Woodgate v Fawcett - [2008] NSWSC 868

Reported Decision:
67 ACSR 611

New South Wales

Supreme Court

CITATION: Giles Geoffrey Woodgate v Helen Margaret Fawcett [2008] NSWSC 868
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 13, 14 & 15 August 2008

JUDGMENT OF: Hammerschlag J

EX TEMPORE JUDGMENT DATE: 15 August 2008

DECISION: Judgment for the second plaintiff against the defendant in the amount of $45,000.00 together with interest from 15th March 2006 in the sum of $10,522.00.
Judgment for the second plaintiff against the defendant in the amount of $136,500.00 together with interest from 17 November 2006 in the sum of $23,607.00.
Order pursuant to s 588FF(1)(a) that the defendant pay the second plaintiff the amount of $2,593,295.44 together with interest from 17th March 2006 in the sum of $605,066.00.
The order made by the Court on 29th November 2007 extending the operation of Caveats Nos. AC293305 and AC293341 lodged by the second plaintiff over the land in Certificates of Title Folio Identifiers 8/SP2791 and 181/7866 respectively, is vacated.
The defendant is to pay the costs of the plaintiffs of the proceedings including reserved costs, which costs are to be assessed on an indemnity basis from 10th January 2007.

CATCHWORDS: CORPORATIONS – Corporations Act 2001 (Cth) claim for an order under s 588FF(1)(a) that defendant pay to the company amount paid by company to discharge monies owed by her to third party creditor on the basis that transaction was an unfair preference under s 588FA(1) and unreasonable director-related transaction under s 588FDA(1) – insolvency - whether company was insolvent - s 588FG(2) - statutory defence raised but not established

LEGISLATION CITED: Corporations Act 2001 (Cth)
Law Reform (Miscellaneous Provisions) Act 1965 (NSW)

CASES CITED: Re Emanuel (No 14) Pty Ltd (in liq)\
Macks and Anor v Blacklaw & Shadforth Pty Ltd (1997) 24 ACSR 292
Powell v Fryer (2001) 37 ACSR 589
Melbase Corporation Pty Ltd v Segenhoe Ltd (1995) 17 ACSR 187
Noxequin Pty Ltd v Deputy Commissioner of Taxation [2007] NSWSC 87
Sandell v Porter (1966) 115 CLR 666
Expile Pty Ltd v Jabb’s Excavations Pty Ltd
Bank of Australasia v Hall (1907) 4 CLR 1514
Lewis v Doran (2005) 54 ACSR 410
Rosenberg v Percival (2001) 205 CLR 434
Ellis v Wallsend District Hospital (1989) 17 NSWLR 553
Skouloudis v Planet Enterprises (2002) 41 ACSR 369
McDonald v Hanselmann (1998)28 ACSR 49

PARTIES: Giles Geoffrey Woodgate
MGB Chadd Pty Ltd (in liquidation)
Helen Margaret Fawcett
The estate of the late Douglas Richard Fawcett

FILE NUMBER(S): SC 5869/2006

COUNSEL: B.A. Coles QC with J.T. Johnson (Plaintiffs)
R.G. Forster SC with D.M. Loewenstein (Defendants)

SOLICITORS: Sally Nash & Co (Plaintiffs)
Leonard Legal (Defendants)

- 15 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

HAMMERSCHLAG J

15 AUGUST 2008

5869/2006 GILES GEOFFREY WOODGATE -V- HELEN MARGARET FAWCETT

EX TEMPORE JUDGMENT

INTRODUCTION

1 HIS HONOUR: The first plaintiff (“the liquidator”) is the liquidator of the second plaintiff…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2008] NSWSC 868
Decision Date: 15 August 2008

CaseChat Overview and Summary

The case of Woodgate v Fawcett involved a claim brought by the plaintiff, Woodgate, against the defendant, Fawcett, under sections 588FF(1)(a), 588FA(1), and 588FDA(1) of the Corporations Act 2001 (Cth). Woodgate sought an order requiring Fawcett to repay an amount the company had paid to discharge monies owed by Fawcett to a third-party creditor. The plaintiff argued that the transaction constituted an unfair preference and an unreasonable director-related transaction. The case was heard and determined by the Federal Court of Australia.

The central legal issues the court needed to resolve were whether the company was insolvent at the time of the transaction, as defined under section 588FG(2) of the Act, and whether the defendant had successfully raised and substantiated the statutory defence provided by section 588FG(2). These questions were critical to determining whether the transaction could be considered an unfair preference and an unreasonable director-related transaction.

The court examined the evidence presented regarding the company's financial position at the relevant time and considered whether the transaction had the effect of preferring Fawcett over other creditors. The court found that the company was indeed insolvent at the time of the transaction, which satisfied one of the conditions for establishing an unfair preference. The court also determined that the statutory defence raised by the defendant had not been established. Consequently, the transaction was held to be an unfair preference and an unreasonable director-related transaction.

The court ordered Fawcett to repay the amount paid by the company to the third-party creditor, along with interest, as it was found that the transaction was an unfair preference and an unreasonable director-related transaction. This ruling reinforced the importance of adherence to the provisions of the Corporations Act concerning transactions during insolvency.

Orders