Sydney Appliances P/L (in liq) v Eurolinx P/L [2001] NSWSC 230

Reported Decision : (2001) 37 ACSR 477 (2001) 19 ACLC 633

New South Wales Supreme Court

CITATION : Sydney Appliances P/L (in liq) v Eurolinx P/L [2001] NSWSC 230 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC 4175/99 HEARING DATE(S) : 11/10/00, 12/10/00 JUDGMENT DATE : 30 March 2001

PARTIES : RODERICK MACKAY SUTHERLAND (in his capacity as Liquidator of SYDNEY APPLIANCES PTY LIMITED (in liquidation)) (Plaintiff) EUROLINX PTY LIMITED (ACN 001 473 347) (Defendant) JUDGMENT OF : Santow J

COUNSEL : C R C Newlinds (Plaintiff) J J Priestley (Defendant) SOLICITORS : Kemp Strang (Plaintiff) Cutler Hughes & Harris (Defendant) CATCHWORDS : CORPORATIONS — Company making payments for goods supplied — Factors going to establishing "good faith" defence under s588FG(2)(a) of Corporations Law in relation to preferential payments of a concededly insolvent company — Relevance of post-dated cheques and arrangements to not bank them without telephone confirmation — Subjective and objective alternative tests for suspicion of insolvency — Running account defence under s588FA(3) of the Corporations Law — Relevance of lack of good faith in subjective sense to continuance of business relationship required for defence — Other factors affecting — Defence made out — How unfair preference calculated where running account. LEGISLATION CITED : Corporations Law Pt 5.3A; Pt 5.7B; s9; s95A; s436A; s439A; s439C; s446A; s513C; s588FA; 588FC; 588FE; 588FF; s588FG Airservices Australia v Ferrier & Anor (1996) 185 CLR 483 Downey v Aira Pty Limited (1996) 15 ACLC 1068 Re Ermayne; Sims v Tech Holdings Pty Limited (1998) 30 ACSR 330 Pegulan Floor Coverings v Carter (1997) 15 ACLC 1,293 Queensland Bacon Pty Limited v Rees (1966) 115 CLR 266 CASES CITED : Rees v Bank of New South Wales (1964) 111 CLR 210 Richardson v The Commercial Banking Co of Sydney (1952) 85 CLR 110 Sandell v Porter (1966) 115 CLR 666 Sims v Celcast Pty Limited (1998) 71 SASR 142 Smith v Deputy Commissioner of Taxation (1997) 23 ACSR 611 Sparad (No 100) v Harkness (NSWCA, 14 February 1997, unreported) Sutherland v Liquor Administration Board (1997) 15 ACLC 875 DECISION : Plaintiff succeeds on negating good faith defence. Defendant succeeds on running account defence.