Sims v ABC Tissue Products Pty Ltd

Sims, as liquidator of a company in liquidation, initiated proceedings against ABC Tissue Products Pty Ltd, seeking to recover payments made by the company to ABC as an unfair preference under section 588FF(1) of the Corporations Act 2011. ABC raised a defence under section 588FG(2) of the Act, arguing that it did not suspect the company to be insolvent at the time of the payment and that there was no intention to prefer it over other creditors. The key issue for the court was whether ABC had met the requirements of the statutory defence, specifically whether it could demonstrate that it did not suspect the company to be insolvent and had no intention to prefer it over other creditors.

The court examined whether ABC had discharged the onus of proving its defence under section 588FG(2). The court noted that ABC failed to call individuals who held opinions relevant to whether ABC suspected the company to be insolvent. The court found that ABC's failure to call these individuals was not adequately explained. The court concluded that without these witnesses, ABC could not prove that it did not suspect the company to be insolvent. Consequently, the court held that ABC had not met the requirements of the statutory defence. The liquidator was therefore entitled to recover the unfair preference payment made to ABC.

The court ordered ABC to repay the unfair preference payment to the liquidator, along with interest. The court also awarded costs to the liquidator. This decision reinforces the importance of providing evidence to support a statutory defence in insolvency proceedings, particularly when it comes to proving that a creditor did not suspect insolvency.