Walsh v Salzer Constructions Pty Ltd

In the case of Walsh v Salzer Constructions Pty Ltd, the dispute involved the liquidator of a company seeking to recover payments made to a builder under a contract for the construction of a property. The liquidator claimed that the payments, which were made as progress claims, constituted unfair preferences under the Corporations Act and should be void as against the liquidator. The matter was heard in the Supreme Court of Victoria.

The primary legal issue before the court was whether the payments made to the builder as progress claims constituted an unfair preference under the Corporations Act. Specifically, the court had to determine whether these payments were void as against the liquidator as "settlements of property" within the meaning of the Bankruptcy Act. The court also had to consider the distinction between "running account" payments and "ear-marked payments" in the context of the progress claims.

The court found that the progress payments were not void as against the liquidator. The reasoning was based on the concept that the payments were not "ear-marked" but rather part of an ongoing construction project. The payments were considered as part of a running account rather than specific settlements of property. The court held that the payments did not constitute unfair preferences because they were not preferential transfers within the meaning of the Corporations Act. The liquidator's claim was dismissed.

The final orders of the court were that the liquidator's claim for the recovery of the progress payments was dismissed, and the payments made to the builder were not recoverable as unfair preferences. The court's decision clarified the distinction between running account payments and earmarked payments in the context of construction contracts and insolvency law.