Re Cummins, T.G. & Ors v. Ex parte Harris, E.G. & Ors [1985] FCA 515

Re Cummins, T.G. & Ors v. Ex parte Harris, E.G. & Ors [1985] FCA 515

All three payments were not made in the ordinary course of business as they involved post-dated and dishonoured cheques, persistent arrears, and collection efforts outside normal dealings, failing the test of forming part of the undistinguished common flow of business, and thus are void as against the trustees under the Bankruptcy Act 1966.

Parties
Debtors: Thomas George Cummins and Jill Imelda Cummins trading as NAM Constructions; Trustees/applicants: Ernest George Harris and Wilson Joseph Wilde; Respondent: A.R.C. Engineering Pty Ltd
Jurisdiction
Australia
Judgment Date
07 October 1985
Procedural Posture
Bankruptcy Application / Application for Declarations and Orders Regarding Voidable Preference Payments
Outcome
Applicants succeed. Three payments are void as unfair preferences under Bankruptcy Act 1966.
Legal Topics
Preferences, Ordinary Course of Business, Good Faith
Bankruptcy Preferences Ordinary Course of Business Good Faith

Case Brief

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Parties

Thomas George Cummins and Jill Imelda Cummins trading as NAM Constructions

Debtors

Ernest George Harris and Wilson Joseph Wilde

Trustees/applicants

A.R.C. Engineering Pty Ltd

Respondent

Procedural Posture

Bankruptcy Application / Application for Declarations and Orders Regarding Voidable Preference Payments

Legal Issues

  1. 1 Whether the three identified payments to the respondent were void as unfair preferences under s.122 of the Bankruptcy Act 1966.
  2. 2 Whether the payments were made in 'good faith and for valuable consideration and in the ordinary course of business' under s.122(2)(a).

Ratio Decidendi

All three payments were not made in the ordinary course of business as they involved post-dated and dishonoured cheques, persistent arrears, and collection efforts outside normal dealings, failing the test of forming part of the undistinguished common flow of business, and thus are void as against the trustees under the Bankruptcy Act 1966.

Court Disposition

Applicants succeed. Three payments are void as unfair preferences under Bankruptcy Act 1966.

Orders

  • Declaration that the payments of $10,901.81 (19 August 1983), $20,000.00 (11 October 1983), and $8,995.51 (9 December 1983) by or on behalf of the debtors to the respondent are void against the applicants as trustees.
  • Respondent to pay to the applicants sums of $10,901.81, $20,000.00, and $8,995.51 within 14 days.