Downs Distributing Co Pty Ltd v Associated Blue Star Stores Pty Ltd (In Liq) [1948] HCA 14
The transaction was not in the ordinary course of business; the circumstances objectively gave the defendant reason to suspect insolvency, excluding protection as a purchaser, payee, or encumbrancer in good faith under s.95(2)(b), thus the payment constituted a voidable preference and must be repaid to the liquidator. Ex parte James did not apply to prevent relief.
- Jurisdiction
- Australia
- Procedural Posture
- Appeal / Judgment on Appeal
- Outcome
- appeal dismissed
- Legal Topics
- ['voidable Preference' 'winding Up' 'ordinary Course of Business' 'good Faith' 'onus of Proof']
Case Brief
Summary, issues, holding and outcome
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Procedural Posture
Appeal / Judgment on Appeal
Legal Issues
- 1 ['Whether the transaction between the companies was a voidable preference under s.95 of the Bankruptcy Act 1924-1946 as applied by s.298(1) of the Companies Act 1936-1940 (NSW)' 'Whether the defendant was a purchaser, payee, or encumbrancer in good faith and for valuable consideration in the ordinary course of business' 'Whether the principle in Ex parte James applied so as to prevent the order to repay']
Ratio Decidendi
The transaction was not in the ordinary course of business; the circumstances objectively gave the defendant reason to suspect insolvency, excluding protection as a purchaser, payee, or encumbrancer in good faith under s.95(2)(b), thus the payment constituted a voidable preference and must be repaid to the liquidator. Ex parte James did not apply to prevent relief.
Court Disposition
appeal dismissed
Orders
- ['Appeal dismissed with costs.']
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