Emwest Products Pty Ltd v Olifent No. SCGRG 94/1951 Judgment No. 5862 Number of Pages 11 Corporations

[1996] SASC 5862

COURT IN THE FULL COURT OF THE SUPREME COURT OF SOUTH AUSTRALIA COX(1), PRIOR(2) AND PERRY(3) JJ

CWDS
Corporations - winding up - preferential payments - the appellant, a supplier of roofing materials, supplied a company, of which the respondent was subsequently appointed liquidator,with materials used by it during the course of its performance of a sub-contract between it and a builder at a time when it wasconceded that the company could not pay its debts as they fell due - in answer to a claim that the payments were a preference which was void as against the respondent, the appellant raised the defence that the payments were received "in good faith and for valuable consideration and in the ordinary course of business" - consideration of the meaning of "good faith" and "ordinary course of business". Corporations Laws 565(1); Bankruptcy Act 1966 (Cwth) s122, referred to. Perkins v State Bank of South Australia (1993) 61 SASR 246; Katoa Pty Ltd (In Liquidation) v Dartnall (1984) 2 ACLC 42; Sheahan v Hertz Australia Pty Ltd (1995) 16 ACSR 765; Hamilton v BHP Steel (LS) Ltd (1995) 13 ACLC 1548; Taylor v ANZ Banking Group Ltd
(1988) 6 ACLC 808; Airservices Australia v Ferrier and Anor (1996) 137 ALR 609, considered.

HRNG ADELAIDE, 6 June 1996 #DATE 31:10:1996

Counsel for appellant:         Mr D Bleby QC with him Mr M Rice

Solicitors for appellant:     Finlaysons

Counsel for respondent:        Dr R Baxter

Solicitors for respondent:     Johnston Winter and Slattery

ORDER
Appeal dismissed.

JUDGE1 COX J
1. In my opinion this appeal should be dismissed. I am in general agreement with the reasons of Perry J.

JUDGE2 PRIOR J
2. I agree with the reasons published by Perry J. The appeal should be dismissed.

JUDGE3 PERRY J
3. The appellant, the defendant in the proceedings at first instance, appeals against the judgment given following a trial in this Court in favour of the respondent in the sum of $136,259 together with interest of $20,304.45.

4. The respondent was appointed liquidator of Ceiling and Roofing Products Pty Ltd (In Liquidation) ("CRP") by order of this Court made on 6 July 1993, following an application that it be wound up filed on 4 June 1993.

5. The judgment followed a finding by the learned trial Judge that certain payments made by CRP to the appellant between 12 January and 21 April 1993 totalling the amount for which the judgment was pronounced, amounted to a preference which was void as against the respondent.

6. The appellant complains that the learned trial Judge erred in failing to find that the appellant was a payee who had received the payments in good faith and in the ordinary course of business within the meaning of the relevant statutory provisions.

7. Before coming to those provisions, I will refer to the history of the dealings between the parties.

8. CRP was a roofing contractor. The appellant supplied it with materials. They had a trading relationship which had been established for some years before 1992.

9. As at July 1992, CRPÕs account with the appellant was subject to a credit limit of $10,000. CRP was a poor payer in the sense that although the agreed terms of trade between the parties provided for payment to be made within 30 days of the end of the month in which a particular invoice for goods supplied by the respondent was issued, payments would commonly not be received until 45 to 60 days after that date.

10. Early in 1992 CRP won a contract as sub-contractor to Baulderstone-Hornibrook ("Baulderstone") for work on a construction project for GMH Australia Ltd at Elizabeth, described in evidence as the "NEPS job". Pursuant to the contract, the appellant was to supply smoke and heat release ventilators to be mounted above the roof-line. CRPÕs contract with Baulderstone was larger than the class of contract commonly entered into by CRP. It was worth to CRP in the order of $200,000.

11. In view of the size of the contract, CRP sought an increase in its credit limit with the appellant. The appellant agreed to increase it to $160,000. At the same time the appellant obtained guarantees from three of CRPÕs directors. Once the guarantees had been executed, formal approval was given by the appellant for an increase in the overall credit limit on the account from $10,000 to $160,000. That approval was given on 28 July 1992.

12. In the course of negotiating the increase in its credit limit, CRP intimated that if the extension of the limit was approved, it would pay for goods supplied with respect to the NEPS job within 45 days of invoice.

13. From the start, the 45 day limit was never met. In August 1992 an invoice was rendered for items supplied to the NEPS job as well as another job. It was paid after 62 days, on 2 November 1992.

14. In September 1992 invoices were sent totalling $164,000. As was the appellantÕs normal practice, the invoices were marked for payment at 30 days, namely on 30 October 1992. Thereafter, various unsuccessful requests for payment were made. Eventually a payment of $50,000 was made to the appellant and banked by it on 27 November 1992. That left a balance of $114,000 on the September invoices.

15. That amount was not paid until 12 January 1993. It was paid by two cheques dated the same day, each for the sum of $57,000. These two payments, each of $57,000 are the first of the impugned payments. $1,072 was paid on 22 January 1993. Somewhat later, namely between 29 March and 21 April 1993, various payments were received totalling $21,887. The learned trial Judge found that the liability to repay the total of $21,887 was, for reasons which he explained, unarguable. His view as to that has not been seriously challenged on the hearing of the appeal. So the appeal as argued concerns that part of the judgment represented by the payments made on 12 and 27 January 1993, a total of $115,072.

16. Certain concessions were made in the appellantÕs defence and during the course of the trial which obviated the need for the respondent to call any oral evidence. In particular, details of the payments, that is to say, the amount and date of the payments, the insolvency of the CRP at the time the payments were made, and the fact that they created a priority or preference in favour of the appellant at the expense of other creditors of CRP were all conceded.

17. Against that background, the appellant accepted that the onus was upon it of making out the only ground of defence which it raised, namely, that the payments were received "in good faith and for valuable consideration and in the ordinary course of business" and were, accordingly, not recoverable by the respondent.

18. I come to the relevant statutory provisions.

19. S565(1) of the Corporations Law has the effect of rendering void as against the liquidator, inter alia, any payment made by a company that:" ... if it had been made or incurred by a natural person, would, in the event of his or her becoming a bankrupt, be void as against the trustee in the bankruptcy ...".

20. The section renders applicable in the winding up of a company, s122 of the Bankruptcy Act 1966 (Cwth) which deals with the avoidance of preferences.

21. In the case of bankruptcy, s122 is applicable to payments made "within six months before the presentation of a petition" pursuant to which the debtor becomes bankrupt. As I have said, the date of presentation of the application for winding up, which for these purposes is equated with the presentation of the petition in bankruptcy, was 4 June 1993. Accordingly, the payments in question were made within the period of relation back.

22. The relevant parts of s122 of the Bankruptcy Act are as follows:
    "(1) A conveyance or transfer of property, a charge on property, or
    a payment made, or an obligation incurred, by a person who is
    unable to pay his debts as they become due from his own money (in
    this section referred to as Ôthe debtorÕ), in favour of a creditor,
    having the effect of giving that creditor a preference, priority or
    advantage over other creditors, being a conveyance, transfer,
    charge, payment obligation executed, made or incurred -
    (a) within 6 months before the presentation of a petition on which,
    or by virtue of the presentation of which, the debtor becomes a
    bankrupt; or
    (b) ...
    is void as against the trustee in the bankruptcy.

(1A ...
    (2) Nothing in this section affects -
    (a) the rights of a purchaser, payee or encumbrancer in good faith
    and for valuable consideration and in the ordinary course of
    business;
    (b ...
    (c) ...

(3) The burden of proving the matters referred to in
sub-section (2) lies upon the person claiming to have the benefit of
    that sub-section.

(4) For the purposes of this section -
    (a) ...
    (b) ...
    (c) a creditor shall be deemed not to be a purchaser, payee or
    encumbrancer in good faith if the conveyance, transfer, charge,
    payment or obligation was executed, made or incurred under such
    circumstances as to lead to the inference that the creditor knew,
    or had reason to suspect -
     (i) that the debtor was unable to pay his debts as they became
     due from his own money; and
     (ii) that the effect of the conveyance, transfer, charge, payment
     or obligation would be to give him a preference, priority or
     advantage over other creditors."

23. Given that the insolvency of CRP, the existence of valuable consideration, and the fact that the payments gave a preference, priority or advantage over other creditors were all admitted, it was incumbent upon the appellant to satisfy the learned trial Judge that it received the various payments in question "in good faith and ... in the ordinary course of business" within the meaning of s122(2), and that subs(4)(c) was not of application to negative good faith.

24. In an endeavour to discharge that onus, the appellant called as witnesses two of its sales managers, Mr Winter and Mr Stone, its National Credit Manager, Mr Judd and Mrs Strickland, who occupied a position entitled Credit Controller. It does not appear that the learned trial Judge took an adverse view of the credit of any of the witnesses called by the appellant, with the qualification that, as will be seen, he was not prepared to accept at its face value certain evidence given by Mr Judd.

25. Mrs Strickland kept a detailed summary of the history of the account. That was tendered, and together with a number of other records, provided the basis upon which certain critical findings were made.

26. With the assistance of her notes, Mrs Strickland explained the history of the dealings with CRP. It is clear from her evidence that for quite some time, going back to early June 1989, she would constantly have to follow up CRP to obtain a payment to the account. When she did so, she was commonly met with an indication that CRP was unable to pay until some time in the future. In her evidence, she described CRP as "almost always slow with payment", and that the company generally took "sixty-plus days" within which to pay. It was because of the slow-paying history of CRP that Mr Judd required that its directors execute the personal guarantees to which I have referred, to support the new credit limit of $160,000.

27. The history of payment on the account after the new credit limit was established on 28 July 1992 is summarised by the learned trial Judge in the following passage in his reasons for judgment (the appellant is referred to as Email):
    "Invoices for all goods supplied by Email, being both for the NEPS
    job and other continuing work, continued to be rendered in the
    normal way. In August 1992 invoices were rendered for items
    supplied to the Velodrome job and to the NEPS project. This was
    the first invoice for the latter project and was treated as being
    payable at the end of September 1992 in the usual terms of 30 days.
    It was paid on 2 November 1992 after 62 days - so much for the
    promise to pay on this project in 45 days.From then on it took even
    longer for Email to be paid, both for this project and for others,
    as is identified in the invoices within the Exhibit D2.In September
    1992 invoices were sent for $164,000. Payment was due on
    30 October, 1992 at 30 days. Many requests for payment were made.
    Further efforts enabled a payment of $50,000 to be obtained and
    banked on 27 November, 1992. The balance of those invoices was not
    paid until 12 January, 1993 and then by two sequential cheques of
    the same day each in the sum of $57,000. These are the first of
    the impugned payments. They are dated some time earlier but, on
    the evidence, nothing turns on that."

28. Certain correspondence between December 1992 and January 1993 is important for present purposes. Most of Mrs StricklandÕs dealings with CRP were with Mr Wegener who was described as CRPÕs "principal". The payment of $50,000 on 27 November 1992 to which reference has been made was preceded by advice given by Mr Wegener to Mrs Strickland on 26 November 1992 that the $50,000 would be available the next day, but that thereafter there would be no funds until 15 December 1992.

29. On the same day, that is 26 November, she wrote to Mr Judd in the following terms:
    "Email Westinghouse Pty Ltd
    From: BEV STRICKLAND
    Date: 26-11-92
    Subject: CEILING and ROOFING - $164,000 OUTSTANDING
    FOR SEPTEMBER GMH - NEPS PROJECT
    To: BOB STONE RAY JUDD
    Peter Wegener has today advised that he has an immense cash flow
    problem at the moment due to extreme weather over the last three
    months. He stipulated this is not a liguidity (sic) problem, just
    cash flow. He is unable to pay the full amount outstanding at the
    moment. I can collect cheque for $50,000 on 27-11-92 and balance
    should be paid by 15th December but he will keep us posted and will
    advise on or about the 5th December.
    Bev Strickland"

30. One might well pose the question whether there is any real difference between a liquidity problem and a cash flow problem. Be that as it may, on 15 December 1992 Mrs Strickland had a further telephone conversation with Mr Wegener. Her note of that conversation is of particular significance. It reads:"Peter Wegener says ÔIf Email attempt to ring Baulderstone re payment to CRP we will be history in his books.ÕPeter is owed 1.7m at moment and is desperately trying to pursue some moneys. SACON owe $400,000 (45 days).He WILL endeavour to pay us before Xmas but no promises. Peter said ÔTell our GM to ring himÕ.He said ÔWe know as well as he does that if we put in hands of solicitors it will take a lot longer to get the moneyÕ."The learned trial Judge summarised further activity thereafter with respect to the account in the following way:
    "The following day a note records a suggested approach from EmailÕs
    principal in Sydney. For local reasons this was not acted upon.
    Further suggestions as to the basis upon which CRP should be
    approached were also made in an attempt to be paid in full by 17
    December. At this time $114,000 of the sum due to be paid (on 30
    day terms) at the end of October was unpaid. It was therefore in
    excess of 60 days which had become, over the years, the time within
    which CRP as a slow payer, would satisfy its indebtedness to
    Email.At this time there was no real suggestion of no further
    supply. Indeed on 31 October 1992 equipment had been supplied for
    another job and the invoice dated that day.However, the
    communication from NSW had some effect. On 16 December 1992 the
    State sales manager of Email, Mr Stone spoke to Mr Wegener. On
    17 December 1992 he wrote to his NSW principal setting out the
    present position and anticipating payment in January 1993. He
    recommended advice to CRP that should full payment not be made by
    25 January 1993 the directorsÕ guarantees would be called in. When
    he wrote that letter (page 104 of D3) on 17 December the sum of
    $114,000 was 77 days overdue for payment (on 30 day terms.).Mr
    StoneÕs advice was not taken. On that day Mr Judd wrote to each
    director of CRP requiring payment of the total sum due of $115,072
    by 1 January 1993 threatening legal action for recovery as the
    alternative. In addition on 18 December 1992 Mrs Strickland wrote
    to Mr Wegener indicating that future supply of equipment by Email
    would be upon payment therefor being received. She also referred
    to the directorsÕ liability pursuant to the guarantees (page 111 of
    D3). It seems from the invoices in evidence that this equipment
    was delivered on 23 December 1992 despite payment not having been
    received. This demand for the payment of $21,887 forms a separate
    stage of this relationship. Payment was not received by 1 January
    1993. On 8 January 1993 Mrs Strickland recorded on the debtorÕs
    ledger advice that the cheque would "definitely" be posted that
    day. A further conversation with CRP occurred on 11 January 1993,
    obviously when the cheque had not arrived. The two cheques
    totalling $114,000 were received by courier and banked on 12
    January 1993. On 15 January 1993 CRP advised that it was then
    unable to pay the balance due of $1,072 - it was subsequently paid
    on 22 January 1993."

31. Mr StoneÕs communication with his New South Wales principals on 17 December 1992 is in the following terms:
    "To: MR JOHN NELLA
    c.c. MR CRAIG LEWIN
    As the result of my discussions yesterday with Peter Wegener
    concerning the outstanding $115,072.00, I am recommending the
    following action be taken bearing in mind:-
    a) Order value received this year - $238,752.
    b) Their history of payment indicates they normally pay 60 days (I
    realise our terms and conditions are 30 days).
    c) We are currently withholding $21,887 worth of equipment from
    them, of which $13,927 is for the GMH - NEPS project that is
    required to complete the job.
    d) We are in possession of the three Director Guarantees.
    e) From my discussions, for what it is worth, I have no doubt that
    we will get paid in January 1993 but it wonÕt be until between the
    11th and 29th when, because of the Christmas shutdown of the
    building industry, they expect to receive payment of the $1.3
    million they are owed.I recommend we send a letter stating that,
    unless we receive full payment by 25th January 1993, we will be
    implementing action on the Directors Guarantees.ÉÉÉ..Bob Stone"

32. On the next day, that is, 18 December `1992, Mrs Strickland wrote to Mr Wegener:
    "Dear Sir
    Please be advised that Email Westinghouse Pty Ltd are unable to
    release any further equipment ordered for the GMH - NEPS project or
    the ADELAIDE VELODROME project until such time as we have payment
    in hand for the total supply only amount of $21,887.00.Email
    Westinghouse Pty Ltd have manufactured this equipment to order for
    both jobs, therefore the above total amount is due and
    payable.Furthermore, $13,927.00 of the total outstanding amount
    above is also covered by the DirectorsÕ Guarantees we have in hand
    for the GMH - NEPS project.We await your advice to enable delivery
    to be instigated."

33. At about the same time three separate letters were written to the directors who had furnished guarantees. The text of those letters reads:
    "In accordance with the terms and conditions of the guarantee dated
    20th July 1992 for:
    - Ceiling and Roofing Products Pty Ltd we must warn that unless
    payment of $115,072.00 (balance of account) is received no later
    than 1st January 1993, legal action will commence against the
    guarantors for the recovery of the debt."

34. As to the letter of 17 December 1992 demanding payment in full by 1 January 1993, the learned trial Judge made an important finding. He found that:
    "In evidence, Mr Judd carefully, and to my mind deliberately,
    avoided saying anything of substance about what his fears were at
    the time he sent that letter. I have no doubt that he suspected

    because he knew from what CRP had said to EmailÕs South Australian
    employees that it could not pay its debts, that any payment
    received may well prefer Email to other creditors. His action in
    ignoring local advice and writing that letter which paid no
    attention to the Christmas close-down in the building industry
    permits of no other realistic explanation."

35. He went on to conclude that when the critical payments were received on 12 and 22 January 1993, they were not received in good faith, nor could they be said to have been received in the ordinary course of business.

36. As to the appropriate test to be applied in determining whether particular payments are made "in the ordinary course of business" within the meaning of s122(2), I refer to the observations which I made in Perkins v State Bank of South Australia (1993) 61 SASR 246 at 256:
    "As to the expression "in the ordinary course of business", I agree
    with the observations of Kearney J in Norfolk Plumbing Supplies Pty
Ltd v Commonwealth Bank of Australia (supra) (1992) 6 ACSR 601.
    where he observed (at 618): ÔAs to whether the payments were
    received in the ordinary course of business there has been some
    difference in judicial formulations of the test to be applied. I
    agree with McGarvie J in Taylor v ANZ Banking Group (1988) 13 ACLR
    780 and with Hodgson J in Maurice Dry Cleaners Pty Ltd v National
    Australia Bank Ltd (unreported, 12 July 1990) that the appropriate
    test is as stated by Rich J in Downs Distributing Co PL v
Associated Blue Star Stores Pty Ltd (In liq) (1948) 76 CLR 463 at
    476-477 to the effect "that the transaction must fall into place as
    part of the undistinguished common flow of business done, that it
    should form part of the ordinary course of business as carried on,
    calling for no remark and arising out of no special or particular
    situation".This approach is echoed in the statement of Dixon CJ in
Taylor v White (1964) 110 CLR 129 at 136 that "the time honoured
    phrase Ôin the ordinary course of businessÕ is meant to refer to
    transactions regularly taking place in a sustained course of
    activity or some usual process naturally passing without
    examination". (See also Re Cummins (t/a Nam Constructions); Ex
parte Harris v ARC Engineering Pty Ltd (1985) 62 ALR 129, per
    Pincus J."

37. It must be accepted that there are cases where a payment will nonetheless be regarded as having been made in the ordinary course of business, notwithstanding the fact that it was made in response to demands for payment of an overdue account (see, for example, Katoa Pty Ltd (In Liquidation) v Dartnall (1984) 2 ACLC 42. Each case must depend upon its own circumstances.

38. The impugned payments made in January 1993 must be considered against the background of the correspondence with and dealings between the parties towards the end of December 1992. In my opinion, the correspondence with Mr Wegener and with the three directors plainly indicates that the impugned payments were made in response to pressures brought to bear by the appellant of a kind which it had not previously brought to bear upon CRP, at a time when the delay in payment far exceeded any delay previously experienced, and when the amount in arrears substantially exceeded any previous level of indebtedness.

39. In my opinion, for those reasons the payments cannot be characterised as "part of the undistinguished common flow of business", and were, therefore, not made in the ordinary course of business.

40. The finding that the payments were not made in the ordinary course of business means that it is strictly unnecessary to consider whether or not they were made in good faith, as both elements must be present before the appellant could succeed on the defence which it mounted.

41. However, in deference to the arguments put by Mr Bleby QC of counsel for the appellant with respect to the question of good faith, I will deal briefly with that aspect of the matter.

42. In Sheahan v Hertz Australia Pty Ltd (1995) 16 ACSR 765, King CJ said (770):
    "The expression Ôgood faithÕ in subs (2) is not used in its
    ordinary meaning of honesty as is apparent from a consideration of
    subs (4). The question to be answered is whether the creditor knew
    or had reason to suspect that the debtor was in fact insolvent:
Rees v Bank of New South Wales (1964) 111 CLR 210, and that the
    payment would give the creditor a preference over other creditors.
    Absent an actual suspicion there must be something in the
    circumstances which would create in the mind of a reasonable person
    in the position of the payee an apprehension or fear that the payer
    may be unable to pay his debts as they become due and that the
    payment would give the payee a preference: Queensland Bacon Pty Ltd
v Rees (1966) 115 CLR 266 per Kitto J at 303; (1966) ALR 855. The
    question is to be answered objectively having regard to all the
    circumstances of the case."

43. Mr Bleby QC sought to gain some assistance from dicta in the judgment of Young J in Hamilton v BHP Steel (LS) Ltd.(1995) 13 ACLC 1548. In that case, Young J, in determining what inferences should be drawn from the fact that the customer (also a roofing contractor) was not paying its debts on time to its supplier of materials, had regard to what he described as "the commercial reality" of the situation, an expression drawn from the judgment of McGarvie J in Taylor v ANZ Banking Group Ltd.(1988) 6 ACLC 808. Young J said (1552):
    " ... what has to be done is not a mere accounting exercise, but an
    appreciation of whether moneys can be readily mustered in order to
    pay creditors.It seems to me that the words Ôcommercial realityÕ
    mean that one must look at the circumstances in the light of
    prevailing business practices. ... (1554) What is aimed at in s122
    is preventing someone obtaining an unfair advantage. That
    unfairness happens if objectively there is not good faith, or
    objectively there is cause for suspicion that a Company is not able
    to pay its debts when they fall due from its own resources. One
    needs to look at the ordinary conduct of the business community
    from time to time to see whether there is objectively grounds for
    suspicion. At a time when there is an inflationary economy and
    people are anxious to pay their business debts as soon as possible
    to get income tax deductions in the current year, one may very well
    have suspicious circumstances when a customer falls well behind the
    terms of trading. On the other hand, in a recessionary environment
    where people wish to save on their own interest bills in respect of
    borrowed capital, such suspicion will not necessarily be so
    engendered."

44. While I accept that a commercially realistic approach must be adopted, I am not sure that I would be prepared to accept the proposition that in a recessionary environment one might reach a conclusion that the debtor was unable to pay his debts as they became due from his own money by reason of tardiness of payment of his debts, less readily than might be the case at other times. One of the characteristics of a recessionary environment is that it produces a high crop of bankruptcies. With respect to Young J, I am unable to accept that slow payment of an account during a recessionary environment should be treated differently for the purpose of drawing the necessary inference against the debtor as opposed to slow payment in an inflationary economy.

45. At all events, every case depends upon its own facts.

46. In this case, the rapidly deteriorating performance of CRP in paying its indebtedness to the appellant, coupled with the information given particularly to Mrs Strickland, provided a proper basis for a finding that the appellant knew or had reason to suspect that CRP was unable to pay its debts as they became due from its own money. She was told by Mr Wegener on 26 November that he had "an immense cash flow problem". That she was told by him on 15 December 1992 that CRP owed $1.7 million to creditors and was "desperately trying to pursue some monies" makes such a conclusion inevitable. The appellantÕs understanding of the manner of operation of its contractor clients and that they generally relied on payments from the building owner or head contractor in order to meet payments due to the appellant, must lead to the conclusion that by December 1992, if not before, CRP could not pay its debts as they became due from its own money.

47. The same circumstances likewise lead to the conclusion that the impugned payments were made in circumstances in which the appellant knew, or had reason to expect, that its receipt of the payments would give it a preference, priority or advantage over other creditors.

48. Since dictating the above reasons, I have read the recent decision of the High Court of Australia in Airservices Australia v Ferrier and Anor (1996) 137 ALR 609.

49. In the judgment of the majority (Dawson, Gaudron and McHugh JJ) the High Court held that the account in question in that case, which was an account struck between the Civil Aviation Authority ("CAA") and Compass Airlines Pty Ltd ("Compass"), was properly to be characterised as a running account. Further, the majority were of the view, reversing the decision of the Full Court of the Federal Court, that certain payments made by Compass to CAA on the account (although not the last of the payments) were not shown to have given CAA a preference, priority or advantage over the general body of creditors of Compass (137 ALR at 628.).

50. The reasoning which led the majority of the High Court to that view might be thought, at least in some respects, to be of application in this case. However, I do not explore that further, as the Airservices Australia case must be distinguished for present purposes, and does not cause me to question the soundness of the conclusions which I have reached.

51. That is so for two reasons.

52. In the first place, Mr Bleby QC for the appellant expressly eschewed any suggestion that the account here in question was a running account (See Appeal T15). In the second place, as I have already observed, it was conceded at the trial that not only was CRP insolvent at the time the payments in question were made, but that the payments created a priority or preference in the appellant at the expense of other creditors of CRP (See the learned trial JudgeÕs reasons at AB4/659.).

53. I would dismiss the appeal.