Walsh as Liquidator of Thompson Land Limited (in Liquidation) v Salzer Constructions Pty Ltd M4/2001

The case of *Walsh as Liquidator of Thompson Land Limited (in Liquidation) v Salzer Constructions Pty Ltd* concerned an appeal to the High Court of Australia from a decision of the Supreme Court of Victoria. The liquidator of Thompson Land Limited (in Liquidation) sought to recover moneys paid by Thompson Land to Salzer Constructions Pty Ltd, alleging that these payments constituted voidable transactions under section 588FA of the Corporations Act 1989 (Cth) (now Corporations Act 2001 (Cth)). The primary dispute revolved around whether the payments were made in the ordinary course of business.

The High Court was required to determine whether the payments made by Thompson Land to Salzer Constructions were properly characterised as being made in the ordinary course of business, thereby preventing them from being voidable as unfair preferences. This involved an examination of the nature of the transactions and the relationship between the parties at the time the payments were made.

In their joint judgment, McHugh and Gummow JJ held that the payments were not made in the ordinary course of business. Their Honours applied the principles established in *Official Trustee in Bankruptcy v Schultz* and *Official Trustee in Bankruptcy v L G & M Australia Pty Ltd*, which require an objective assessment of whether the transaction was one which would be expected to be found in the dealings between ordinary parties engaged in similar businesses. The court considered the context of the payments, including the financial position of Thompson Land and the nature of the ongoing contractual relationship, to conclude that the payments were not of a kind that would ordinarily be made.

The appeal was allowed, and the orders of the Supreme Court of Victoria were set aside.