Green v Chenoweth

The High Court of Australia considered the dispute between Green and Chenoweth. The case concerned the interpretation and application of certain provisions within the *Corporations Act 2001* (Cth) relating to the winding up of a company and the recovery of property.

The central legal issues before the Court were whether a liquidator could recover payments made by a company to a director as a preference, and whether the director had acted in good faith and ought to be excused from liability under s 588FG of the *Corporations Act 2001* (Cth). The Court also had to determine the proper approach to assessing the value of the director's services to the company in the context of the winding up proceedings.

The Court's reasoning focused on the statutory tests for voidable transactions, particularly the definition of an unfair preference. It examined the evidence presented regarding the company's financial position at the time of the payments and the director's knowledge of that position. The Court affirmed that the onus was on the liquidator to establish the elements of an unfair preference. In relation to the director's defence, the Court reiterated that the "good faith" defence requires more than mere absence of dishonesty; it necessitates a positive demonstration of reasonable care and diligence. The Court also considered the principles governing the valuation of services rendered by a director to a company, particularly where those services were not formally remunerated or documented.

The High Court allowed the appeal in part, setting aside the orders of the Full Federal Court and remitting the matter to the Federal Court for redetermination of the amount recoverable by the liquidator.