Manzi v Smith [1975] HCA 35

Manzi v Smith [1975] HCA 35

Because the only evidence of the alleged preference was the company's internal journal entries, and the appellants were not shown to have known of, agreed to, or adopted those entries, there was no evidence of any payment of $35,859 by the company to or for the appellants or of any acknowledged indebtedness discharged by such payment. The entries merely altered the form of the company's internal accounts and did not alter legal rights. The declarations and orders based on a void preference therefore could not stand.

Jurisdiction
Australia
Procedural Posture
Appeal Concerning a Liquidator's Summons Under S. 293 of the Companies Act WA / High Court of Australia Appeal From Declarations and Orders of the Supreme Court of Western Australia
Outcome
Appeal allowed with costs.
Legal Topics
['preferential Payments' 'payments by Book Entries' "liquidator's Summons" 'mutual Credits, Mutual Debts and Mutual Dealings' 'set Off']
['corporations Law' 'bankruptcy and Insolvency'] ['preferential Payments' 'payments by Book Entries' "liquidator's Summons" 'mutual Credits, Mutual Debts and Mutual Dealings' 'set Off']

Case Brief

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Procedural Posture

Appeal Concerning a Liquidator's Summons Under S. 293 of the Companies Act WA / High Court of Australia Appeal From Declarations and Orders of the Supreme Court of Western Australia

Legal Issues

  1. 1 ["Whether journal entries in the company's books constituted a payment of money by the company to or for the account of the appellants within the meaning of the preference provisions incorporated by s. 293 of the Companies Act WA." "Whether the company's book entries provided evidence against the appellants of indebtedness to the company or payment discharging that indebtedness." 'Whether mutual dealing or set-off principles affected the alleged preference.']

Ratio Decidendi

Because the only evidence of the alleged preference was the company's internal journal entries, and the appellants were not shown to have known of, agreed to, or adopted those entries, there was no evidence of any payment of $35,859 by the company to or for the appellants or of any acknowledged indebtedness discharged by such payment. The entries merely altered the form of the company's internal accounts and did not alter legal rights. The declarations and orders based on a void preference therefore could not stand.

Court Disposition

Appeal allowed with costs.

Orders

  • ['Declarations and orders of the Supreme Court of Western Australia set aside.' "In lieu thereof, the liquidators' summons dismissed with costs."]