Mulherin v Bank of Western Australia Ltd

In the case of Mulherin v Bank of Western Australia Ltd, the parties involved were Mulherin, the liquidator of a company, and the Bank of Western Australia, a financial institution. The dispute centred on whether certain transactions and dealings were valid and whether they could be set aside under the Corporations Act 2001 (Cth). Specifically, the liquidators sought to set aside a transaction involving an undertaking given by the bank to a third party for the benefit of a company director. The company had been indebted to the bank and subsequently entered into liquidation. The court was tasked with determining whether the rollovers of the undertaking constituted a transaction under section 588FC of the Corporations Act, and whether the bank could rely on the defence of good faith. Additionally, the court considered whether an estoppel by convention arose from a priority deed executed between the parties, which was later unilaterally altered and signed fraudulently.

The central legal issues before the court involved the interpretation and application of sections 588FC and 588GA of the Corporations Act, which pertain to uncommercial or insolvent transactions and the defence of good faith. The court needed to ascertain whether the rollovers of the undertaking constituted a transaction that could be set aside and whether the bank had acted in good faith. Furthermore, the court examined the effect of a fraudulent signature on the priority deed and whether an estoppel by convention could still apply in such circumstances.

In its reasoning, the court found that the rollovers of the undertaking did not constitute a transaction under section 588FC of the Corporations Act. It concluded that the bank had acted in good faith and that the defence of good faith was valid. The court held that the fraudulent signature on the priority deed did not negate the possibility of estoppel by convention arising, as the doctrine could apply independently of the validity of the signature. Consequently, both appeals were dismissed, and the bank was not required to set aside the transaction in question. The final orders of the court were that both appeals were dismissed with costs.