Recent Cases

Bryant v Badenoch Integrated Logging Pty Ltd [2023] HCA 2 (08 February 2023) (Kiefel CJ, Gageler, Gordon, Edelman, Steward, Gleeson and Jagot JJ)


Catchwords:


Corporations – Winding up ­– Insolvency – Voidable transactions – Unfair preferences – Construction of s 588FA(3) of Corporations Act 2001 (Cth) – Where appellants liquidators of debtor company – Where respondent entered into agreement to supply services to debtor company for harvesting and hauling timber – Where respondent continued to provide services to debtor company despite debtor company’s increasing indebtedness – Where liquidators applied to have series of payments made by debtor company to respondent within six‑month period ending on relation‑back day set aside as unfair preferences – Where liquidators contended that, if “continuing business relationship” existed so as to engage s 588FA(3), liquidators entitled by “peak indebtedness rule” to choose starting date of “single transaction” within relation‑back period to prove existence of unfair preference – Whether “peak indebtedness rule” part of or excluded by s 588FA(3) – Proper approach to construction of element of s 588FA(3)(a) that “transaction is, for commercial purposes, an integral part of a continuing business relationship” – Whether payments engaged s 588FA(3)(a).

Words and phrases – “business character of the transaction”, “continuing business relationship”, “peak indebtedness rule”, “running account principle”, “unfair preference”, “voidable transactions”, “winding up”.