Wiley v The Commonwealth of Australia
[1995] FCA 782
•29 SEPTEMBER 1995
IN THE FEDERAL COURT OF AUSTRALIA)
)
NEW SOUTH WALES DISTRICT REGISTRY) No. G3331 of 1994
)
GENERAL DIVISION )
BETWEEN: HUGH JENNER WILEY as liquidator of UNITED TELECASTERS SYDNEY LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION)
Applicant
AND: THE COMMONWEALTH OF AUSTRALIA
Respondent
JUDGE MAKING ORDER: LOCKHART J.
WHERE ORDER MADE: SYDNEY
DATE ORDER MADE: 29 SEPTEMBER 1995
MINUTE OF ORDER
THE COURT ORDERS THAT:
1. The question ordered to be decided separately from any other question in the proceeding, namely, whether the property disposed of by means of the following payments was property of United Telecasters Sydney Limited (Receivers and Managers Appointed) (In Liquidation), within the meaning of s. 468(1) of the Corporations Law, be answered as follows:
The following payments made by the receivers and managers of United Telecasters Sydney Limited (Receivers and Managers Appointed) (In Liquidation) (UTS) to the Commonwealth of Australia did not constitute dispositions of property of UTS within the meaning of s. 468(1) of the Corporations Law.
- 2 -
DATE PAID AMOUNT
13 June 1991 $ 2,000,000.00
26 June 1991 $ 1,000,000.00
25 July 1991 $ 1,000,000.00
28 August 1991 $ 1,000,000.00
27 September 1991 $ 1,000,000.00
15 October 1991 $18,332,317.77
$24,332,317.77
2. The applicant pay the respondent's costs of the hearing of the separate question.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
CATCHWORDS
CORPORATIONS - Winding up - receivership - powers of receivers and managers: s. 468 Corporations Law - "disposition of property of the company" - interpretation - whether payments by receivers after commencement of winding up are "dispositions of property of the company" - rights and powers of liquidators.
Corporations Law: s. 468.
Television Licence Fees Act 1964 (Cth)
HUGH JENNER WILEY as liquidator of UNITED TELECASTERS SYDNEY LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) v THE COMMONWEALTH OF AUSTRALIA
G 3331 of 1994
LOCKHART J.
SYDNEY
29 SEPTEMBER 1995
IN THE FEDERAL COURT OF AUSTRALIA)
)
NEW SOUTH WALES DISTRICT REGISTRY) No. G3331 of 1994
)
GENERAL DIVISION )
BETWEEN: HUGH JENNER WILEY as liquidator of UNITED TELECASTERS SYDNEY LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION)
Applicant
AND: THE COMMONWEALTH OF AUSTRALIA
Respondent
29 September 1995
REASONS FOR JUDGMENT
LOCKHART J.
Hugh Jenner Wiley, the liquidator of United Telecasters Sydney Limited (Receivers and Managers Appointed) (In Liquidation) (UTS), sues the Commonwealth of Australia to recover payments totalling $24,332,317.77, as dispositions of property of UTS made after the commencement of the winding up of UTS and therefore void under s. 468(1) of the Corporations Law. UTS was wound up by order of the Supreme Court of New South Wales on 13 May 1991 and Mr Wiley was appointed its liquidator.
The evidence in the case is rather sparse, but the primary facts are agreed between the parties.
On 23 January 1990 UTS executed a deed of charge as mortgagor in favour of Westpac Banking Corporation (Westpac), as agent for three banks, described in the deed as the "participants", namely, Citibank Limited, Commonwealth Bank of Australia and Westpac. This deed of charge related to the property of UTS in New South Wales.
Also on 23 January 1990, another deed of charge was executed by UTS in favour of Westpac relating to property outside New South Wales. Again Westpac is described in the deed of charge as agent for the "participants", being the same three banks mentioned earlier.
The terms of the two deeds of charge are substantially the same. For convenience I shall refer to the provisions of the first-mentioned charge, as it sufficiently describes the second for relevant purposes.
UTS charged to Westpac all its right, title and interest in, to, under or derived from the undertaking and all the assets of UTS, both present and future, and whether real or personal property. The charge is expressed to be a first charge and to be a fixed charge as to certain real and leasehold property and marketable securities, book debts and certain other specified assets. The charge is expressed to be a floating charge as to all other assets. Provision is made by clause 3.4 for the crystallization of the floating charge, the terms of which I need not recite as it is agreed between the parties that the charge, in so far as it was a floating charge, crystallized not later than the date of the appointment of the receivers and managers (the receivers), to the property of UTS by Westpac on 14 September 1990.
The powers of the receivers are set out in clause 7 of the deed and they are powers in the usual terms one finds in deeds of this kind. Also, the receivers are said by the deed to be the agent of UTS, which alone shall be responsible for their acts and defaults (clause 7.2).
UTS held television licences pursuant to the provisions of the Television Licence Fees Act 1964 (Cth) (the 1964 Act). On 3 September 1990 the Australian Broadcasting Tribunal (the Tribunal) requested UTS to lodge returns and make arrangements for payment of licensing fees from UTS and related companies.
On 14 September 1990, Westpac, as agent for the banks previously mentioned, appointed the receivers of UTS. Between 11 December 1990 and 17 June 1991 the receivers commenced negotiations with the Department of Transport and Communications concerning payment by instalments of television licence fees due by UTS and certain other companies with which it was connected.
On 21 March 1991 a creditor of UTS, New South Wales Rugby League Limited, filed a summons in the Supreme Court of New South Wales for an order that UTS be wound up. As mentioned earlier, the winding up order was made on 13 May 1991.
On 17 June 1991 an arrangement was made between the receivers and the Department of Transport and Communications approving payment by instalments of moneys payable to the Commonwealth in respect of the licence fees. Thereafter instalments were paid by the receivers to the Commonwealth, commencing with a payment of $2,000,000 on 13 June 1991 and concluding with a payment of $18,332,317.77 on 15 October 1991. It is not clear whether the cheques were paid to the Tribunal as agent for the Commonwealth or to the Commonwealth itself. The agreed bundle of documents which constitutes the evidence in the case leaves this question uncertain, but it is agreed that nothing turns on it. The better view is that the payments were made to the Commonwealth. The following is a schedule of the payments.
DATE PAID AMOUNT
13 June 1991 $ 2,000,000.00
26 June 1991 $ 1,000,000.00
25 July 1991 $ 1,000,000.00
28 August 1991 $ 1,000,000.00
27 September 1991 $ 1,000,000.00
15 October 1991 $18,332,317.77
$24,332,317.77
The large payment of $18,332,317.77 on 15 October 1991 was made in full settlement of the licence fees and penalties then outstanding, apparently because of a pending arrangement to dispose of either the shares or the assets, as the case may be, of UTS to a third party.
The six payments totalling $24,332,317.77 were made by the receivers of UTS after their appointment as receivers and after UTS was wound up and the liquidator appointed. Each of the payments was made during the currency of the receivership and the liquidation, and represented instalments of television licence fees payable by UTS in respect of its gross earnings for the period ended 30 June 1990. The fee relating to that period was not payable until the notice of assessment was issued in January 1991, after the appointment of the receivers. Licence fees fell due under the 1964 Act (in the form which it then took), on each anniversary of the date of commencement of the licence that occurred during the period of the licence, or during the period of 20 months immediately following the end of the period of the licence (s. 6(2)). The 1964 Act has been relevantly amended from time to time. Since 31 December 1992 (the date of commencement of the Television Licence Fees (Amendment) Act 1991 (Act No 185 of 1991)), licence fees have fallen due on each 31 December for the period of one year ending on the 30 June last preceding the 31 December. The relevant time with which this case is concerned preceded 31 December 1992.
Each of the payments with which this case is concerned was made after the commencement of the winding up of UTS and from funds generated from the carrying on by the receivers of its business in accordance with the terms of the charges.
Orders were made by another judge of the Court on 9 September 1994, pursuant to O29 r2, that the following question be decided separately from and before any other question in the proceeding, namely:
"Whether the property disposed of by means of the payments described in the defence and cross claim herein [that is the payments mentioned above], was property of UTS within the meaning of s. 468(1) of the Corporations Law".
That is the question which is before the Court for determination.
My recitation of the relevant facts is brief and I am in some doubt as to the completeness of them; but in the interests of raising the point of law for determination by the Court the parties agreed on the appropriate documents to be treated as evidence. Hence the facts that emerge from them are rather sketchy but nothing appears to turn on this and no party suggested that it did.
Section 468(1) of the Corporations Law provides, so far as presently relevant, as follows:
"468(1) Any disposition of property of the company ... made after the commencement of the winding up by the Court is, unless the Court otherwise orders, void."
The expression "disposition of property of the company" is not defined by the Corporations Law. The only relevant definition is that of "property" which is defined by the interpretation provision (s. 9) in these terms:
" 'property' means any legal or equitable estate or interest (whether present or future and whether vested or contingent) in real or personal property of any description and includes a thing in action."
Counsel for the liquidator accepted that a transfer of property by a company, after the commencement of the winding up, to a person with a pre-existing beneficial interest in that property is not a disposition of property of the company within the meaning of s. 468. Counsel submitted, however, that the Commonwealth, acting through the Tribunal, had no prior beneficial interest in the funds or assets of UTS, and so, that this principle has no application here. He submitted that the existence of a fixed and floating charge is not an impediment to recovery under s. 468 of property claimed to be subject to that charge at the time of its disposition. He argued that what was paid to the Commonwealth in this case was nonetheless the property of the company within the meaning of s. 468, notwithstanding the equitable interest of the chargee, namely, the banks. The receivers had not appropriated the funds to the banks in satisfaction of the charge. Reliance was placed on the recent judgment of the Full Court of the Supreme Court of South Australia in Sheahan v Air Con Serve Pty Ltd, unreported, 1 August 1995.
Counsel for the Commonwealth submitted that the reference in s. 468 to property that has been disposed of by the company is a reference to property which is beneficially owned by the company, and that it makes no difference that the nature of the interest of a chargee is limited rather than absolute, that is, limited by way of charge. A critical point, counsel argued, is that by reason of the charges that exist in this case in favour of the banks, the banks as chargees have the right of disposition of the funds in question. The fact that the payments were made, not to the chargees themselves, but to the Commonwealth, is irrelevant because the moneys belonged in equity to the chargees. Any distinction that is sought to be drawn on behalf of the liquidator between payments made to the chargee who appointed the receiver and payments made to third parties is not supported either by authority or logic. The rationale of the section is to prevent a company disposing of its property after the commencement of the winding up, being property to which the company, not the chargee, is beneficially entitled.
Counsel for the Commonwealth explored the ramifications that would follow if the argument of counsel for the liquidator were correct. It would mean, it was submitted, that one could not safely deal with a receiver after the commencement of the winding up of a company because, if the liquidator's argument is correct, the power of the receiver to dispose of property the subject of a charge (except by payment directly to the chargee) would cease upon the filing of the winding up summons, assuming that it was followed later by a winding up order.
The status of the receiver of a company after it has been wound up must be examined. The cases, text books and articles are replete with statements that winding up terminates the agency of the receiver, acting under the debenture pursuant to which he was appointed, to bind the company. The proposition has been expressed in various ways, but to much the same effect. In Sowman v David Samuel Trust Limited [1978] 1 WLR 22, [1978] 1 All ER 616 it was held by Goulding J. that winding up deprives the receiver, acting under the debenture, of power to bind the company personally by acting as its agent. It does not, however, affect his power to hold and dispose of the company's property comprised in the debenture, including the power to use the company's name for that purpose, for such power is given by the disposition of the company's property which is made in equity by the debenture itself. To similar effect are statements by Rigby L.J. in Gaskell v Gosling [1896] 1 QB 669 at 699-700, whose dissenting judgment was approved by the House of Lords [1897] AC 575; Romer L.J. in Gough's Garages Limited v Pugsley [1930] 1 KB 615 at 626; the New Zealand case of Newman Bros Limited v Allum SOS Motors Ltd [1934] NZLR 694 per Myers C.J. at 702; Wright J. in Thomas v Todd [1926] 2 KB 511 at 518-519; and American Express International Banking Corporation v Hurley [1985] 3 All ER 564 per Mann J. at 568. See also Kerr on the Law and Practice as to Receivers and Administrators, 17th ed., p. 430; Lightman and Moss, The Law of Receivers of Companies, 2nd ed., para. 11-11; James O'Donovan, "The Interaction of Winding Up and Receivership", 53 ALJ 264; Quaidzoher Adenwala, "Receivers as Agents and Their Duties", Company and Securities Law Journal 1991, vol 9(6), p. 395.
In more recent times this proposition has been refined. In Visboard v Federal Commissioner of Taxation (1943) 68 CLR 354 Williams J. said at 382:
"The compulsory winding up of a company operates as a dismissal of all the company's servants and agents. The company cannot authorize the receiver to do any act which it is unable to do itself, so that it cannot empower the receiver, after the date of the liquidation, to carry on its business so as to create debts provable against the unmortgaged assets of the company (my emphasis) ... ; but the receiver can still continue to exercise his powers in the
name of the company although the company is no longer liable for any debts which he may incur in doing so."
In Re Leslie Homes (Aust) Pty Limited (1984) 8 ACLR 1020 McLelland J. said at 1023 that it did not seem to him to be "entirely accurate" to say that winding up terminates a receiver's agency (if the receiver is appointed before the winding up) or prevents a receiver's agency arising (if the receiver is appointed after the winding up). His Honour said at 1023:
"Rather the agency remains or arises (as the case may be) but the receiver's authority as agent is necessarily limited so as to be consistent with the existence of the winding up. Accordingly the agency subsists for the purpose of the receiver's dealing with property charged by the relevant security, but not (it seems) so as to permit the creation of any pecuniary liability provable against the company in the winding up."
To generally similar effect is a passage in the judgment of Street J. in Re Landmark Corporation Ltd (1968) 88 WN (Pt 1) (NSW) 195 at 196. Compare Re KVE Homes Pty Limited and The Companies Act (1979) 4 ACLR 47 where Needham J. said at 48 that:
"While the cases are not as clear as perhaps they could be(my emphasis) it does seem, on the authority of Gosling v Gaskell [1897] AC 575 and Thomas v Todd [1926] 2 KB 511, that the appointment under a winding up order of a liquidator terminates the power of a receiver to carry on business."
In my opinion, upon the appointment of a receiver (I use this expression to describe a receiver and manager) he takes complete control of the mortgaged property, and the company (the mortgagor), is dispossessed from control of the mortgaged property: Visboard per Williams J. at 382. The receiver is the agent of the company (the mortgagor). But he occupies a special position. He is appointed receiver, and may be removed from office, by the mortgagee. Secured creditors stand outside the winding up and are entitled to realize their securities independently of it.
Most debenture trust deeds contain provisions conferring wide powers upon the receiver for managing the company's business as its agent and for taking possession of, and realizing, its assets for the benefit of the debenture holder. Although the winding up of a company operates as a dismissal of all its servants and agents, the receiver's capacity to act as agent for the company thereafter is limited in that he may not create liabilities provable in the winding up. I agree with McLelland J. in Leslie Homes that it is not "entirely accurate" to say, as it is said in some of the cases, that a winding up terminates a receiver's agency where a receiver is appointed before the winding up, and will prevent a receiver's agency arising if the receiver is appointed after the winding up. I agree with his Honour that the agency remains or arises as the case may be, but the receiver's authority as agent to bind the company is necessarily limited so as to be consistent with the carrying on of the winding up of a company and the appointment of a liquidator. It is the liquidator that has the authority to bind the company, carrying on its business or otherwise entering into transactions, for the benefit of the company's unsecured creditors. It is inconsistent with winding up and the powers of the liquidator that a receiver can act also as the company's agent so as to incur liabilities provable in the winding up. Otherwise the receiver's agency to bind the company continues unimpaired.
The receiver may continue or commence proceedings in the name of the company to enforce choses in action which constitute part of the security under the debenture trust deed pursuant to which he was appointed. The receiver may continue to act as agent for the company with respect to his dealings with property which are subject to the charge, but may not create liabilities provable in the winding up. The receiver's agency is continued notwithstanding the winding up, but not to the extent of inconsistency with the existence of the winding up. Intervention of winding up does not, however, interfere with the receiver's right to take possession of and sell the company's assets subject to the charge (McPherson, The Law of Company Liquidation, 3rd ed., p. 202).
After the winding up of the company, the receiver does not, in a normal case, become an agent for the debenture holder, unless the latter directs or interferes with his activities: American Express and Gosling; also Kerr on the Law and Practice as to Receivers and Administrators, 17th ed., pp. 429-432. In that event the debenture holder is liable as principal for the actions of the receiver, and also as principal liable to indemnify the receiver for loss caused by his negligence, subject to any express term in his appointment to the contrary. In all other cases a receiver can continue, after the winding up of the company, to get in and realize the assets of the company and take proceedings in its name to recover assets provided the assets answer the description of the mortgaged property under the debenture trust deed. He does so as agent for the company and may do so as agent for the mortgagee in circumstances mentioned earlier, namely, he acts as agent for the mortgagee if the mortgagee treats him as such.
With this background, I turn to s. 468 of the Corporations Law. Some of the predecessor sections of s. 468 have been considered in the reported cases, including s. 227 of the Companies Act 1961 (NSW), s. 368(1) of the Companies (NSW) Code 1981 and s. 127 of the Companies Act 1986 (UK). In Re Wiltshire Iron Co; Ex parte Pearson (1868) LR 3 Ch App 443 Lord Cairns said at 446, concerning s. 153 of the Companies Act 1862 (Eng) (which is to the same effect as s. 468) (a passage described by Helsham C.J. in Eq. in Re Margart Pty Limited (in liq); Hamilton v Westpac Banking Corporation (1984) 9 ACLR 269 at 273 as the "locus classicus"):
"This [s. 153] is a wholesome and necessary provision, to prevent, during the period which must elapse before a petition can be heard, the improper alienation and dissipation of the property of a company in extremis."
This passage in Wiltshire from the speech of Lord Cairns was referred to with approval by Dunn J. in Re Pacific Coast Fisheries Pty Limited (1980) 5 ACLR 354 at 355.
The reported cases establish, consistently with Lord Cairns speech, that s. 468 applies only to property in which the company has a beneficial interest and only to the extent of that interest.
Helsham C.J. in Eq. said at 273, after citing the passage from the judgment of Cairns L.J. in Wiltshire:
"What lies behind the section [s. 368 of the Companies (NSW) Code 1981, to the same effect as s. 468 of the Corporations Law] is the prevention of the improper alienation and dissipation of the company's property. I do not believe it was intended to reach out to transactions by which a secured creditor receives assets covered by his security at a time when he was entitled to have them.
To hold otherwise would mean that assets covered by a fixed charge, or their monetary equivalent, could not with impunity be taken by or paid to the person having the benefit of the charge at any time after the commencement of the winding up. Anything done by the company or a receiver to pay the chargee or transfer
assets to the chargee would be void. No bank or other person holding a charge under which moneys had become payable could take payment without the precaution of obtaining what is known as a validating order. I do not believe that s. 368 was intended to operate in that way.
Perhaps this conclusion is only another way of stating that retrieval of property the subject of a charge by a chargee when he is entitled to have it is not to be categorised as a disposition of the property of the company within the meaning of s. 368. If this be so it does not affect the present case; the result is the same."
Helsham C.J. in Eq.'s observations were followed by Williams J. in Re Country Stores Pty Limited [1987] 2 QdR 318 at 326-327 and by White J. in Re Ravi Nominees Pty Limited (1993) 10 ACSR 599 at 604. Compare Sowman [1978] 1 WLR 22 at 27-28; [1978] All ER 616 at 621 per Goulding J.
The proposition that s. 468 applies only to property to which the company has a beneficial interest was accepted by Master Burley in the South Australian case of All Benefit Pty Limited (in liq) v Registrar General (1993) 11 ACSR 578 at 580. In a later decision of Sheahan v Air Con Serve Pty Limited, unreported, 14 November 1994, Master Burley affirmed his earlier view (at p. 10) that a disposition of property for the purposes of s. 468 must be property "of which the company holds the beneficial interest".
The Master's decision was reversed by the Full Court of the Supreme Court of South Australia, but on a different point: Sheahan v Air Con Serve Pty Limited, unreported, 1 August 1995. The Master held that the receiver of TOC Pty Ltd, in making payments to two of its creditors, did not undertake a personal obligation. The Full Court held that the receiver did undertake a personal obligation, and that, because the payments were made in discharge of that personal obligation, they were not, for the purposes of s. 122 of the Bankruptcy Act 1966, payments by TOC Pty Ltd. Sheahan was concerned with the question whether or not the two payments made by the receiver of TOC Pty Ltd constituted "payments" by that company for the purposes of s. 122(1) of the Bankruptcy Act, as incorporated into the Corporations Law by s. 565(1) thereof. Sheahan is authority for the proposition that a payment by a receiver may be a payment by the company for the purposes of s. 122, although the payment is made from funds in the hands of the receiver and subject to the debenture. The question which arises in the present case is a different question, namely, whether such a payment constitutes a "disposition of property" of the company for the purposes of s. 468(1) of the Corporations Law. The Chief Justice (Doyle C.J.), with whose reasons for judgment Duggan and Nyland JJ. agreed, accepted the correctness of Re Margart, but said (at p. 11) that it does not follow from it "that a payment by the receiver to a creditor of the company is not a payment by the company. Any other view would have denied the effectiveness of the security held by the bank". In my opinion it does not
follow from Sheahan that if a payment made by a receiver of a company is a payment by the company, such payment is a "disposition of property" of the company. That is a different question.
See also in support of the proposition that a disposition of property for the purposes of s. 468 must be property "in which the company has a beneficial interest", McPherson, The Law of Company Liquidation, 3rd ed., at 167; and Lightman and Moss, The Law of Receivers of Companies, 2nd ed. at 187.
In my opinion s. 468 is directed to dispositions of property of the company in which it has a beneficial interest and to the extent of that interest.
It would also, as counsel for the Commonwealth contended, correctly in my opinion, lead to odd, if not extraordinary results if this were not the law. It would follow that people could not safely deal with a receiver after the commencement of the winding up of a company. The receiver's power to dispose of property the subject of the charge to third parties would cease upon the filing of the summons to wind up the company, assuming that a winding up order is subsequently made. It would be hollow consolation to the recipient of the funds that he could apply to the Court for an order validating the disposition. A transaction contravening s. 468 is unlikely to be validated by the Court unless it was made in the ordinary course of the carrying on of the company's business or otherwise for the company's benefit: see Lightman and Moss, The Law of Receivers of Companies, 2nd ed., at para. 11-09 (p. 182), and the cases there cited.
Lastly, I turn to the submission of counsel for the liquidator that only dispositions of property made by a receiver to the mortgagee itself stand outside s. 468 and that dispositions of property made by the receiver to third persons, in the course of carrying out his duties as receiver pursuant to the charge, are not outside the scope of the section.
I see no warrant in principle to support this proposition; nor do the decided cases support it. The mere fact that property is disposed of by the receiver directly to the mortgagee rather than to third parties (assuming the receiver is acting validly pursuant to his powers under the charge), cannot have any significance in principle for the purposes of s. 468 of the Corporations Law.
Counsel for the liquidator relied in particular upon Re Margart and Re Ravi. Though the facts in Re Margart related to payments made indirectly to the benefit of the chargee (there was no receiver appointed), the reasoning of Helsham C.J. in Eq. would necessarily in my view extend to a case where the payments were made by a receiver to third parties.
Re Ravi was a case of property transferred to the mortgagee. Again I see nothing in the reasoning of White J. to support the distinction for which counsel for the liquidator contends. Quite the contrary, because reliance was placed by White J. upon a passage from the judgment of Helsham C.J. in Re Margart at 273 to which reference was made earlier and which, notwithstanding the tedium of repetition, I shall cite again:
"What lies behind the section is the prevention of the improper alienation and dissipation of the company's property ..."
How can it conceivably be said that there is some impropriety in the disposition by a receiver of the company's property covered by the charge, and pursuant to the powers conferred upon him by the charge, in discharge of obligations of the company incurred necessarily to protect the company's business (by ensuring the preservation of the television licence), and therefore the interests of the secured creditor?
Counsel for the liquidator relied on Sheahan, but I have already referred to and distinguished it.
Reference was made by counsel for the liquidator to Bayley v National Australia Bank Limited (1995) 16 ACSR 38, a decision of Wright J. of the Supreme Court of Tasmania. That was an entirely different sort of case. In that case the liquidator of the company recovered moneys from creditors of the company as void dispositions made after the commencement of the winding up (s. 468), and in addition, recovered amounts as preferences which were void as against the liquidator. The bank held a floating charge over the company's assets and claimed entitlement to those moneys under the charge. The moneys which were held by the liquidator, resulting from the collection by him of payments void under s. 468 of the Corporations Law, were held to be subject to the charge; but the other moneys were not, on the ground that moneys recovered as preferences were available to the general body of creditors (subject to statutory priorities provided by the Corporations Law), not to the secured creditor. I respectfully agree with his Honour's finding because the purpose of the law of preferences is to restore equity amongst creditors where they have been improperly deprived of moneys by one of their number who has stolen the march on them. It was never intended to entitle secured creditors to lay claim to moneys recovered by the liquidator as preferences.
The Court answers the question which was ordered to be decided separately from any other question in the proceeding as follows:-
Question:
Whether the property disposed of by means of the following payments was property of United Telecasters Sydney Limited (Receivers and Managers Appointed) (In Liquidation) within the meaning of s. 468(1) of the Corporations Law?
DATE PAID AMOUNT
13 June 1991 $ 2,000,000.00
26 June 1991 $ 1,000,000.00
25 July 1991 $ 1,000,000.00
28 August 1991 $ 1,000,000.00
27 September 1991 $ 1,000,000.00
15 October 1991 $18,332,317.77
$24,332,317.77
Answer:
The said payments made by the receivers and managers of United Telecasters Sydney Limited (Receivers and Managers Appointed) (In Liquidation) (UTS) to the Commonwealth of Australia did not constitute dispositions of property of UTS within the meaning of s. 468(1) of the Corporations Law.
The Court orders the applicant to pay the costs of the respondent of the hearing of the separate question.
I certify that this and the preceding twenty-one (21) pages are a true copy of the reasons for judgment herein of the Honourable Justice Lockhart.
Associate
Dated: 29 September 1995
Counsel for the applicant : Mr B Coles QC
Mr J K Chippendall
Solicitors for the applicant: M D Nikolaidis & Co
Counsel for the respondent : Mr R B S MacFarlan QC
Mr J W Stevenson
Solicitors for the respondent : Australian Government Solicitor
Date of Hearing : 29 June 1995
Date of Judgment : 29 September 1995
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