Mann v Sangria Pty Ltd

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.