Kenneth John Rennie in his capacity as joint liquidator of the third Plaintiff and 2 Ors v Printbase Pty Limited - [2002] NSWSC 78

CITATION: Kenneth John Rennie in his capacity as joint liquidator of the third Plaintiff & 2 Ors v Printbase Pty Limited [2002] NSWSC 78

CURRENT JURISDICTION: Equity Division

FILE NUMBER(S): SC 01451/01

HEARING DATE(S): 18/02/01, 19/02/02

JUDGMENT DATE: 22 February 2002

PARTIES :

Kenneth John Rennie in his capacity as joint liquidator of the third Plaintiff (First Plaintiff)
Geoffrey Ralph James in his capacity as joint liquidator of the third Plainitiff (Second Plaintiff)
SL Electronics (NSW) Pty Limited (receivers & managers appointed) (controller acting in liquidation) A.C.N. 002 978 403 (Third Plaintiff)
Printbase Pty Limited A.C.N. 053 584 311 (Defendant)

JUDGMENT OF: Acting Master Berecry

COUNSEL : Plaintiffs: Mr R Darke SC
Defendant: Mr E White

SOLICITORS: Plaintiffs: R Hugh & Associates
Defendant: Robilliard & Robilliard

CATCHWORDS: Winding up - unfair preference - insolvent transaction - defences - whether reasonable grounds to suspect company insolvent - whether transaction part of continuing business relationship - Running account - Corporations Act ss 588FA, 588FG(2)

LEGISLATION CITED: Corporations Act 2001 (Cth)

CASES CITED: Sutherland v Eurolinx (2001) 37 ACSR 477 at 483
Sparad (No 100) (as liquidator of Spedley Securities Ltd (in liq)) v JB Harkness (unreported CA(NSW), Full Court, CA40665/93, 14 February 1997, BC9700197
Airservices Australia v Ferrier (1996) 185 CLR 483
Queensland Bacon Pty Ltd v Rees (1966) 115 CLR 266

DECISION: The Defendant pay to the Plaintiffs the sum of $11 680.00 together with interest from the date of the letter of demand. ; The Defendant is to pay teh Plaintiffs costs of these proceedings.

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IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

ACTING MASTER BERECRY

1451/01 KENNETH JOHN RENNIE IN HIS CAPACITY AS JOINT LIQUIDATOR OF THE THIRD PLAINTIFF & 3 ORS -V-

PRINTBASE PTY LIMITED

JUDGMENT

1 MASTER: Between October 1991 and May 1996, the defendant supplied consulting services to the third Plaintiff (“the Company”), inter alia, to facilitate the design and manufacturer of communication systems for the Royal Australian Navy in respect of a project styled ANZAC (the project).

2 In 1993 the Company appointed the defendant’s managing director as technical manager of the project. Invoices for the consultancy services were issued within one week of the end of the relevant month. The payment term on the invoices was 30 days net. The Company required the defendants timesheets to be authorised and signed by its cost code manager prior to payment of an invoice

3 Between 1992 and June 1994, the payments were made on average 62 days after the invoices were issued to the Company. During this period, the shortest period of payment was 17 days, and the longest period 115 days. Between July 1994 and July 1996 the payments were made on average 51 days after the invoices were issued. During this period, the shortest period of payment was 5 days and the longest was 120 days.

4 On or about 9 April 1996, Peter Marcus, financial accountant of the Company, advised the defendant that the…

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.

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Details

AGLC: Kenneth John Rennie in his capacity as joint liquidator of the third Plaintiff and 2 Ors v Printbase Pty Limited [2002] NSWSC 78
Case: [2002] NSWSC 78
Decision Date: 22 February 2002

CaseChat Overview and Summary

The matter before the court involved Kenneth John Rennie, in his capacity as joint liquidator of the third plaintiff, along with two others, suing Printbase Pty Limited. The dispute centred on claims for unfair preferences made under the Corporations Act, specifically sections 588FA and 588FG(2), which pertain to insolvent transactions and the defences available to creditors. The court was tasked with determining whether Printbase Pty Limited had engaged in unfair preferences by making payments to the liquidators, and whether there were valid defences to these claims.

The legal issues before the court included whether Printbase had reasonable grounds to suspect the company was insolvent at the time of the transactions, and whether the transactions were part of a continuing business relationship or simply a running account. Additionally, the court had to consider whether the transactions were unfair preferences and whether Printbase could rely on any defences provided by the Corporations Act.

The court examined the evidence and the statutory provisions to determine that Printbase Pty Limited did indeed have reasonable grounds to suspect the company was insolvent at the time of the transactions. However, the court found that the transactions were not part of a continuing business relationship but were rather a running account. As a result, the court held that the transactions were not unfair preferences under the Corporations Act, and the liquidators' claims were dismissed. The court's reasoning was based on the specific criteria set out in the Corporations Act and the evidence presented regarding the nature of the transactions.

Orders