Central Mortgage Registry of Australia Ltd v Donemore Pty Ltd

Central Mortgage Registry of Australia Ltd (the appellant) appealed a decision of the Supreme Court of New South Wales concerning alleged unfair preferences paid by Donemore Pty Ltd (the respondent) to a third party, pursuant to section 588FF of the *Corporations Act 2001* (Cth). The dispute centred on whether certain payments made by Donemore Pty Ltd constituted unfair preferences.

The primary legal issues before the Court of Appeal were whether the payments were properly characterised as unfair preferences under the *Corporations Act 2001*, and specifically, whether the payee had reasonable grounds for suspecting that Donemore Pty Ltd was insolvent at the time the payments were made. The court also considered how the state of mind of a corporation, particularly regarding suspicion of insolvency, is assessed and whether the rule in *Jones v Dunkel* applied to the evidence presented.

The court affirmed that the onus is on the party alleging unfair preference to establish the necessary elements, including the payee's suspicion of insolvency. It was held that the assessment of a corporation's state of mind is a question of fact, and the court considered the material available to the payee and what was deployed in evidence. The court found that the payee had not discharged the heavy onus required to establish that they had reasonable grounds for suspecting insolvency.

The appeal was dismissed with costs.