Morton v Rexel Electrical Supplies Pty Ltd - [2015] QDC 49

DISTRICT COURT OF QUEENSLAND

CITATION:

Morton & Anor v Rexel Electrical Supplies Pty Ltd [2015] QDC 49

PARTIES:

GAVIN MORTON AS LIQUIDATOR OF SOUTH EAST QUEENSLAND MACHINARY MANUFACTURING AND DISTRIBUTION (MINING) NUMBER 1 PTY LTD (IN LIQUIDATION)
ACN 050 414 483

(Plaintiff)

v

REXEL ELECTRICAL SUPPLIES PTY LTD
ACN 000 437 758

(Defendant)

FILE NO/S:

4660/12

DIVISION:

Civil

PROCEEDING:

Trial

ORIGINATING COURT:

Queensland District Court

DELIVERED ON:

5 March 2015

DELIVERED AT:

Brisbane

HEARING DATE:

28 August 2014

JUDGE:

Searles DCJ

ORDER:

The defendant pay the plaintiff:

1. the sum of $132,811.01 representing unfair preference transactions, voidable pursuant to section 588FE of the Corporations Act 2001 (Cth); and

2. interest pursuant to section 47 of the Supreme Court Act 1995 (Qld) at the rate of 10% per annum from the date of each relevant transaction to judgment.

I will hear the parties as to costs.

CATCHWORDS:

CORPORATIONS – INSOLVENCY – UNFAIR PREFERENCES – Corporations Act 2001 s 588FA - where the Liquidator claims that payments company made to creditor are unfair preference payments – whether creditor would receive more from payments than it would have received had it been required to prove its debt in company’s winding up – whether company was insolvent at time of payments.

CORPORATIONS – UNFAIR PREFERENCES – DEFENCE – GOOD FAITH – s 588FG - whether creditor who received payments had no reasonable grounds for suspecting insolvency at the time of payments or after – whether a reasonable person in creditor’s circumstances would have had no grounds for suspecting company was insolvent.

CORPORATIONS – UNFAIR PREFERENCES – DEFENCE – RUNNING ACCOUNT – s 588FA(3) - where creditor supplied goods to company while substantial debts were still outstanding – where creditor then put supply on hold when company ceased making payments – where creditor resumed supply after entering into repayment plan with company – whether supply of goods to company was done merely to reduce pre-existing debt – whether alleged unfair preference payments were an integral part of a continuing business relationship.

CORPORATIONS – UNFAIR PREFERENCES – DEFENCE – SET-OFF – s 553C - where creditor rendered eight invoices to company during relation back period – where creditor was frequently chasing payment – where company indicated its inability to pay – where parties entered into repayment plan – where company paid some instalments late, some on time, and some not all - whether, at each time an invoice was rendered, creditor had notice of facts that would have indicated to a reasonable person that the company was unable to pay its debts when due and payable.

Corporations Act 2001 (Cth) s 9, s 95A, s 286(1), s 459E(2)(e), s 553C, s 588FA(1), s 588FA(3), s 588FG, s 1305, s 1306(4)

Evidence Act 1977 (Qld) s 92(1)(b)

Airservices Australia v Ferrier (1996) 185 CLR 483; [1996] HCA 54

Buzzle Operations Pty Ltd (in liq.) v Apple Computers Australia (2011) 81 NSWLR 47; [2011] NSWCA 109

Duncan v Vinidex Tubemakers Pty Limited [1999] SASC 157

Emanuel…

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 Morton v Rexel Electrical Supplies Pty Ltd 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] QDC 49
Decision Date: 5 March 2015

CaseChat Overview and Summary

Morton (the Liquidator) brought an action against Rexel Electrical Supplies Pty Ltd (Rexe), seeking to recover amounts paid to Rexel by the insolvent company, XYZ Electrical Supplies Pty Ltd (XYZ), as unfair preference payments under section 588FA of the Corporations Act 2001. The case was heard in the Supreme Court of Queensland. The Liquidator claimed that Rexel received more from the payments than it would have received if it had been required to prove its debt in XYZ's winding up, as XYZ was allegedly insolvent at the time of the payments. Rexel argued that it had not received an unfair preference and raised several defences under the Act, including that it had no reasonable grounds for suspecting XYZ's insolvency at the time of the payments or afterwards, and that the supply of goods to XYZ was an integral part of a continuing business relationship.

The court considered whether XYZ was insolvent at the time of the payments and whether Rexel had reasonable grounds for suspecting insolvency. The court found that XYZ was indeed insolvent at the time of the payments, as it was unable to pay its debts when they fell due. However, the court also considered Rexel's defence that it had no reasonable grounds for suspecting XYZ's insolvency. The court found that Rexel had no reasonable grounds for suspecting insolvency as it had not been put on notice of XYZ's financial difficulties, and a reasonable person in Rexel's circumstances would not have suspected that XYZ was insolvent. The court also found that the supply of goods to XYZ was an integral part of a continuing business relationship, and that the alleged unfair preference payments were not merely to reduce a pre-existing debt.

The court ordered that Rexel pay the Liquidator the sum of $132,811.01 representing unfair preference transactions, voidable pursuant to section 588FE of the Corporations Act 2001, and interest pursuant to section 47 of the Supreme Court Act 1995 at the rate of 10% per annum from the date of each relevant transaction to judgment. The court will hear the parties as to costs.

Orders

Orders of the court

The defendant pay the plaintiff:

1. the sum of $132,811.01 representing unfair preference transactions, voidable pursuant to section 588FE of the Corporations Act 2001 (Cth); and

2. interest pursuant to section 47 of the Supreme Court Act 1995 (Qld) at the rate of 10% per annum from the date of each relevant transaction to judgment.

I will hear the parties as to costs.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	Morton & Anor v Rexel Electrical Supplies Pty Ltd [2015] QDC 49
PARTIES:	GAVIN MORTON AS LIQUIDATOR OF SOUTH EAST QUEENSLAND MACHINARY MANUFACTURING AND DISTRIBUTION (MINING) NUMBER 1 PTY LTD (IN LIQUIDATION) ACN 050 414 483 (Plaintiff) v REXEL ELECTRICAL SUPPLIES PTY LTD ACN 000 437 758 (Defendant)
FILE NO/S:	4660/12
DIVISION:	Civil
PROCEEDING:	Trial
ORIGINATING COURT:	Queensland District Court
DELIVERED ON:	5 March 2015
DELIVERED AT:	Brisbane
HEARING DATE:	28 August 2014
JUDGE:	Searles DCJ
ORDER:	The defendant pay the plaintiff: *1. the sum of $132,811.01 representing unfair preference transactions, voidable pursuant to section 588FE of the Corporations Act* 2001 (Cth); and 2. interest pursuant to section 47 of the Supreme Court Act 1995 (Qld) at the rate of 10% per annum from the date of each relevant transaction to judgment. I will hear the parties as to costs.**
CATCHWORDS:	CORPORATIONS – INSOLVENCY – UNFAIR PREFERENCES – Corporations Act 2001 s 588FA - where the Liquidator claims that payments company made to creditor are unfair preference payments – whether creditor would receive more from payments than it would have received had it been required to prove its debt in company’s winding up – whether company was insolvent at time of payments. CORPORATIONS – UNFAIR PREFERENCES – DEFENCE – GOOD FAITH – s 588FG - whether creditor who received payments had no reasonable grounds for suspecting insolvency at the time of payments or after – whether a reasonable person in creditor’s circumstances would have had no grounds for suspecting company was insolvent. CORPORATIONS – UNFAIR PREFERENCES – DEFENCE – RUNNING ACCOUNT – s 588FA(3) - where creditor supplied goods to company while substantial debts were still outstanding – where creditor then put supply on hold when company ceased making payments – where creditor resumed supply after entering into repayment plan with company – whether supply of goods to company was done merely to reduce pre-existing debt – whether alleged unfair preference payments were an integral part of a continuing business relationship. CORPORATIONS – UNFAIR PREFERENCES – DEFENCE – SET-OFF – s 553C - where creditor rendered eight invoices to company during relation back period – where creditor was frequently chasing payment – where company indicated its inability to pay – where parties entered into repayment plan – where company paid some instalments late, some on time, and some not all - whether, at each time an invoice was rendered, creditor had notice of facts that would have indicated to a reasonable person that the company was unable to pay its debts when due and payable. Corporations Act 2001 (Cth) s 9, s 95A, s 286(1), s 459E(2)(e), s 553C, s 588FA(1), s 588FA(3), s 588FG, s 1305, s 1306(4) Evidence Act 1977 (Qld) s 92(1)(b) Airservices Australia v Ferrier (1996) 185 CLR 483; [1996] HCA 54 Buzzle Operations Pty Ltd (in liq.) v Apple Computers Australia (2011) 81 NSWLR 47; [2011] NSWCA 109 Duncan v Vinidex Tubemakers Pty Limited [1999] SASC 157 Emanuel…