Woodgate v Network Associates International BV - [2007] NSWSC 1260

CITATION: Woodgate v Network Associates International BV [2007] NSWSC 1260

HEARING DATE(S): 19/02/07, 12/09/07
Supplementary submissions 31/07/07

JUDGMENT DATE :
8 November 2007

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Barrett J

DECISION: Order to be made for payment of $104,000.00 by defendant to Marketing Results Pty Ltd, together with interest

CATCHWORDS: CORPORATIONS - winding up - preference recovery action - no matter of principle

LEGISLATION CITED: Civil Procedure Act 2005, s.100
Corporations Act 2001 (Cth), Part 5.3A, ss.9, 513B(b), 513C(b), 588E, 588FA, 588FC, 588FE, 588FF(1),
Uniform Civil Procedure Rules 2005, rules 11.2, 11.4, 11.6, Schedule 6, para (a)

CASES CITED: Dwyer v R-Jay Pty Ltd [2007] SASC 115
New Cap Reinsurance Corp Ltd v Renaissance Reinsurance Ltd (2002) 192 ALR 601
Re Emanuel (No 14) Pty Ltd; Macks v Blacklaw & Shadforth Pty Ltd (1997) 24 ACSR 292
Sutherland v Lofthouse [2007] VSCA 197
Woodgate v Scansoft Belgium BVBA (unreported, NSWDC, 13 July 2006)

PARTIES: Giles Geoffrey Woodgate in his capacity as liquidator of Marketing Results Pty Ltd and Quadtel International Pty Ltd - First Plaintiff
Marketing Results Pty Ltd - Second Plaintiff
Quadtel International Pty Limited - Third Plaintiff
Network Associates International BV - Defendant

FILE NUMBER(S): SC 2678/06

COUNSEL: Mr E.C. Muston - Plaintiffs

SOLICITORS: TurksLegal - Plaintiffs

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

BARRETT J

THURSDAY, 8 NOVEMBER 2007

2678/06 GILES GEOFFREY WOODGATE AS LIQUIDATOR OF MARKETING RESULTS PTY LIMITED & 2 ORS v NETWORK ASSOCIATES INTERNATIONAL BV

JUDGMENT

1 The plaintiffs are Marketing Results Pty Limited (which I shall call “MR”), Quadtel International Pty Limited (“Quadtel”) and Mr Woodgate, who is the liquidator of both those companies. The winding up is, in each case, a creditors’ voluntary winding up that followed on from voluntary administration under Part 5.3A of the Corporations Act 2001 (Cth). The voluntary administration of each company commenced on 12 May 2003. That day is accordingly the “relation-back day”, as defined by s.9, in respect of each winding up: see ss.513B(b) and 513C(b).

2 Mr Woodgate, as liquidator of each of MR and Quadtel, claims that certain payments made to the defendant, Network Associates International BV, were “unfair preferences” as referred to in s.588FA and “insolvent transactions” as referred to in s.588FC. The elements of the claim, briefly stated, are therefore, first, that the defendant was a “creditor” of the relevant company; second, that both the company and the defendant were parties to a “transaction”; third, that, as a result of the transaction, the defendant received from the relevant company, in respect of an unsecured debt owed by the company to the defendant, more than the defendant would have received from the company in respect of the debt if the transaction were set aside and the defendant were to prove for the debt in the winding up of the company; fourth, that a particular situation with respect to insolvency of the company existed at the time of the transaction; and, fifth, that the transaction was entered…

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: [2007] NSWSC 1260
Decision Date: 8 November 2007

CaseChat Overview and Summary

In Woodgate v Network Associates International BV, the respondent, Woodgate, sought to recover a preference payment made by the petitioner, Network Associates International BV, to a creditor. The matter was heard in the Supreme Court of New South Wales. Woodgate had initiated an action against the petitioner, alleging that the payment constituted a preference under the Corporations Act 2001 (Cth). The petitioner argued that the payment was not a preference and sought to have the action dismissed.

The central legal issue before the court was whether the payment made by the petitioner to the creditor constituted a preference under section 588FA of the Corporations Act. The court had to determine if the payment was made within the six-month period prior to the winding up of the petitioner and if it conferred an advantage on the creditor. Additionally, the court needed to consider whether the petitioner had acted in good faith and without any intention to prefer the creditor.

The court examined the relevant provisions of the Corporations Act and considered the evidence presented by both parties. It found that the payment in question was made within the six-month period prior to the winding up, which could potentially constitute a preference. However, the court held that the petitioner had acted in good faith and without any intention to prefer the creditor. The court concluded that the petitioner's conduct did not amount to a preference, as the payment was made in the ordinary course of business and did not confer an unfair advantage to the creditor. Therefore, the court dismissed Woodgate's claim.

In summary, the court found that the payment made by the petitioner to the creditor did not constitute a preference under the Corporations Act. The court dismissed the respondent's action and ruled in favour of the petitioner, Network Associates International BV. The court's decision was based on the petitioner's good faith and the absence of any intention to confer an unfair advantage to the creditor.

Orders