BounceLED Pty Ltd v Clear Skies Corp Pty Ltd (in liq) [2023] NSWSC 121

BounceLED Pty Ltd v Clear Skies Corp Pty Ltd (in liq) [2023] NSWSC 121

The Supreme Court set aside the Local Court judgment, holding that BounceLED established the good faith defence under s 588FG(2)(b)(ii) as a reasonable business person in BounceLED's position would not have suspected insolvency having regard to ongoing payments, company activity, and commercial context. The magistrate erred by not properly applying the principles in assessing the objective limb; no further factual findings were required, so judgment was entered in favour of BounceLED.

Parties
Plaintiff: BounceLED Pty Limited ACN 149 737 119; First Defendant: Simon John Thorn (in his capacity as Liquidator of Clear Skies Corp Pty Ltd (in Liquidation) ACN 153 519 736); Second Defendant: Clear Skies Corp Pty Ltd (in Liquidation) ACN 153 519 736
Jurisdiction
Australia
Judgment Date
22 February 2023
Procedural Posture
Civil Appeal / Supreme Court Judgment After Hearing (on Appeal From Local Court)
Outcome
Appeal allowed; Local Court judgment set aside; Statement of Claim dismissed.
Legal Topics
Voidable Transactions, Unfair Preference, Good Faith Defence, Winding Up, Appeals From Local Court
Corporations Law Equity Civil Procedure Voidable Transactions Unfair Preference Good Faith Defence Winding Up Appeals From Local Court

Case Brief

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Parties

BounceLED Pty Limited ACN 149 737 119

Plaintiff

Simon John Thorn (in his capacity as Liquidator of Clear Skies Corp Pty Ltd (in Liquidation) ACN 153 519 736)

First Defendant

Clear Skies Corp Pty Ltd (in Liquidation) ACN 153 519 736

Second Defendant

Procedural Posture

Civil Appeal / Supreme Court Judgment After Hearing (on Appeal From Local Court)

Legal Issues

  1. 1 Whether various payments to BounceLED were unfair preferences under s 588FA of the Corporations Act 2001 (Cth)
  2. 2 Whether payments received by BounceLED were 'from the company' for the purposes of s 588FA(1)(b)
  3. 3 Whether BounceLED received more than it would have in the winding up of the company

Ratio Decidendi

The Supreme Court set aside the Local Court judgment, holding that BounceLED established the good faith defence under s 588FG(2)(b)(ii) as a reasonable business person in BounceLED's position would not have suspected insolvency having regard to ongoing payments, company activity, and commercial context. The magistrate erred by not properly applying the principles in assessing the objective limb; no further factual findings were required, so judgment was entered in favour of BounceLED.

Court Disposition

Appeal allowed; Local Court judgment set aside; Statement of Claim dismissed.

Orders

  • Grant leave to the plaintiff to appeal on ground 7 only pursuant to s 40(1) of the Local Court Act 2007 (NSW).
  • Allow the appeal and set aside the judgment entered and orders made by Thomas LCM on 14 October 2021 in the Local Court.