Re Rodney Steventon; Ex Parte David Ernest Willis Blackwell and John Maait

In the Federal Court of Australia, David Ernest Willis Blackwell, acting as the trustee of the bankrupt estate of Rodney Steventon, applied for a declaration that a payment of $75,000 made by Steventon to John Maait on or about 17 March 1989 was void under section 122 of the Bankruptcy Act 1966. The application also sought an order for Maait to repay the amount to the trustee. Steventon had been declared bankrupt on 19 June 1990, with the act of bankruptcy being his failure to comply with a bankruptcy notice issued by Walter Dowling. The payment in question was made from the proceeds of the sale of a property at Burwood, which Steventon and his brother inherited from their late mother. The primary issue before the court was whether the payment to Maait constituted a voidable preference under section 122 of the Bankruptcy Act, and if so, whether it was protected by subsection 2(a) which exempts transactions in the ordinary course of business.

The court found that Steventon was insolvent at the time of the payment and that the transaction gave Maait a preference over other creditors. The key legal question then became whether the payment was made in the ordinary course of business, as required by subsection 2(a) of the Act. The court rejected Maait's argument that his customary business practices included making loans and receiving payments during bankruptcy proceedings, ruling that the nature of the transaction itself had to be considered. The court held that a payment made while a bankruptcy petition was pending and as part of an agreement to dismiss the petition could not be considered an ordinary course of business transaction. Consequently, the payment did not meet the criteria for exemption under subsection 2(a).

The court concluded that the trustee's application should succeed, and ordered Maait to repay the $75,000 to the trustee. The court also awarded costs of the application to the trustee.