Resilient Investment Group Pty Ltd v Barnet and Hodgkinson as liquidators of Spitfire Corporation Limited (in liq)

The appeal concerned a dispute between Resilient Investment Group Pty Ltd and the liquidators of Spitfire Corporation Limited (in liq), Barnet and Hodgkinson. The primary issue revolved around the liquidators' claim for recovery of moneys paid by Spitfire to Resilient, which the liquidators alleged constituted unfair preferences under section 588FA of the Corporations Act 2001 (Cth). The case was heard in the Court of Appeal of New South Wales.

The central legal questions before the Court of Appeal were whether the payments made by Spitfire to Resilient were unfair preferences, and if so, whether Resilient had a defence under section 588FG of the Corporations Act. Specifically, the court had to determine if Spitfire was insolvent at the time of the payments, if the payments were made within the relevant time periods, and if Resilient received more than it would have if Spitfire had been wound up at the time of the payments. The court also considered whether Resilient had acted in good faith and given valuable consideration in return for the payments, and whether it would be inequitable to require repayment.

The Court of Appeal found that the primary judge had erred in their assessment of Spitfire's insolvency at the time of the payments. The court applied the principles of insolvency as defined in the Corporations Act, considering both the cash-flow test and the balance-sheet test. It was held that the liquidators had not discharged their onus of proving insolvency on the balance-sheet test, and that the evidence did not conclusively establish insolvency on the cash-flow test. Consequently, the payments could not be characterised as unfair preferences. The court also considered the defence under section 588FG, noting that even if the payments were preferences, Resilient had provided valuable consideration and acted in good faith, making it inequitable to order repayment.

The appeal was allowed, and the orders of the primary judge were set aside. The liquidators' claim for recovery of the moneys paid by Spitfire to Resilient was dismissed.