Buzzle Operations Pty Ltd (In Liq) v Apple Computer Australia Pty Ltd [2010] NSWSC 233

77 ACSR 410 28 ACLC 10-010 Reported Decision : 4 BFRA 512 [2010] ALMD 4140 [2010] ALMD 4137 238 FLR 384

New South Wales Supreme Court

CITATION : Buzzle Operations Pty Ltd (In Liq) v Apple Computer Australia Pty Ltd [2010] NSWSC 233

HEARING DATE(S) : 27-30 April 2009; 1, 4-8 and 12-15 May 2009

JUDGMENT DATE : 30 March 2010

JURISDICTION : Equity

JUDGMENT OF : White J

DECISION : 1. Direct entry of judgment for the defendants. 2. Order that the defendants' cross-claim against Mr McComb (the second cross-defendant) be dismissed. 3. The exhibits may be returned after 28 days.

CATCHWORDS : CORPORATIONS – merger and proposed float of plaintiff – defendant's consent required and given for merger to proceed – plaintiff granted charge to defendant over plaintiff's assets – failure of float and plaintiff's business – receivers appointed to plaintiff – orders made for winding up of plaintiff and liquidator appointed – plaintiff incurred debts to defendant when plaintiff insolvent – debts remained unpaid at liquidation - CORPORATIONS – whether charge void under Corporations Law, s 267– charge not void – defendant not relevant person under s 267 – defendant not an officer of plaintiff – defendant did not make or participate in any decisions that affected the whole or substantial part of plaintiff's business – defendant had capacity to affect significantly plaintiff's financial standing but not involved in management of plaintiff's business – defendant not associated with plaintiff – defendant not acting in concert with plaintiff in creation of charge – no trespass or conversion by receivers in taking possession of plaintiff's assets and realising assets to pay debts - CORPORATIONS – whether payments made to defendant by plaintiff when insolvent were uncommercial transactions under Corporations Law, s 588FB – payments not uncommercial transactions – payments made for full consideration – defendant received benefits in good faith and without reasonable grounds to suspect plaintiff's insolvency - CORPORATIONS – whether payments made to defendant by plaintiff when insolvent were unfair preferences under Corporations Law, s 588FE – whether payments by receiver to defendant to discharge debt were unfair preferences – whether defendant related entity of plaintiff – running account between plaintiff and defendant under s 588FA – payments not unfair preferences - CORPORATIONS – whether defendants contravened Corporations Law, s 588G due to plaintiff's incurring debts when insolvent – determination of when plaintiff insolvent – determination of when defendants had reasonable grounds for suspecting plaintiff's insolvency or when reasonable person in like position would have been aware of plaintiff's insolvency - CORPORATIONS – whether s 588G applies to shadow directors – whether company can be a shadow director – defendants not plaintiff's shadow directors – plaintiff did not establish that its directors were accustomed to act in accordance with defendants' wishes or instructions – imposing conditions or terms in arm's length commercial dealings or negotiations with which plaintiff felt obliged to comply not sufficient to make defendant shadow director – causal connection required between acts of directors and instructions or wishes of shadow director – whether plaintiff's directors delegated their powers – no such delegation – directors collectively or governing majority in their exercise of powers of management must be accustomed to act on instructions or wishes of shadow director