Shaw v KPR Recruitment Australia Pty Ltd - [2017] NSWSC 539

Supreme Court

New South Wales

Medium Neutral Citation: Shaw (as liquidator of ACN 166 338 138 Pty Ltd (in liq) (formerly Structural Projects Pty Ltd) v KPR Recruitment Australia Pty Ltd [2017] NSWSC 539
Hearing dates: 24 April 2017
Decision date: 05 May 2017
Before: Gleeson JA
Decision:
(1)   Grant liberty to the plaintiff to apply within 14 days of these reasons for leave to re-open the plaintiff’s case to adduce further evidence on the issue of insolvency.
(2)   Direct that notice of any application to re-open the plaintiff’s case be served on the defendant.
(3)   Note that if the plaintiff does not exercise the liberty to apply within the time stated in order 1, the Court will make an order that the plaintiff’s interlocutory process filed 20 March 2017 be dismissed with no order as to costs.

Catchwords: CORPORATIONS – external administration – application to recover monies paid to creditor pursuant to a purported voidable transaction within the meaning of Corporations Act, s 588FE – whether payment to creditor voidable as unfair preference and insolvent transaction within meaning of Corporations Act, ss 588FA and 588FC – where presumption of insolvency under s 588E(4) on basis that company failed to keep adequate books and records not available because liquidator’s claim not against a related entity of the company – whether plaintiff established on balance of probabilities that transaction was made at a time when the company was insolvent.
Legislation Cited: Bankruptcy Act 1966 (Cth), s 122
Corporations Act 2001 (Cth), ss 9, 95A, 286(1), 459A, 513A, 588E(4), 588E(7), 588FA, 588FC, 588FE, 588FF; Div 1A, Pt 5.6
Cases Cited: ASIC v Plymin and Ors (2003) 46 ACSR 126; [2003] VSC 123
Lewis v Doran [2004] NSWSC 608; (2004) 50 ACSR 175
Lewis (as liq of Doran Constructions Pty Ltd (in Liq)) v Doran and Others (2005) 219 ALR 555; [2005] NSWCA 243
M & R Jones Shopfitting Co Pty Ltd v National Bank of Australasia Ltd (1983) 68 FLR 282; (1983) 7 ACLR 445
Pegulan Floor Covering Pty Ltd V Carter (1997) 24 ACSR 651
Quick v Stoland Pty Ltd (1998) 157 ALR 615; 29 ACSR 130
Re Ashington Bayswater Pty Ltd [2013] NSWSC 1008
Re Emanuel (No 14) Pty Ltd (in liq) (1997) 24 ACSR 292; [1997] FCA 667
Re Structural Projects Pty Ltd [2015] NSWSC 1859
Sheahan v Carrier Air Conditioning Pty Ltd and Campbell (1997) 189 CLR 407; [1997] HCA 37
Southern Cross Interiors Pty Ltd (in liq) v Deputy Commissioner of Taxation (2001) 53 NSWLR 213; [2001] NSWSC 621
Sutherland & Another (as joint liquidators of Australian Coal Technology) v Hanson Construction Materials Pty Ltd and Others (2009) 254 ALR 650; [2009] NSWSC 322
Walsh as liquidator of Thompson Land Ltd (receiver and manager appointed) v Terranova (1994) 14 ACSR 432
Welcome Homes Real Estate Pty Limited v Ziade Investments Pty Limited [2007] NSWCA 167
Texts Cited: McPherson’s Law of Company Liquidation (5th ed 2006, Thomson Lawbook Co)
Category: Principal…

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: [2017] NSWSC 539
Decision Date: 05 May 2017

CaseChat Overview and Summary

The case of Shaw v KPR Recruitment Australia Pty Ltd involved a claim by the liquidator of a company seeking to recover monies paid to a creditor under circumstances that may have constituted an unfair preference or insolvent transaction. The proceedings took place in the Federal Court of Australia, with the Court tasked to determine the validity of the liquidator's claim under the Corporations Act 2001 (Cth). The dispute centred on whether the payment to the creditor was voidable as an unfair preference and an insolvent transaction, pursuant to sections 588FA and 588FC of the Act, respectively.

The key legal issues before the Court were whether the presumption of insolvency under section 588E(4) of the Act applied, and if the plaintiff had established on the balance of probabilities that the company was insolvent at the time of the transaction. The Court considered the application of the statutory presumption of insolvency in light of the liquidator's failure to provide evidence of the company's financial status. A significant aspect of the case was the applicability of section 588E(4) of the Act, which presumes insolvency if the company has failed to keep adequate books and records, and whether this presumption could be invoked in the context of the liquidator’s claim against a non-related entity of the company.

The Court determined that the presumption of insolvency did not apply in this instance, as the claim was not against a related entity of the company. The Court then examined the liquidator’s evidence to establish whether the company was insolvent at the time of the payment to the creditor. The Court held that the liquidator had not successfully demonstrated, on the balance of probabilities, that the company was insolvent at the relevant time. Consequently, the Court dismissed the liquidator's claim to recover the payment made to the creditor.

Orders