Buzzle Operations Pty Ltd (In Liq) v Apple Computer Australia Pty Ltd

Buzzle Operations Pty Ltd (in liq) appealed a decision concerning whether certain payments made by Buzzle to Apple Computer Australia Pty Ltd constituted uncommercial transactions under section 588FB of the Corporations Law. The primary dispute revolved around whether Buzzle, a new company that took over the business of "Resellers," was obliged to pay debts owed by the Resellers to Apple, and if so, whether those payments were uncommercial.

The Court of Appeal was required to determine two principal issues. Firstly, whether the payments made by Buzzle to Apple were uncommercial transactions within the meaning of section 588FB of the Corporations Law, considering the significance of full consideration and the detriment suffered by Buzzle. Secondly, the Court had to consider whether Apple, or its representative, could be characterised as a shadow director of Buzzle, based on the definition in the Corporations Law, which requires directors to act in accordance with a person's instructions or wishes.

Regarding the uncommercial transaction issue, the Court reasoned that while full consideration for a transaction goes a long way to avoiding it being termed uncommercial, it does not, by itself, render a transaction commercial. The Court found that the balance of detriment suffered by Buzzle was such that the payments were uncommercial. However, the Court also considered the defence under section 588FB(2), which requires good faith, no reasonable grounds to suspect insolvency, and valuable consideration. The Court held that the satisfaction and release of an antecedent debt constituted valuable consideration, and a creditor receiving payment for a genuine debt would prima facie be acting in good faith, thus applying the defence to the payments. On the shadow director issue, the Court clarified that "in accordance with" requires a causal connection, "the directors" refers to the governing majority, and "accustomed" implies habitual compliance over time. The instructions or wishes must relate to board decisions, not merely managerial activities, and not every person whose advice is heeded is a shadow director. The Court concluded that neither Apple nor its representative was a shadow director.

The appeal was dismissed with costs.