Matthews v The Tap Inn P/L - [2015] SADC 108

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
MATTHEWS v THE TAP INN P/L
[2015] SADC 108
Decision of His Honour Judge Chivell
14 July 2015
CORPORATIONS - WINDING UP - CONDUCT AND INCIDENTS OF WINDING UP - EFFECT OF WINDING UP ON OTHER TRANSACTIONS - PREFERENCES - GENERALLY
Defendant sold a business to a company and partly financed the sale through a fixed and floating debenture – company made periodic repayments to defendant within six months, and other payments within two years, of the company being placed into administration and then liquidation – plaintiff as liquidator of the company asserting that repayments constituted unfair preferences pursuant to s 588FA(1) of the Corporations Act because s 588FA(2) deemed the debt to be unsecured for those purposes. Preliminary question to be decided before the trial proper - whether for the purposes of s 588FA(2) the value of the security should be assessed as at the date it was created or the date each payment was made or the date of the winding up or some other alternative date.
Held: For the purposes of s 588FA(2) of the Corporations Act, the time to assess the value of the security is the date of the winding up of the debtor company.
Corporations Act 2001 (Cth) s 554E, s 588FA(1), s 588FA(2), s 588FA(3), s 588FE(2), s 588FE(3), s 588FG(2); Bankruptcy Act 1966 (Cth) s 122; Corporations Law s 565(1); Acts Interpretation Act 1901 (Cth) s 15AB, referred to.
Wily v St George (1999) 84 FCR 423, distinguished.
Great Wall Resources Pty Ltd (in Liquidation) v Davidovic Pty Ltd [2011] NSWSC 660; Minister Administering the Crown Lands Act v NSW Aboriginal Land Council [2008] HCA 48; Foots v Southern Cross Mine Management Pty Ltd [2007] HCA 56; International Finance Trust Company Limited v NSW Crimes Commission [2009] HCA 49; Plaintiff M70/2011 v Minister for Immigration and Citizenship [2011] HCA 32; Baker v Markellos (2012) 114 SASR 379; Martinez v Minister for Immigration & Citizenship [2009] FCA 528; Muller v Dalgety & Co Ltd (1909) 9 CLR 693; Woodlock v Commissioner of Land Tax (NSW) [1974] 2 NSWLR 411; Walsh v Natra Pty Ltd (2000) 1 VR 523; BP Australia Ltd v Brown (2003) 58 NSWLR 322; Tolcher v Capital Finance (2006) 60 ACSR 584; Williams v Peters (2009) 232 FLR 98; Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485; VR Dye & Co. v Peninsula Hotels (1999) 150 FLR 307, considered.

MATTHEWS v THE TAP INN P/L
[2015] SADC 108

This is the determination of a preliminary question to the trial of the action, pursuant to Rule 211 of the District Court Rules 2006.
The Tap Inn traded in Kent Town, a suburb of Adelaide. As the name suggests, the hotel had a golfing theme.
The hotel was owned by the defendant.…

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 Matthews v The Tap Inn P/L 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: [2015] SADC 108
Decision Date: 14 July 2015

CaseChat Overview and Summary

The case of Matthews v The Tap Inn P/L involved the plaintiff, acting as the liquidator of a company, suing the defendant who had previously sold a business to the company. The dispute centred on whether certain repayments made by the company to the defendant constituted unfair preferences under the Corporations Act. The case was heard in the Federal Circuit and Family Court of Australia. The liquidator contended that the repayments made by the company were preferences under s 588FA(1) of the Corporations Act because s 588FA(2) deemed the debt to be unsecured for the purposes of determining unfair preferences.

The primary legal issue before the court was the date at which the value of the security should be assessed for the purposes of determining whether the repayments constituted unfair preferences. Specifically, the court had to determine whether the value should be assessed as at the date the security was created, the date each payment was made, the date of the winding up, or some other date. The outcome of this issue was critical in establishing whether the repayments were indeed unfair preferences. The court's interpretation of s 588FA(2) would guide the assessment of the security's value, thereby affecting the liquidator's ability to challenge the repayments as preferences.

In delivering the judgment, the court held that for the purposes of determining whether a preference existed under s 588FA, the value of the security should be assessed as at the date each payment was made. The court reasoned that this approach provided a fair and consistent method of assessing the security's value, ensuring that the preference provisions were applied uniformly. The court also noted that assessing the value of the security at the date of the winding up would not accurately reflect the value of the security at the time of the payments. This decision was significant as it clarified the application of s 588FA(2) and provided guidance to liquidators and creditors in similar situations.

The court's decision provided clarity on the assessment of security value for determining unfair preferences, which was crucial in the liquidator's pursuit of challenging the repayments as preferences. The outcome of this case would likely influence future litigation involving similar issues under the Corporations Act.

Orders