WA School Bus Services Pty Ltd (in liq) v Clover

[2012] WASC 381

WA SCHOOL BUS SERVICES PTY LTD (in liq) -v- CLOVER [2012] WASC 381

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2012] WASC 381
Case No:	COR:111/2012	Heard:	9 OCTOBER 2012
Coram:	MASTER SANDERSON	Delivered:	11/10/12
No of pages:	6	Judgment Part:	1 of 1
Result:	Order made for payment by the defendant to plaintiff
Category:	B
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Parties:	WA SCHOOL BUS SERVICES PTY LTD (in liq) AMANDA KAREN CLOVER
Catchwords:	Corporations law Recovery of payment as uncommercial transaction Turns on own facts
Legislation:	Nil
Case References:	Nil

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA CITATION : WA SCHOOL BUS SERVICES PTY LTD (in liq) -v- CLOVER [2012] WASC 381 CORAM : MASTER SANDERSON HEARD : 9 OCTOBER 2012 DELIVERED : 11 OCTOBER 2012 FILE NO/S : COR 111 of 2012 BETWEEN : WA SCHOOL BUS SERVICES PTY LTD (in liq)

Plaintiff

AND

AMANDA KAREN CLOVER
Defendant

Catchwords:

Corporations law - Recovery of payment as uncommercial transaction - Turns on own facts

Legislation:

Nil

Result:

Order made for payment by the defendant to plaintiff

(Page 2)

Category: B

Representation:

Counsel:

Plaintiff : Mr H J Paiker
Defendant : In person

Solicitors:

Plaintiff : Paiker & Overmeire Solicitors
Defendant : In person

Case(s) referred to in judgment(s):

Nil

(Page 3)

1 MASTER SANDERSON: This is the plaintiff's application to set aside an uncommercial transaction. The application is brought by the liquidator of the plaintiff. It was opposed by the defendant. After hearing argument I indicated I would make orders in terms of the originating process. I said I would publish reasons for my decision. These are those reasons.

2 On 21 March 2011 liquidators were appointed to WA School Bus Services Pty Ltd. At the time liquidators were appointed Mr Jonathon Clover was a director of the company. At all material times the defendant was the wife of Mr Clover.

3 One of the liquidators appointed to the company was Mr David Hurt. Mr Hurt has sworn an affidavit in support of the application. Mr Hurt says an examination of the affairs of the company revealed on 3 August 2009 the defendant became the registered proprietor of property situated at 2440 Richardson Road, Parkerville. The company provided vendor finance to the defendant to enable the defendant to complete the purchase of the property. The amount of finance provided was $43,559.19. Mr Hurt says he wrote to the defendant on a number of occasions demanding repayment of that amount. The money has not been repaid.

4 In opposition to the application the defendant relied on her affidavit affirmed 2 October 2012. It is not entirely clear what argument is being put by the defendant. It would seem what she is saying is she has made payments to or on behalf of the company which effectively amount to a repayment of the loan. That is the most beneficial interpretation of what has been put by the defendant and for the purposes of this application I am prepared to accept that as the position.

5 Section 588FDA of the Corporations Act 2001 (Cth) is in the following terms:

Unreasonable director-related transactions

(1) A transaction of a company is an unreasonable director-related transaction of the company if, and only if:


(a) the transaction is:

(i) a payment made by the company; or

(ii) a conveyance, transfer or other disposition by the company of property of the company; or

(iii) the issue of securities by the company; or

(Page 4)

(iv) the incurring by the company of an obligation to make such a payment, disposition or issue; and

(b) the payment, disposition or issue is, or is to be, made to:

(i) a director of the company; or

(ii) a close associate of a director of the company; or

(iii) a person on behalf of, or for the benefit of, a person mentioned in subparagraph (i) or (ii); and


(c) it may be expected that a reasonable person in the company's circumstances would not have entered into the transaction, having regard to:

(i) the benefits (if any) to the company of entering into the transaction; and

(ii) the detriment to the company of entering into the transaction; and

(iii) the respective benefits to other parties to the transaction of entering into it; and

(iv) any other relevant matter.


The obligation referred to in subparagraph (a)(iv) may be a contingent obligation.

Note: Subparagraph (a)(iv)--This would include, for example, granting options over shares in the company.

(2) To avoid doubt, if:

(a) the transaction is a payment, disposition or issue; and

(b) the transaction is entered into for the purpose of meeting an obligation the company has incurred;

the test in paragraph (1)(c) applies to the transaction taking into account the circumstances as they exist at the time when the transaction is entered into (rather than as they existed at the time when the obligation was incurred).


(3) A transaction may be an unreasonable director-related transaction because of subsection (1):

(a) whether or not a creditor of the company is a party to the transaction; and

(Page 5)

(b) even if the transaction is given effect to, or is required to be given effect to, because of an order of an Australian court or a direction by an agency.

6 In this case there is no doubt the transaction was a payment made by the company. So the provision of s 588FDA(1)(a)(i) are satisfied.

7 Under s 9 of the Corporations Act a 'close associate' of a director means 'a relative of the director'. The same section defines 'relative' to mean 'the spouse, parent or remoter lineal ancestor, child or remoter issue, or brother or sister of the person'. So the defendant as the spouse of a director of the company falls within s 588FDA(1)(b)(ii).

8 In this case there is nothing to suggest it was reasonable for the company to enter into the transaction. There has been no evidence put forward as to how the company benefited from the transaction. So the requirements of s 588FDA(1)(c)(i) are satisfied.

9 The plaintiff also relied on s 588FB. That section is in the following terms:

Uncommercial transactions

(1) A transaction of a company is an uncommercial transaction of the company if, and only if, it may be expected that a reasonable person in the company's circumstances would not have entered into the transaction, having regard to:


(a) the benefits (if any) to the company of entering into the transaction; and

(b) the detriment to the company of entering into the transaction; and

(c) the respective benefits to other parties to the transaction of entering into it; and

(d) any other relevant matter.


(2) A transaction may be an uncommercial transaction of a company because of subsection (1):

(a) whether or not a creditor of the company is a party to the transaction; and

(b) even if the transaction is given effect to, or is required to be given effect to, because of an order of an Australian court or a direction by an agency.

(Page 6)

10 There is nothing in the evidence to suggest that a reasonable person in the company's circumstances would have entered into the transaction having regard to the benefits to the company of entering into the transaction. Nothing in the affidavit material relied on by the defendant could lead to a different conclusion.

11 Even accepting the plaintiff has made certain payments on the company's behalf this would do no more than permit her to be an unsecured creditor. There is nothing in the evidence to suggest she has actually repaid all or part of the funds advanced to her. In the absence of such evidence there is no basis upon which the plaintiff's claim could be resisted.

12 For these reasons I will make an order in terms of pars 1 - 3 of the plaintiff's originating process. Paragraph 3 will be amended to include an order for reserved costs.