Muller v Academic Systems Pty Ltd - [2007] QCA 218

SUPREME COURT OF QUEENSLAND

CITATION:

Muller & McIntosh (as joint and several liquidators of Arafura Equities P/L (in liq)) v Academic Systems P/L [2007] QCA 218

PARTIES:

GINETTE MULLER and LACHLAN MCINTOSH as joint and several liquidators of ARAFURA EQUITIES PTY LTD (in liquidation) ACN 083 542 929
(applicant/appellant)
v
ACADEMIC SYSTEMS PTY LTD ACN 060 989 442
(respondent)

FILE NO/S:

Appeal No 3994 of 2007
DC No 2666 of 2006

DIVISION:

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:

District Court at Brisbane

DELIVERED ON:

13 July 2007

DELIVERED AT:

Brisbane

HEARING DATE:

13 June 2007

JUDGES:

Williams JA, White and Atkinson JJ
Separate reasons for judgment of each member of the Court, each concurring as to the orders made

ORDER:

1. Allow the appeal and set aside the judgment of the District Court
2. Declare that a payment of $83,000 to the respondent on or about 29 August 2005 is an insolvent transaction within the meaning of s 588FC Corporations Act 2001 (Cth)
3. Declare that the payment of $83,000 is an unfair preference pursuant to s 588FA of the Act
4. Declare that the payment of $83,000 is voidable pursuant to s 588FE of the Act
5. The respondent pay to the appellant the sum of $83,000 pursuant to s 588FF of the Act
6. The respondent pay interest on the sum of $83,000 pursuant to s 47 Supreme Court Act 1995 (Qld) from the commencement of the winding up until the date of this judgment
7. The respondent pay the appellant's costs of and incidental to the proceedings in the District Court and of this appeal to be assessed

CATCHWORDS:

CORPORATIONS – WINDING-UP – CONDUCT AND INCIDENTS OF WINDING UP – EFFECT OF WINDING UP ON OTHER TRANSACTIONS – PROTECTED TRANSACTIONS – NO REASON TO SUSPECT INABILITY TO PAY DEBTS – where respondent had funds invested with Arafura – where respondent's solicitors issued a statutory demand for the amount said to be owing – where respondent entered deed of release with Arafura for an amount less than the full amount owing – where appellants sought a declaration that the payment was voidable as an insolvent transaction under the Corporations Act 2001 (Cth) – where the respondent raised a defence under s 588FG(2) claiming that they did not suspect and that a reasonable person would not have suspected that Arafura was insolvent at the time of the payment – whether the respondent had discharged the onus with respect to establishing the relevant defence

Corporations Act 2001 (Cth), s 459E, s 459F, s 459G, s 459Q, s 588FA, s 588FC, s 588FE, s 588FF, s 588FG

D'Aloia (as liquidator of Damark RV Investments Pty Ltd (in liq)) and Another v Federal Commissioner of Taxation (2003) 203 ALR 609, applied
Queensland Bacon Pty Ltd v Rees (1966) 115 CLR 266, applied
Sims v Celcast Pty Ltd (1998) 71 SASR 142, applied

COUNSEL:

I R Perkins for the appellant
F G D Forde for the respondent

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.

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Details

Case: [2007] QCA 218
Decision Date: 13 July 2007

CaseChat Overview and Summary

The appellants, Muller, were directors of Arafura, which was in liquidation, and sought to recover a payment made to the respondent, Academic Systems Pty Ltd, claiming that it was an insolvent transaction under the Corporations Act 2001 (Cth). The respondent argued that they had no reason to suspect that Arafura was unable to pay its debts and that a reasonable person would not have suspected insolvency. The matter was before the court on an appeal from the District Court of Queensland.

The primary legal issue was whether the respondent had discharged the onus of establishing that they did not suspect, and that a reasonable person would not have suspected, that Arafura was insolvent when the payment was made. The court had to determine if the respondent's defence under s 588FG(2) was valid. The court considered the evidence provided by the respondent and whether it was sufficient to discharge the onus of proof.

The court found that the respondent had failed to discharge the onus of proof. It held that the respondent's conduct and knowledge were such that a reasonable person would have suspected that Arafura was insolvent at the time of the payment. The court found that the respondent's defence under s 588FG(2) was not established. The appeal was allowed, and the judgment of the District Court was set aside. The court declared that the payment was an insolvent transaction, an unfair preference, and voidable. The respondent was ordered to pay the appellants the sum of $83,000, interest, and costs.

In summary, the court found that the respondent did not successfully establish the defence under s 588FG(2) of the Corporations Act 2001 (Cth) and set aside the judgment of the District Court. The court declared the payment to be an insolvent transaction, an unfair preference, and voidable, and ordered the respondent to repay the amount with interest and costs.

Orders

Orders of the court

1. Allow the appeal and set aside the judgment of the District Court

2. Declare that a payment of $83,000 to the respondent on or about 29 August 2005 is an insolvent transaction within the meaning of s 588FC Corporations Act 2001 (Cth)

3. Declare that the payment of $83,000 is an unfair preference pursuant to s 588FA of the Act

4. Declare that the payment of $83,000 is voidable pursuant to s 588FE of the Act

5. The respondent pay to the appellant the sum of $83,000 pursuant to s 588FF of the Act

6. The respondent pay interest on the sum of $83,000 pursuant to s 47 Supreme Court Act 1995 (Qld) from the commencement of the winding up until the date of this judgment

7. The respondent pay the appellant's costs of and incidental to the proceedings in the District Court and of this appeal to be assessed

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:	Muller & McIntosh (as joint and several liquidators of Arafura Equities P/L (in liq)) v Academic Systems P/L [2007] QCA 218
PARTIES:	GINETTE MULLER and LACHLAN MCINTOSH as joint and several liquidators of ARAFURA EQUITIES PTY LTD (in liquidation) ACN 083 542 929 (applicant/appellant) v ACADEMIC SYSTEMS PTY LTD ACN 060 989 442 (respondent)
FILE NO/S:	Appeal No 3994 of 2007 DC No 2666 of 2006
DIVISION:	Court of Appeal
PROCEEDING:	General Civil Appeal
ORIGINATING COURT:	District Court at Brisbane
DELIVERED ON:	13 July 2007
DELIVERED AT:	Brisbane
HEARING DATE:	13 June 2007
JUDGES:	Williams JA, White and Atkinson JJ Separate reasons for judgment of each member of the Court, each concurring as to the orders made
ORDER:	1. Allow the appeal and set aside the judgment of the District Court 2. Declare that a payment of $83,000 to the respondent on or about 29 August 2005 is an insolvent transaction within the meaning of s 588FC Corporations Act 2001 (Cth) 3. Declare that the payment of $83,000 is an unfair preference pursuant to s 588FA of the Act 4. Declare that the payment of $83,000 is voidable pursuant to s 588FE of the Act 5. The respondent pay to the appellant the sum of $83,000 pursuant to s 588FF of the Act 6. The respondent pay interest on the sum of $83,000 pursuant to s 47 Supreme Court Act 1995 (Qld) from the commencement of the winding up until the date of this judgment 7. The respondent pay the appellant's costs of and incidental to the proceedings in the District Court and of this appeal to be assessed
CATCHWORDS:	CORPORATIONS – WINDING-UP – CONDUCT AND INCIDENTS OF WINDING UP – EFFECT OF WINDING UP ON OTHER TRANSACTIONS – PROTECTED TRANSACTIONS – NO REASON TO SUSPECT INABILITY TO PAY DEBTS – where respondent had funds invested with Arafura – where respondent's solicitors issued a statutory demand for the amount said to be owing – where respondent entered deed of release with Arafura for an amount less than the full amount owing – where appellants sought a declaration that the payment was voidable as an insolvent transaction under the Corporations Act 2001 (Cth) – where the respondent raised a defence under s 588FG(2) claiming that they did not suspect and that a reasonable person would not have suspected that Arafura was insolvent at the time of the payment – whether the respondent had discharged the onus with respect to establishing the relevant defence Corporations Act 2001 (Cth), s 459E, s 459F, s 459G, s 459Q, s 588FA, s 588FC, s 588FE, s 588FF, s 588FG D'Aloia (as liquidator of Damark RV Investments Pty Ltd (in liq)) and Another v Federal Commissioner of Taxation (2003) 203 ALR 609, applied Queensland Bacon Pty Ltd v Rees (1966) 115 CLR 266, applied Sims v Celcast Pty Ltd (1998) 71 SASR 142, applied
COUNSEL:	I R Perkins for the appellant F G D Forde for the respondent