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Defendant Defeats Plaintiff in Preferential Payment Claim

Thursday, June 28, 2018 - Posted by Michael McCulloch

In the matter of Heavy Plant Leasing Pty Ltd (In Liquidation) (ACN 151 786 677) [2018] NSWSC 707 (8 February 2018), a Creditor had been applying pressure to obtain payment which was not forthcoming despite several months of requests for payment.

Once the company had been placed in liquidation the liquidator filed proceedings in the Supreme Court, as the Plaintiff (HPL) , against Ms Christine Mancer who trades as Bildavoid Concrete Voidforming Systems (Bildavoid), as the Defendant, claiming to recover $152,609.79 made by HPL to Bildavoid in February 2013. The application was made under the s588FF of the Corporations Act to recover those funds as an unfair preference, insolvent transaction and voidable transaction. The most common way to defend a liquidators claim again unfair preference is to rely on s588FG(2) of the Corporations Act, commonly referred to as "the good faith defence". The basis of the defence is that the Creditor argues that they received monies in good faith and they did not know, or ought not to have known, that the company was insolvent.


In relation to Bildavoid's pressure in which to obtain payment, the Court said, "These are steps that are taken just as much by an unpaid creditor of a solvent debtor as they are by an unpaid creditor of an insolvent debtor. The fact that a creditor applies pressure of that order to secure payment does not, to my mind, illustrate that the creditor fears or apprehends that the debtor is insolvent. The degree of pressure exerted by a creditor does not speak of a suspicion of insolvency, because a creditor is as likely to exert pressure on a recalcitrant solvent debtor as on an insolvent one."

It is important in these matters that if you expect that a company may be insolvent and owes you money that you seek timely advice from a qualified legal practitioner.

Please note that this article is not intended to be legal advice. You should seek your own independent advice from a qualified legal practitioner.


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