Roberts v Investwell Pty Ltd (in liq)

In *Roberts v Investwell Pty Ltd (in liq)*, the Court of Appeal of New South Wales considered an appeal concerning payments made by Investwell Pty Ltd (in liq) to its director, Mr Roberts, at a time when the company was insolvent. The liquidator sought to recover these payments as unfair preferences under sections 588FA, 588FC, and 588FF of the *Corporations Act 2001* (Cth). The central dispute revolved around whether the payments were made in respect of a secured debt, and the effect of an agreement to grant the director security over the company's assets, specifically whether this created an equitable charge.

The legal issues before the Court were whether the payments made to Mr Roberts constituted an unfair preference, and if so, whether the company received "fair value" in return. This required the Court to determine whether Mr Roberts held a secured debt at the time of the payments, and if the agreement to grant security was effective in creating a charge over the company's assets, thereby potentially negating the claim for unfair preference. The interpretation of the term "charge" within the context of the *Corporations Act 2001* was also a key consideration.

The Court reasoned that the agreement to grant security, while not a formal registered charge, was sufficient to create an equitable charge over the company's assets. This equitable charge meant that Mr Roberts was a secured creditor in respect of the debt owed to him. Consequently, the payments made to him were in satisfaction of a secured debt, and therefore, the company did not receive less than it would have if the company had been wound up and the debt was paid out of the proceeds of enforcing the security. Accordingly, the payments did not fall within the definition of an unfair preference under the Act.

The appeal was dismissed with costs.