Metal Manufacturers Pty Limited v Gavin Morton as Liquidator of MJ Woodman Electrical Contractors Pty Ltd (in Liquidation) & Anor

The High Court of Australia considered an appeal concerning the application of section 588FF of the Corporations Act 2001 (Cth) to a liquidator's claim for the recovery of alleged unfair preferences. The liquidator of MJ Woodman Electrical Contractors Pty Ltd (in Liquidation) sought to recover payments made by the company to Metal Manufacturers Pty Limited, arguing these payments constituted unfair preferences. Metal Manufacturers Pty Limited appealed the decision of the Full Federal Court, which had upheld the liquidator's claim.

The central legal issue before the High Court was whether the liquidator's claim for recovery under section 588FF was validly brought, specifically in relation to the timing of the company's insolvency and the nature of the payments. The court was required to determine the proper interpretation of "relation back period" and the conditions under which a transaction could be characterised as an unfair preference.

The High Court allowed the appeal, finding that the liquidator had failed to establish that the payments were made during the "relation back period" as defined by the Act. Their Honours Gageler and Steward JJ held that the liquidator bore the onus of proving that the company was insolvent at the time the payments were made, or that it became insolvent by making those payments. The court clarified that the statutory presumption of insolvency under section 588E(2) did not apply in this instance, and without evidence of insolvency at the relevant time, the claim under section 588FF could not succeed. The court therefore set aside the orders of the Full Federal Court.