following - the basis for the first of which being raised will later become apparent - need be noted: "28. … the said payments were an accounting of a trustee to a beneficiary. ……… 58. Additionally or alternatively at all material times the Defendant became a party to the transaction in good faith (within the meaning of s.588FG(2)(a) of the Corporations Law) and additionally or alternatively conducted itself in good faith at all material times. 59. Additionally or alternatively at the time when the Defendant became a party to the transaction it had no reasonable grounds for suspecting that the Company was insolvent at that time or would become insolvent as mentioned in s.588FC(b) of the Corporations Law (within the meaning of s.588FG(2)(b)(ii)(A) of the Corporations Law). 60. Additionally or alternatively at the time when the Defendant became a party to the transaction a reasonable person in the Defendant's circumstances would have had no such grounds for suspecting that the Company was insolvent at that time or would become insolvent as mentioned in s.588FC(b) of the Corporations Law (within the meaning of s.588FG(2)(b)(ii)(B) of the Corporations Law). 61. Additionally or alternatively the Defendant has provided valuable consideration under the transaction. PARTICULARS (a) the provisions of goods; (b) the provision of credit."