CID Electrical Services Pty Limited v CNW Pty Limited [2006] NSWLC 17

CID Electrical Services Pty Limited v CNW Pty Limited [2006] NSWLC 17

The Company was insolvent at the time of the Payments, which were made within the relation back period, giving the Defendant a preference over other unsecured creditors. The Defendant failed to discharge the onus under s.588FG(2) to establish a good faith defence, as it did not provide evidence from those with direct involvement. Consequently, judgment is for the Plaintiff for recovery of the payments as voidable transactions under the Corporations Act 2001 (Cth).

Parties
Plaintiff: CID Electrical Services Pty Limited (in Liquidation); Plaintiff: Mark Roufeil (Liquidator of CID Electrical Services Pty Limited); Defendant: CNW Pty Limited
Jurisdiction
Australia
Judgment Date
18 April 2006
Procedural Posture
Civil / Judgment After Hearing
Outcome
Judgment for the Plaintiff
Legal Topics
Liquidator Powers, Insolvent Transactions, Voidable Preferences, Solvency, Creditor Priority
Insolvency Company Law Liquidator Powers Insolvent Transactions Voidable Preferences Solvency Creditor Priority

Case Brief

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Parties

CID Electrical Services Pty Limited (in Liquidation)

Plaintiff

Mark Roufeil (Liquidator of CID Electrical Services Pty Limited)

Plaintiff

CNW Pty Limited

Defendant

Procedural Posture

Civil / Judgment After Hearing

Legal Issues

  1. 1 Whether payments made to CNW Pty Limited were unfair preferences under s.588FA Corporations Act 2001 (Cth)
  2. 2 Whether the company was insolvent at the time of the payments
  3. 3 Whether CNW Pty Limited could rely upon the defence under s.588FG(2) of the Corporations Act 2001 (Cth)

Ratio Decidendi

The Company was insolvent at the time of the Payments, which were made within the relation back period, giving the Defendant a preference over other unsecured creditors. The Defendant failed to discharge the onus under s.588FG(2) to establish a good faith defence, as it did not provide evidence from those with direct involvement. Consequently, judgment is for the Plaintiff for recovery of the payments as voidable transactions under the Corporations Act 2001 (Cth).

Court Disposition

Judgment for the Plaintiff

Orders

  • Judgment for the Plaintiff in the sum of $25,000 together with interest from 2 March 2004 to be calculated by the registry
  • Costs to follow the event, as agreed or assessed. Liberty to apply regarding costs. If not relisted within 28 days, order as to costs to be executed.