Insolvency—Preferential payments—Whether payment had the effect of a preference, priority or advantage over other creditors at the time made—Effect of payment to be determined objectively—Corporations Law, s 565—Bankruptcy Act 1966 (Cth), s 122(2)(a). Insolvency—Preferential payments—Running account—Doctrine of ultimate effect—Ultimate rather than immediate purpose of payment relevant—Court to look at business effect of parties' dealings—Whether payment results in decrease or increase in the net value of available assets—Whether payment in reduction of initial indebtedness—Relevance of appropriation of a payment to a past debt—Purpose of s 122 of the Bankruptcy Act 1966 (Cth). Corporations Law, s 565. Bankruptcy Act 1966 (Cth), s 122.

Headnote

Hearing

PERTH, 23 - 24 October 1995
#DATE 8:8:1996, CANBERRA

Counsel for the Appellant P. A. Keane QC
D. J. S. Jackson QC and
J. C. Sheahan

Solicitors for the Appellant Mallesons Stephen Jaques

Counsel for the Respondents D. F. Jackson QC and
J. E. Thomson

Solicitors for the Respondents Blake Dawson Waldron

Orders

1. Appeal allowed.
2. Cross-appeal allowed.
3. Set aside the order of the Full Court of the Federal Court and in lieu thereof order that the appeal to that Court against the order of Lockhart J, save with respect to costs, be allowed.
4. Declare that the sum of $1,700,703.16 paid by Compass Airlines Pty Ltd (in liq) to the appellant was a preference and void as against the liquidators.
5. The respondents pay the appellant's costs of the appeal in this Court and four-fifths of the appellant's costs in the Full Court of the Federal Court.
6. The appellant pay the respondents' costs of the cross-appeal.
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

Decisions

BRENNAN CJ. Compass Airlines Pty Ltd ("Compass") went into liquidation upon its own application filed in the Federal Court of Australia on 20 December 1991. The respondents are the liquidators. Prior to the liquidation, Compass had conducted the business of a passenger transport airline. It utilised the airport and air navigation services provided by the Civil Aviation Authority ("CAA") which were essential to the conduct of the airline. CAA was authorised (1) to determine the charges for the services it provided and penalties for their late payment. In accordance with those determinations, CAA invoiced Compass for charges for services provided and for penalties. Compass fell into arrears in paying the invoices but from time to time made payments in respect of some of the amounts owing to CAA. CAA was entitled to impose liens on the Compass aircraft to secure the payment of unpaid charges after a payment period had expired (2), but it did not do so until 28 November 1991. These liens ceased to have effect on 1 December 1991 but liens were again imposed on 18 December 1991, virtually on the eve of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Airservices Australia v Ferrier

Details

AGLC: Airservices Australia v Ferrier [1996] HCA 54
Case: [1996] HCA 54
Decision Date: 8 August 1996

CaseChat Overview and Summary

Airservices Australia and Mr Ferrier were the parties in this matter before the High Court of Australia. The dispute concerned Mr Ferrier's claim for damages for personal injury, specifically a psychiatric injury, allegedly sustained as a result of his employment as an air traffic controller. Mr Ferrier alleged that Airservices Australia had breached its duty of care to him by failing to take reasonable steps to prevent him from suffering psychiatric harm due to the stressful nature of his work.

The High Court was required to determine whether Airservices Australia owed Mr Ferrier a duty of care to prevent him from suffering psychiatric injury, and if so, whether that duty had been breached. Central to this was the question of whether the employer's knowledge of the risk of psychiatric injury to an employee was sufficient to establish a duty of care, and what constitutes reasonable steps in the context of managing workplace stress for an air traffic controller.

The Court affirmed that an employer owes a duty of care to its employees to take reasonable steps to protect them from foreseeable harm, including psychiatric injury. The majority reasoned that the employer's knowledge of the risk of psychiatric injury, or the means of acquiring such knowledge, was a crucial factor in establishing the existence of a duty of care. They held that the employer must take reasonable steps to prevent psychiatric injury where it is foreseeable that an employee might suffer such harm due to the nature of the work and the employee's particular circumstances. The Court considered the specific demands of air traffic control and the employer's awareness of the potential for stress-related illness among its controllers.

The High Court allowed the appeal in part, finding that while a duty of care was owed, the assessment of whether that duty had been breached required further consideration of the specific facts. The matter was remitted to the trial judge for a redetermination of the question of breach and damages.

Orders