Re Evolvebuilt Pty Ltd

In this case, the liquidators of Evolvebuilt Pty Ltd sought a declaration that certain payments made by a third party to a creditor of the company were invalid preferences under section 588FA of the Corporations Act 2001 (Cth). The liquidators argued that the payments were made by the third party on behalf of the company and were therefore considered payments by the company itself. The third party, however, claimed that they had reasonable grounds to suspect that the company was insolvent, which entitled them to make the payments without them being considered preferences.

The central issue before the court was whether the payments made by the third party to the creditor constituted payments made by the company, and if so, whether the third party had a valid defence based on reasonable grounds to suspect insolvency. The court had to determine the legal principles governing when a payment by a third party could be considered a payment by the company and the defences available to the third party. Additionally, the court had to distinguish between a temporary cash flow problem and actual insolvency.

The court found that the payments made by the third party were indeed payments made by the company, as the third party had effectively acted as the company's agent in making the payments. However, the court also noted that the third party had a valid defence based on reasonable grounds to suspect insolvency. The third party had acted reasonably in suspecting insolvency and making the payments to the creditor, as the evidence showed that the company was experiencing severe financial difficulties and was unlikely to continue trading. The court held that the third party's actions were not unreasonable, and therefore the payments were not invalid preferences.

The court ordered that the liquidators' claim for invalid preferences be dismissed, as the third party had a valid defence based on reasonable grounds to suspect insolvency. The liquidators were not entitled to recover the payments made by the third party to the creditor.