MANN & ANOR v. SANGRIA P/L [2001] NSWSC 172 revised - 2/05/2001
CURRENT JURISDICTION:
Equity
FILE NUMBER(S):
SC 4062/99
HEARING DATE(S):
08/03/2001
JUDGMENT DATE:
21 March 2001
PARTIES :
JOHN MANN (2nd Pltf) G.A. COONEY HOLDINGS PTY LTD (IN LIQ) (3rd Pltf) SANGRIA P/L (Defendant)
JUDGMENT OF:
Bryson J at 1
COUNSEL :
R.D. Marshall - Pltf; K. Andronos - Dft
SOLICITORS:
Gordon & Johnstone - Pltf Mallesons Stephen Jaques - Dft
CATCHWORDS:
CORPORATIONS - external administration - voidable transactions - preferential payments - Abattoir sold meat to wholesale Butcher August 1996 to March 1997 then sued to recover $186,000 unpaid account - action settled on terms that debt paid off at $7000 per month - six instalments paid in period January to June 1998 - in May and June 1998 Abattoir sold and delivered six consignments of meat which were each paid for by a cheque specifically for the price of one consignment - cheques postdated 2 or 3 weeks and handed over at or forwarded soon after delivery total $27811.58 - voluntary administration on 22 June followed by winding-up - company insolvent throughout 6 months preceding VA - on claim under subs.588FA(1) to recover payments, instalments off old debt $42,000 were held to be preferences - payments $27,811.58 for deliveries in May and June were held not to fall within subs.588FA(1) as the transactions were not preferential - consideration of categorisation of facts and events as transaction within the meaning of subs.588FA(1) - defence under s.588FG(2) failed because of grounds for suspicion of insolvency - consideration of Dye v. Peninsula Hotels (Ormiston JA)
Judgment for the plaintiff for $42,000 plus interest.
IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION
BRYSON J.
WEDNESDAY 21 MARCH 2001
4062/99 MANN & G.A. COONEY HOLDINGS PTY LTD (IN LIQ) v. SANGRIA P/L
JUDGMENT
1 HIS HONOUR: The plaintiffs claim orders for the recovery of a number of payments made to the defendant by the company. The claim is based on Ch.5 Pt.5.7B Div.2 of the Corporations Law which relates to voidable transactions. The plaintiffs must show that each payment occurred in a transaction which was an unfair preference given by the company to a creditor within subs.588FA(1), that the transaction was an insolvent transaction within s.588FC, and that it was a voidable transaction within subs.588FE(2) which establishes a relation back period of six months; if those things are shown the Court has power to make an order in effect directing repayment under subs.588FF(1) para.(a). At the time of the payments…
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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AGLC
Mann v Sangria Pty Ltd [2001] NSWSC 172
Case
[2001] NSWSC 172
Decision Date
CaseChat Overview and Summary
Mann, the plaintiff, sought to recover preferential payments made to Sangria Pty Ltd, the defendant, prior to its voluntary administration and subsequent winding up. The dispute centred on payments totalling $186,000 for meat sold by Mann to Sangria from August 1996 to March 1997, and additional payments made in May and June 1998. Mann argued that the post-dated cheques totalling $27,811.58, used to settle the later payments, constituted preferential transactions under the Corporations Law. Sangria contended that the payments did not constitute preferences as they were made in the ordinary course of business.
The court was tasked with determining whether the payments made by Mann to Sangria constituted voidable preferential transactions under section 588FA(1) of the Corporations Act. The court also had to consider whether Sangria's defence under section 588FG(2), which required a showing that the transaction was in the ordinary course of business and there were no grounds to suspect insolvency, was valid. Additionally, the court needed to assess whether the payments made in May and June 1998 were preferential under section 588FA(1).
The court concluded that the six monthly instalments totalling $42,000 were indeed preferential payments because they were made within six months of Sangria's insolvency and were not in the ordinary course of business. However, the court found that the payments made in May and June 1998, totalling $27,811.58, did not constitute preferential transactions as they were made in the ordinary course of business. The court further held that Sangria's defence under section 588FG(2) failed because there were grounds to suspect insolvency, as evidenced by the six-month period of insolvency prior to the voluntary administration. The court's reasoning was consistent with the decision in Dye v Peninsula Hotels, where Ormiston JA outlined the criteria for assessing preferential transactions.
The court ordered that the preferential payments of $42,000 be recovered by Mann from Sangria. The payments of $27,811.58 made in May and June 1998 were not recoverable as they did not constitute preferential transactions.