Frederick Charles Perkins v the State Bank of South Australia No. SCGRG92/1581 Judgment No. 4320 Number of Pages 14 Companies Winding up (1993) 61 Sasr 246

Frederick Charles Perkins, as liquidator of I and B Clarke Transport Pty Ltd, sought to recover a payment of $64,882.74 made by the company to the State Bank of South Australia four months prior to the company's winding up. The liquidator argued that this payment constituted an insolvent transaction under s.565 of the Corporations Law and should be voided. The bank contended that it received the payment in good faith and for valuable consideration in the ordinary course of business, and thus should not be required to repay the amount. The central legal issues were whether the company was insolvent at the time of the payment and whether the bank's receipt of the payment constituted a preference under s.122 of the Bankruptcy Act. The Court found that the company was indeed insolvent at the time of the payment, but that the bank was entitled to retain the funds as it received them in good faith and for valuable consideration in the ordinary course of business. The Court concluded that even if the payment was a preference, the bank's good faith and lack of knowledge that the payment would result in a preference shielded it from liability. The liquidator's claim was dismissed.