Shirlaw and ANOR. v Associated Alloys Pty Limited

The appeal and cross-appeal concerned a liquidator's claim against Associated Alloys Pty Limited (the respondent) for the recovery of alleged preferential payments made by a company in liquidation, Shirlaw and Another (the appellants). The liquidator sought to set aside certain payments made by the company to Associated Alloys Pty Limited on the grounds that they constituted unfair preferences under the Corporations Act 2001 (Cth).

The primary legal issues before the court were whether the payments made by the company to Associated Alloys Pty Limited were made in the ordinary course of business and whether Associated Alloys Pty Limited had acted in good faith, without notice of the company's insolvency, when receiving those payments. The court was required to consider the onus of proof in relation to these defences.

The court applied the principles established in insolvency law regarding unfair preferences. It considered the nature of the dealings between the parties and the circumstances surrounding the payments. The court found that the payments were not made in the ordinary course of business, and that Associated Alloys Pty Limited had not discharged the onus of proving it acted in good faith and without notice of the company's insolvency.

Consequently, the appeal was dismissed, and the cross-appeal was also dismissed.