Tolcher v National Australia Bank Ltd

Tolcher brought proceedings against National Australia Bank Limited, seeking to challenge a series of transactions and the interpretation of certain sections of the Corporations Act 2001 (Cth). The dispute centred around whether money recovered by a liquidator under sections 588FA and 588M for unfair preferences and insolvent trading could be considered property of the company subject to a floating charge. The matter was heard in the Federal Court of Australia.

The court was tasked with interpreting sections 588FA, 588M, and the newly introduced 588FF(1)(a) of the Corporations Act, and determining whether these provisions altered the pre-existing legal framework. Specifically, the court had to decide if the funds recovered through the exercise of a liquidator's statutory recovery rights were ever property of the company subject to a floating charge. The decision in Jonsson, Milner and Riaps Pty Ltd (in liq) v Tim Ferrier Pty Ltd was contrasted with SJP Formwork (Aust) Pty Ltd (in liq) v Deputy Commissioner of Taxation, to ascertain the correct interpretation of the statutory provisions in question.

The court held that the introduction of s.588FF(1)(a) did not alter the pre-existing law. It followed the decision in SJP Formwork, rejecting the interpretation in Jonsson, Milner and Riaps. Therefore, funds recovered by a liquidator under s.588FA and s.588M could never be considered property of the company subject to a floating charge. This decision provided clarity on the priority of claims and the nature of funds recovered under the Corporations Act.

The final orders of the court were that the new section 588FF(1)(a) did not change the existing law, and any money recovered by a liquidator under sections 588FA and 588M remained outside the scope of property subject to a floating charge.