Hosking v Extend N Build Pty Ltd - [2018] NSWCA 149

Court of Appeal

Supreme Court

New South Wales

Summary available
Amendment notes

Medium Neutral Citation: Hosking v Extend N Build Pty Ltd [2018] NSWCA 149
Hearing dates: 1 March 2018
Date of orders: 13 July 2018
Decision date: 13 July 2018
Before: Bathurst CJ at [1]; Beazley P at [123]; Gleeson JA at [124]
Decision:
(1)   In relation to the first to fifth respondents:

(a)   Dismiss the appeal.

(b)   Order the appellants to pay the first to fifth respondents’ costs of the appeal.

(2)   In relation to the sixth respondent:

(a)   Allow the appeal.

(b)   Set aside the orders made by the primary judge dismissing the appellants’ claim against the sixth respondent.

(c)   Direct the appellants and the sixth respondent to bring in short minutes of order to give effect to this judgment within 7 days.
(d)   Order the sixth respondent to pay the appellants’ costs of the appeal against it and have a certificate under the Suitors Fund Act 1951 (NSW) if eligible.
Catchwords:
CORPORATIONS – Winding up – Voidable transactions – unfair preference – Corporations Act 2001 (Cth) s 588FA(1) – third party paid creditor of debtor in response to industrial pressure – whether payment was a “transaction” to which the debtor was a party – whether the payment was received “from” the debtor
CORPORATIONS – Winding up – Voidable transactions – statutory defence – Corporations Act 2001 (Cth) – s 588FG(2) – creditor received payment from debtor during relation-back period – whether creditor had reasonable grounds for suspecting that debtor was insolvent
Legislation Cited: Corporations Act 2001 (Cth)
Suitors Fund Act 1951 (NSW)
Cases Cited: Burness v Supaproducts Pty Ltd (2009) 259 ALR 339; [2009] FCA 893
Federal Commissioner of Taxation v Kassem (2012) 205 FCR 156; [2012] FCAFC 124
Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635; [2008] HCA 27
Nilant v Plexipack Packaging Services Pty Ltd (1996) 21 ACSR 428
Re Alsafe Security Products Pty Ltd (in liq) [2016] NSWSC 428
Re Emanuel (No 14) Ltd (in liq) (1997) 147 ALR 281
Re Imobridge Pty Ltd (in liq) [2000] 2 Qd R 280; [1999] QSC 342
Woodgate v National Associates International BV [2007] NSWSC 1260
Category: Principal judgment
Parties: Philip Raymond Hosking, in his capacity as joint and several liquidator of Evolvebuilt Contracting Pty Ltd (in liquidation) (first appellant)
David Anthony Hurst, in his capacity as joint and several liquidator of Evolvebuilt Contracting Pty Ltd (in liquidation) (second appellant)
Evolvebuilt Contracting Pty Ltd (in liquidation) (third appellant)
Extend N Build Pty Ltd (first respondent)
Build Projects Pty Ltd (second respondent)
Consek Pty Ltd (third respondent)
Thehai Trinh (fourth respondent)
Truthful Constructions Pty Ltd (fifth respondent)
Kennico Interiors Pty Ltd (sixth respondent)
Representation:
Counsel:
M Pesman SC with C Alexander (appellants)
A G Martin (first, second, third, fifth and sixth respondents)
J Cohen (fourth respondent)
Solicitors:
CCSG Legal Pty Ltd (appellants)
Paul Bard Lawyers (first, second, third, fifth and sixth respondents)
Ledinh Lawyers (fourth respondent)

File Number(s): 2017/234980

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 Hosking v Extend N Build 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: [2018] NSWCA 149
Decision Date: 13 July 2018

CaseChat Overview and Summary

The appeal in *Hosking v Extend N Build Pty Ltd* concerned a liquidator's claim to recover payments made by a company, Extend N Build Pty Ltd (in liquidation), to certain creditors during the relation-back period. The liquidator argued these payments constituted unfair preferences under section 588FA(1) of the *Corporations Act 2001* (Cth). The primary judge had dismissed the claim against the first to fifth respondents but found in favour of the liquidator against the sixth respondent. The appeal was heard by Bathurst CJ, Beazley P, and Gleeson JA of the Court of Appeal of New South Wales.

The central legal issues before the Court of Appeal were whether the payments made by the company to the creditors constituted "transactions" to which the company was a party, and whether these payments were received "from" the company for the purposes of section 588FA(1). Additionally, the court considered whether the sixth respondent had reasonable grounds to suspect the company's insolvency, which would be a defence under section 588FG(2) of the *Corporations Act 2001* (Cth).

The Court of Appeal reasoned that for a payment to be an unfair preference, it must be a transaction to which the company was a party and from which the creditor received the payment. In relation to the first to fifth respondents, the court found that the payments were not made directly by the company but rather by a third party in response to industrial pressure exerted on the company. Therefore, these payments were not received "from" the company in the relevant sense. However, regarding the sixth respondent, the court determined that the primary judge had erred in finding that the sixth respondent had reasonable grounds to suspect insolvency. The court concluded that the evidence did not support such a finding, and thus the statutory defence under section 588FG(2) was not established.

Consequently, the appeal was dismissed in relation to the first to fifth respondents, with the appellants ordered to pay their costs. The appeal was allowed in relation to the sixth respondent, the primary judge's orders were set aside, and the matter was remitted for short minutes of order to be brought in. The sixth respondent was ordered to pay the appellants' costs of the appeal against it, with a certificate under the *Suitors Fund Act 1951* (NSW) available if eligible.

Orders

Orders of the court

(1) In relation to the first to fifth respondents:

(a) Dismiss the appeal.

(b) Order the appellants to pay the first to fifth respondents’ costs of the appeal.

(2) In relation to the sixth respondent:

(a) Allow the appeal.

(b) Set aside the orders made by the primary judge dismissing the appellants’ claim against the sixth respondent.

(c) Direct the appellants and the sixth respondent to bring in short minutes of order to give effect to this judgment within 7 days.

(d) Order the sixth respondent to pay the appellants’ costs of the appeal against it and have a certificate under the Suitors Fund Act 1951 (NSW) if eligible.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

Medium Neutral Citation:	Hosking v Extend N Build Pty Ltd [2018] NSWCA 149
Hearing dates:	1 March 2018
Date of orders:	13 July 2018
Decision date:	13 July 2018
Before:	Bathurst CJ at [1]; Beazley P at [123]; Gleeson JA at [124]
Decision:	(1) In relation to the first to fifth respondents: (a) Dismiss the appeal. (b) Order the appellants to pay the first to fifth respondents’ costs of the appeal. (2) In relation to the sixth respondent: (a) Allow the appeal. (b) Set aside the orders made by the primary judge dismissing the appellants’ claim against the sixth respondent. (c) Direct the appellants and the sixth respondent to bring in short minutes of order to give effect to this judgment within 7 days. (d) Order the sixth respondent to pay the appellants’ costs of the appeal against it and have a certificate under the Suitors Fund Act 1951 (NSW) if eligible.
Catchwords:	CORPORATIONS – Winding up – Voidable transactions – unfair preference – Corporations Act 2001 (Cth) s 588FA(1) – third party paid creditor of debtor in response to industrial pressure – whether payment was a “transaction” to which the debtor was a party – whether the payment was received “from” the debtor CORPORATIONS – Winding up – Voidable transactions – statutory defence – Corporations Act 2001 (Cth) – s 588FG(2) – creditor received payment from debtor during relation-back period – whether creditor had reasonable grounds for suspecting that debtor was insolvent
Legislation Cited:	Corporations Act 2001 (Cth) Suitors Fund Act 1951 (NSW)
Cases Cited:	Burness v Supaproducts Pty Ltd (2009) 259 ALR 339; [2009] FCA 893 Federal Commissioner of Taxation v Kassem (2012) 205 FCR 156; [2012] FCAFC 124 Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635; [2008] HCA 27 Nilant v Plexipack Packaging Services Pty Ltd (1996) 21 ACSR 428 Re Alsafe Security Products Pty Ltd (in liq) [2016] NSWSC 428 Re Emanuel (No 14) Ltd (in liq) (1997) 147 ALR 281 Re Imobridge Pty Ltd (in liq) [2000] 2 Qd R 280; [1999] QSC 342 Woodgate v National Associates International BV [2007] NSWSC 1260
Category:	Principal judgment
Parties:	Philip Raymond Hosking, in his capacity as joint and several liquidator of Evolvebuilt Contracting Pty Ltd (in liquidation) (first appellant) David Anthony Hurst, in his capacity as joint and several liquidator of Evolvebuilt Contracting Pty Ltd (in liquidation) (second appellant) Evolvebuilt Contracting Pty Ltd (in liquidation) (third appellant) Extend N Build Pty Ltd (first respondent) Build Projects Pty Ltd (second respondent) Consek Pty Ltd (third respondent) Thehai Trinh (fourth respondent) Truthful Constructions Pty Ltd (fifth respondent) Kennico Interiors Pty Ltd (sixth respondent)
Representation:	Counsel: M Pesman SC with C Alexander (appellants) A G Martin (first, second, third, fifth and sixth respondents) J Cohen (fourth respondent) Solicitors: CCSG Legal Pty Ltd (appellants) Paul Bard Lawyers (first, second, third, fifth and sixth respondents) Ledinh Lawyers (fourth respondent)
File Number(s):	2017/234980