In the matter of Evolvebuilt Pty Limited [2017] NSWSC 901

In the matter of Evolvebuilt Pty Limited [2017] NSWSC 901

The payments made by Built to the first, second, third, fourth and fifth defendants were not unfair preferences because they were made out of Built's assets and not out of any property or legal entitlement of Evolvebuilt, so they were not received from Evolvebuilt within s 588FA(1) or made by Evolvebuilt within s 588FF(1)(a). The payments made directly by Evolvebuilt to Kennico were unfair preferences and voidable transactions, but Kennico established the s 588FG defence because the information known to it indicated no more than a short-term cashflow problem and did not give reasonable grounds to suspect insolvency.

Jurisdiction
Australia
Judgment Date
06 July 2017
Procedural Posture
Originating Process by Liquidators to Recover Alleged Unfair Preferences Under the Corporations Act 2001 (cth) / Principal Judgment After Hearing
Outcome
Judgment for the first, second, third, fourth, fifth and eighth defendants, with costs.
Legal Topics
['unfair Preferences' 'voidable Transactions' 'third Party Payments to Creditors' 'section 588 FG Defence' 'reasonable Grounds to Suspect Insolvency']
['corporations' 'external Administration' 'insolvency'] ['unfair Preferences' 'voidable Transactions' 'third Party Payments to Creditors' 'section 588 FG Defence' 'reasonable Grounds to Suspect Insolvency']

Case Brief

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Procedural Posture

Originating Process by Liquidators to Recover Alleged Unfair Preferences Under the Corporations Act 2001 (cth) / Principal Judgment After Hearing

Legal Issues

  1. 1 ["Whether payments made by Built NSW Pty Limited to secondary subcontractors in respect of Evolvebuilt's debts were payments received from Evolvebuilt for the purposes of s 588FA(1)." 'Whether Evolvebuilt was a party to the relevant transactions involving payments by Built to the defendants other than Kennico.' 'Whether the impugned payments were insolvent transactions and voidable transactions under ss 588FC and 588FE(2).' "Whether the defendants had a defence under s 588FG(2), including whether they had no reasonable grounds to suspect Evolvebuilt's insolvency."]

Ratio Decidendi

The payments made by Built to the first, second, third, fourth and fifth defendants were not unfair preferences because they were made out of Built's assets and not out of any property or legal entitlement of Evolvebuilt, so they were not received from Evolvebuilt within s 588FA(1) or made by Evolvebuilt within s 588FF(1)(a). The payments made directly by Evolvebuilt to Kennico were unfair preferences and voidable transactions, but Kennico established the s 588FG defence because the information known to it indicated no more than a short-term cashflow problem and did not give reasonable grounds to suspect insolvency.

Court Disposition

Judgment for the first, second, third, fourth, fifth and eighth defendants, with costs.

Orders

  • ["There be judgment for the first, second, third, fourth, fifth and eighth defendants on the plaintiffs' claims against them." 'The plaintiffs pay the costs of the first, second, third, fourth, fifth and eighth defendants.']