Legal Research
Cases
Cant v Mad Brothers Earthmoving Pty Ltd

Cant v Mad Brothers Earthmoving Pty Ltd

Link copied

Case Copied 5 August 2020 70 min read

Contents

On this page

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2019 0099

ANTHONY ROBERT CANT (in his capacity as liquidator of Eliana Construction and Developing Group Pty Ltd (in liquidation))	First Applicant
and
ELIANA CONSTRUCTION AND DEVELOPING GROUP (in liquidation) (ACN 132 817 362)	Second Applicant
v
MAD BROTHERS EARTHMOVING PTY LTD (ACN 122 889 007)	Respondent

---

JUDGES:	BEACH, McLEISH and HARGRAVE JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	13 May 2020
DATE OF JUDGMENT:	5 August 2020
MEDIUM NEUTRAL CITATION:	[2020] VSCA 198
JUDGMENT APPEALED FROM:	[2019] VSC 546 (Robson J)

---

CORPORATIONS – External administration – Voidable transactions – Whether payment to creditor by related company to debtor company an unfair preference – Whether debtor company a party to transaction between related company and debtor company’s creditor – ‘Transaction’ encompasses interrelated or composite dealings, including authorisation or ratification of third party payment – Whether payment to creditor by related company a payment ‘from’ the debtor company – Payment ‘from the company’ must be from money or assets to which debtor company entitled, and have effect of diminishing assets of company available to creditors – Impugned payment involving no diminution of debtor company’s assets – Payment not ‘from the company’ – Ramsay v National Australia Bank Ltd [1989] VR 59, Sheahan v Carrier Air Conditioning Pty Ltd (1997) 189 CLR 407, Burness v Supaproducts Pty Ltd (2009) 259 ALR 339, Re Emanuel (No 14) Pty Ltd(in liq); Macks v Blacklaw & Shadforth Pty Ltd (1997) 147 ALR 281, Re Evolvebuilt Pty Ltd [2017] NSWSC 901, Hosking v Extend N Build Pty Ltd (2018) 357 ALR 795, considered – Corporations Act 2001 (Cth) ss 588FA(1), 588FE(2), 588FF(1), Bankruptcy Act 1966 (Cth) s 122 – Appeal dismissed.

CORPORATIONS – External administration – Voidable transactions – Unfair preferences – Good faith – Whether reasonable person in position of creditor had no reasonable grounds for suspecting debtor company insolvent – White v ACN 153 152 731 Pty Ltd (in liq) (2018) 53 WAR 234, Queensland Quarry Group Pty Ltd (in liq) v Cosgrove [2019] QCA 220, applied – Corporations Act 2001 (Cth) s 588FG(2).

WORDS AND PHRASES – ‘transaction’ – ‘from the company’ – ‘by the company’.

---

APPEARANCES:	Counsel	Solicitors
For the Applicants	Mr M J Galvin QC with Mr C R Brown	White Cleland Pty Ltd
For the Respondents	Mr S V Palmer with Mr L Molesworth	Oakley Thompson & Co Pty Ltd

TABLE OF CONTENTS

Background................................................................................................................

1

Statutory provisions................................................................................................

3

Proceedings in the Trial Division...........................................................................

5

Proposed appeal........................................................................................................

11

Was Eliana a party to the transaction involving Rock and Mad Brothers? — Notice of contention............................................................................................

12

Payment ‘from the company’ — proposed grounds 1 and 3...............................

13

Legislative background...................................................................................................................................... ......................................................................................................................................

14

Case law.....................................................................................................................

15

Parties’ submissions................................................................................................

32

Analysis......................................................................................................................

35

Conclusion as to grounds 1 and 3.........................................................................

40

Ground 2 – Was Rock indebted to Eliana?...........................................................

40

Ground 4 – Undisclosed principal..........................................................................

42

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.

Keep reading for free

Create a free CaseChat account to read Cant v Mad Brothers Earthmoving Pty Ltd and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2020] VSCA 198
Decision Date: 5 August 2020

CaseChat Overview and Summary

In the case of Cant v Mad Brothers Earthmoving Pty Ltd, the dispute arose in the context of corporate restructuring and the voiding of transactions under the Corporations Act 2001. The liquidator of Mad Brothers Earthmoving Pty Ltd sought to challenge a payment made by a related company to one of the debtor company's creditors, arguing that this constituted an unfair preference under the Act. The High Court was tasked with determining whether this transaction qualified as a payment from the debtor company, and thus could be voided as an unfair preference.

The central legal issues involved interpreting the definition of a 'transaction' under the Act and whether the payment in question constituted a payment 'from the company'. The court had to consider whether the transaction included not only direct payments by the debtor company but also interrelated dealings such as the authorisation or ratification of a third-party payment. Additionally, the court needed to assess whether the creditor had reasonable grounds to suspect the debtor company was insolvent at the time of the transaction, which would affect the good faith requirement under the Act.

The court found that the transaction did not constitute a payment from the debtor company as it did not involve any diminution of the debtor company's assets. The payment made by the related company to the creditor was not derived from the debtor company's money or assets and therefore did not meet the criteria of a payment 'from the company'. The court also determined that the creditor had no reasonable grounds to suspect the debtor company was insolvent, thereby satisfying the good faith requirement. The High Court held that the liquidator's appeal was without merit.

As a result of the court's decision, the appeal was dismissed, and the transaction in question remained valid. The court's interpretation of the relevant statutory provisions clarified the scope of what constitutes a transaction and a payment 'from the company', providing guidance for future cases involving similar issues.

Orders