Bartercard Limited v Wily & Anor

The appeal concerned Bartercard Limited and the official liquidator of BBX, Mr Wily. The dispute arose from the termination of a licence agreement between Bartercard and BBX, which occurred shortly before BBX was wound up. The central issue was whether this termination constituted a voidable transaction under corporate law, specifically an unfair preference. The case was heard in the Supreme Court of New South Wales.

The court was required to determine whether a transaction occurred between Bartercard and BBX on 28 August 1996, when BBX was allegedly insolvent and within the relevant six-month period prior to winding up. Specifically, the court had to consider if Bartercard's act of setting off the value of BBX's business against BBX's debt to Bartercard constituted a transaction that was voidable under section 588FE of the Corporations Act. The legal question was whether the termination of the licence agreement, coupled with the transfer of BBX's business and assets to Bartercard, amounted to a transaction that provided a benefit to Bartercard.

The court found that a consensual arrangement, rather than a unilateral termination, had occurred on 28 August 1996. This arrangement involved Bartercard terminating the licence agreement and taking control of BBX's business, with BBX's acquiescence and co-operation. The court inferred this arrangement from the substantial preparation by Bartercard, the presentation of documents requiring BBX's consent, and the conduct of the parties on the day, including BBX's director cooperating with Bartercard's takeover of the business. The court concluded that this arrangement constituted a transaction where Bartercard received a benefit by setting off an agreed valuation of BBX's business against BBX's debt.

The appeal was dismissed, with costs awarded to the respondent.