JLF Bakeries Pty Ltd (in liquidation) v Baker’s Delight Holdings Ltd [2007] NSWSC 894

Reported Decision : (2007) 25 ACLC 1,164

New South Wales Supreme Court

CITATION : JLF Bakeries Pty Ltd (in liquidation) v Baker's Delight Holdings Ltd [2007] NSWSC 894

HEARING DATE(S) : 17 October 2006

JUDGMENT DATE : 15 August 2007

JURISDICTION : Supreme Court Corporations List

JUDGMENT OF : White J

DECISION : See paragraph 51 of judgment.

CATCHWORDS : CORPORATIONS – Winding up – Set-off – Mutual dealings – Time of receiving credit – Notice of insolvency – Contingent debt in respect of mutual dealings arising from option granted by plaintiff in contract entered into prior to commencement of plaintiff's administration – Option characterised as a conditional contract for sale and purchase – Option exercised by defendant after commencement of winding up – Held that contingent credit received when contract entered into, not when option exercised – Held that defendant had no notice of plaintiff's insolvency at time of receiving credit – Consideration of purpose of s 553C of the Corporations Act – Held that defendant entitled under s 553C of the Corporations Act to set off moneys, payable by it pursuant to exercise of option, against moneys owed to it by plaintiff. - (Cth) Corporations Act 2001, s 553C

LEGISLATION CITED : Corporations Act 2001 (Cth) Bankruptcy Act 1966 (Cth)

Gye v McIntyre (1991) 171 CLR 609 Coventry v Charter Pacific Corp Ltd (2005) 227 CLR 234 GM & AM Pearce and Co Pty Ltd v RGM Australia Pty Ltd [1998] 4 VR 888 Re Parker (1997) 80 FCR 1 Cinema Plus Ltd (Administrators Appointed) v Australia & New Zealand Banking Group Ltd (2000) 49 NSWLR 513 SR Derham, The Law of Set Off, 3rd ed (2003) Great Britain, Oxford University Press Hiley v Peoples Prudential Assurance Co Ltd (1938) 60 CLR 468 Community Development Pty Ltd v Engwirda Construction Co (1996) 120 CLR 455 Federal Commissioner of Taxation v Gosstray [1986] VR 876 GPT RE Ltd v Lend Lease Real Estate Investments Ltd (2005) 12 BPR 23,217 CASES CITED : Laybutt v Amoco Australia Pty Ltd (1974) 132 CLR 57 Re Kidsgrove Steel, Iron and Coal Co (1894) 38 Sol Jo 252 Paganini v The Official Assignee (New Zealand Court of Appeal, unreported, 11 March 1999) Paganini & Anor v Official Assignee (1999) 8 NZCLC 261,811 Ayerst (Inspector of Taxes) v C & K (Construction) Ltd [1976] AC 167 Franklins Self-Serve Pty Ltd v Federal Commissioner of Taxation (1970) 125 CLR 52 Commissioner of Taxation v Linter Textiles Australia Ltd (in liq) (2005) 220 CLR 592 McKinnon v Armstrong Brothers & Co (1877) 2 App Cas 531 Re Inglis; Ex parte The Trustees (1932) 5 ABC 255 Old Style Confections Pty Ltd v Microbyte Investments Pty Ltd [1995] 2 VR 457 Shirlaw v Lewis (1993) 10 ACSR 288 Law v James [1972] 2 NSWLR 573