Leroy as trustee for the Bankrupt Estate of Shinton v Sun Sheetmetals (Qld) Pty Ltd

This matter concerned an application by the trustee of a bankrupt estate, Mr. Leroy, against Sun Sheetmetals (Qld) Pty Ltd. The trustee sought to recover funds paid by the bankrupt, Mr. Shinton, to Sun Sheetmetals prior to his bankruptcy. The dispute centred on whether these payments constituted preferential payments under the *Bankruptcy Act 1966* (Cth).

The primary legal issue before the court was whether the payments made by Mr. Shinton to Sun Sheetmetals within the relevant period before his bankruptcy were voidable as unfair preferences. This required the court to determine if Sun Sheetmetals had received a benefit from these payments at the expense of other creditors, and if Mr. Shinton was insolvent at the time of the payments.

Judge Jarrett found that the payments were indeed preferential. His Honour applied the principles established in *Re P. & S. Civil Engineering Pty Ltd* and *Official Trustee in Bankruptcy v Schultz*, focusing on the elements of a voidable preference. The court was satisfied that Sun Sheetmetals received more than it would have if Mr. Shinton had been placed in liquidation at the time of the payments, and that Mr. Shinton was insolvent at the time the payments were made.

Consequently, the court ordered that the payments made by Mr. Shinton to Sun Sheetmetals be set aside as voidable preferences, and that Sun Sheetmetals repay the sum of $10,000 to the trustee of the bankrupt estate.