Australian Kitchen Industries Pty Ltd v Albarran & Anor

and describes a class of "transaction" by reference to classifications set out in ss.588FA, 588FB, 588FC and 588FD. The classification relevant in the present case is that in s.588FA(1): "(1) A transaction is an unfair preference given by a company to a creditor of the company if, and only if: (a) the company and the creditor are parties to the transaction (even if someone else is also a party); and (b) the transaction results in the creditor receiving from the company, in respect of an unsecured debt that the company owes to the creditor, more than the creditor would receive from the company in respect of the debt if the transaction were set aside and the creditor were to prove for the debt in a winding up of the company; even if the transaction is entered into, is given effect to, or is required to be given effect to, because of an order of an Australian court or a direction by an agency." 20 The various references to "transaction" are to be understood in the light of the definition of that term in s.9: " transaction , in Part 5.7B, in relation to a body corporate or Part 5.7 body, means a transaction to which the body is a party, for example (but without limitation): (a) a conveyance, transfer or other disposition by the body of property of the body; and (b) a charge created by the body on property of the body; and (c) a guarantee given by the body; and (d) a payment made by the body; and (e) an obligation incurred by the body; and (f) a release or waiver by the body; and (g) a loan to the body; and includes such a transaction that has been completed or given effect to, or that has terminated." 21 It is relevant next to refer to the nature of the appellate jurisdiction AKI has invoked. Under s.69(2) of the Local Courts (Civil Claims) Act 1970, a party to proceedings under that Act who is "dissatisfied with the judgment or order of the court as being erroneous in point of law" may appeal to this court. Under s.69(3), an appeal lies on a ground involving a question of mixed fact and law but only with the leave of this court. There has been no application for such leave in this case, with the result that AKI can succeed in the present appeal only if the grounds upon which it relies are such as to justify a conclusion that the Magistrate's decision is "erroneous in point of law". The corollary is, of course, that the appeal will not succeed to the extent that the grounds relied upon involve error of fact. 22 The question whether a finding which is, in the particular evidentiary context, "perverse" reflects error of law or error of fact is generally regarded as settled by the observations of Glass JA in Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139. His Honour said (at pp.155-6): "To say of a finding that it is perverse, that it is contrary to the overwhelming weight of the evidence, that it is against the evidence and the weight of the evidence, that it ignores the probative force of the evidence which is all one way or that no reasonable person could have made it, is to say the same thing in different ways. Upon proof that the finding of a jury is vitiated in this way, it will be set aside because it is wrong in fact. Since the Act does not allow this Court to correct errors of fact, any argument that the finding of a Workers' Compensation Commission judge is vitiated in the same way discloses no error of law and will not constitute a valid ground of appeal. It is also pointless to submit that the reasoning by which the court arrived at a finding of fact was demonstrably unsound as this would not amount to an error of law: R v District Court of the Metropolitan District Holden at Sydney; Ex parte White (1966) 116 CLR 644 at 654." 23 The findings attacked in Grounds (d), (e) and (f) set out at paragraph [10] above fall within the province of fact rather than law. The Magistrate took a particular view of the evidence on the matters concerned, including as to questions of credibility going to a choice whether to accept one witness's evidence rather than another's where there was conflict. No matter of law entered into the relevant decisions. It is irrelevant that the evidence may have been misunderstood or did not support a particular finding. The findings referred to in Grounds (a), (b) and (c), by contrast, go to the question whether the facts, as found, were of such a quality or description as to come within the "transaction" concept employed in the relevant sections of the Corporations Act. Given the nature and scope of those provisions, the relevant question goes beyond the mere meaning of an ordinary word, that generally being a question of fact. The relevant principles and therefore those stated by Mason J in Hope v Bathurst City Council (1980) 144 CLR 1 at p.7: "Many authorities can be found to sustain the proposition that the question whether facts fully found fall within the provisions of a statutory enactment properly construed is a question of law. One example is the judgment of Fullagar J in Hayes v Federal Commissioner of Taxation (1956) 96 CLR 47, at p 51, where his Honour quoted the comment of Lord Parker of Waddington in Farmer v Cotton's Trustees [1915] AC 922, at p 932, which was adopted by Latham CJ in Commissioner of Taxation v Miller (1946) 73 CLR 93, at p 97, that where all the material facts are fully found, and the only question is whether the facts are such as to bring the case within the provisions properly construed of some statutory enactment, the question is one of law only. Fullagar J then said (1956) 96 CLR, at p 51 : '... this seems to me to be the only reasonable view. The distinction between the two classes of question is, I think, greatly simplified, if we bear in mind the distinction, so clearly drawn by Wigmore, between the factum probandum (the ultimate fact in issue) and facta probantia (the facts adduced to prove or disprove that ultimate fact). The `facts' referred to by Lord Parker ... are the facta probantia. Where the factum probandum involves a term used in a statute, the question whether the accepted facta probantia establish that factum probandum will generally--so far as I can see, always--be a question of law.'" 24 The relevant concept of "transaction" is, as the definition implies, very broad. Its breadth is illustrated by a number of cases in which a series of steps over a period, involving several parties and not always contractual consequences, have been held to be a "transaction". "Transaction" includes an arrangement giving rise to an estoppel under which one party may not resile from a position. And, as the definition itself makes clear (for example, by referring to a disposition of property), a "transaction" may be unilateral in character. These matters are made clear by the decision of the Full Federal Court in Re Emanuel (No 14) Pty Ltd; Macks v Blacklaw & Shadforth Pty Ltd (1997) 24 ACSR 292 and those of the Court of Appeal in Bartercard Ltd v Wily (2001) 39 ACSR 94 and Somerset Marine Inc v New Cap Reinsurance Corporation [2003] NSWCA 338. 25 Ground (a) referred to in paragraph [10] above proceeds on the basis that the Magistrate erred in finding that it was irrelevant whether or not W&J was involved in any transaction after 10 December 2001. There might be merit in this submission if, in saying what she said (see paragraph [9] above) the Magistrate had been referring to a "transaction" potentially relevant to the claim for relief under s.588FF(1). However, it is clear that she was not. The finding was that the cause of action the liquidator pursued was maintainable even though the evidence did not show that, after 10 or 11 December 2001, W&J was involved in the delivery of kitchens to customers or made any payments to AKI in relation to kitchens or gave any direction as to payment to any of its customers. The subsequent reference (which became the subject of Ground (a)) to the lack of relevance of the question whether W&J was involved in any transaction after 10 December 2001 is no more than a reference to involvement of W&J in deliveries to customers, such deliveries being referred to by the Magistrate as transactions. The finding was that the cause of action was maintainable in the absence of any evidence that W&J was party to any transaction of delivery to customers after 10 or 11 December 2001. Thus understood, the finding cannot be said to be erroneous in point of law. The "transaction" concept upon which the statutory provisions rely was quite capable of being regarded as satisfied despite evidence of that kind. 26 Ground (b) at paragraph [10] above is that the Magistrate erred in finding that it was irrelevant that W&J did not make any payments to AKI. Having regard to the s.9 definition of "transaction", such a finding cannot be erroneous in point of law. It would be erroneous only if payment as such was an indispensable element of "transaction" which, of course, it is not. 27 Ground (c) is that the Magistrate erred in finding that, for the purposes of s.588FA and in the circumstances of the case, it was relevant that AKI supplied W&J's then existing customers with kitchens. This ground cannot be sustained. Supply of kitchens by AKI to W&J's customers was an event capable of contributing to an inference that W&J received a valuable benefit from AKI. It was found at a factual level that AKI, through Mr Hall, told W&J (Mr Jackson) that AKI would only supply outstanding kitchens if W&J allowed AKI to deliver them direct to W&J's customers and to collect the moneys from those customers. It was relevant that AKI supplied kitchens to W&J's customers because that step by AKI represented part of the plan of action AKI had told W&J it would implement, which plan was apparently concurred in by W&J or, at least, allowed by W&J to be pursued in the sense that W&J did not take steps to inform its customers that their payment obligations were to W&J and they should not pay AKI. Steps going to the implementation of that plan are matters relevant to a decision on the "transaction" question central to the operation of the statutory provisions. 28 My overall conclusion, therefore, is that none of Ground (a), Ground (b) and Ground (c) is made out and that none of Ground (d), Ground (e) and Ground (f) is a ground upon which the plaintiff may rely consistently with s.69(2) of the Local Courts Act. 29 This is sufficient to dispose of the appeal but I nevertheless proceed to consider the defendants' notice of contention. The main point made there is that the Magistrate's decision is sustainable on the basis that, according to the course of trade between AKI and W&J, AKI charged against W&J the wholesale price of kitchens ordered by W&J to satisfy its customers' orders and W&J paid that wholesale price to AKI upon W&J's receipt of the retail price charged by it to its relevant customer; that, following the conversation between Mr Hall and Mr Jackson on 10 December, the arrangement between the two companies was varied so that, with the consent of W&J, AKI not only made deliveries direct to W&J's customers to complete existing orders but also received the payments that the customers would otherwise have made to W&J; that it was part of (or a corollary of) that variation that moneys so received by AKI direct from W&J's customers should be reflected, as between AKI and W&J, in a reduction of W&J's pre-existing indebtedness including components for the wholesale prices of the kitchens in question; and that these events and circumstances themselves constituted a "transaction" to which AKI and W&J were parties, being a transaction which had the effect referred to in s.588FA(1)(b). 30 It was submitted on behalf of the liquidator that this analysis breaks down because there was no evidence of a direction by W&J to its customers to make payment to AKI instead of to W&J. But payment, in a direct or conventional sense, is not an essential element of the statutory cause of action available to a liquidator. Having regard to s.588FA(1), there must be a "transaction" to which the creditor and the company are parties and that transaction must have a particular result, namely, that the creditor "receives from the company, in respect of an unsecured debt that the company owes to the creditor, more than …". The Emanuel and Bartercard decisions, in particular, make it clear that the relevant concept of receipt from the company looks beyond payments as such and is concerned with the accruing of value. 31 I am satisfied that the Magistrate could have reached the same conclusion and result in the way outlined above (by reference to the notice of contention), with the agreement reached on 10 December 2001 for W&J to stand back and allow AKI to make delivery to customers from whom W&J held orders and the several things done pursuant to that agreement (including receipt of moneys by AKI from the customers and application of those moneys in reduction of W&J's indebtedness to AKI), taken as a whole, being the relevant "transaction" and the financial advantage accruing to AKI through reduction of the indebtedness of W&J to AKI as the receipt within s.588FA(1)(b). It is particularly pertinent, to my mind, that AKI itself made contemporary representations that it had achieved receipt. This occurred when, in a statutory demand verified by affidavit of Mr Hall sworn on 21 December 2001, AKI claimed a debt of $99,783 after allowing as credits the sums referable to the kitchens delivered direct to, and paid for by, W&J customers. 32 The appeal is dismissed with costs. **********

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