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Jonas and Lanpac International Pty Ltd v Automation House Pty Ltd [1998] VSC 9 | Case summary | Zoe

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Home/Cases/[1998] VSC 9

VICVSC

Jonas and Lanpac International Pty Ltd v Automation House Pty Ltd [1998] VSC 9

[1998] VSC 9

Supreme Court of Victoria|1998-07-30|Before: CHERNOV, J.

View original source

At a glance

Source facts

Court

Supreme Court of Victoria

Decision date

1998-07-30

Before

CHERNOV, J.

Catchwords

Companies - Winding up - Voidable transaction - Insolvent transaction - Unfair preference - Whether COD payment a payment in respect
of an unsecured debt - Whether reasonable person in circumstances of creditor would have no grounds for suspecting insolvency - Onus
of proof - Corporations Law, ss.588FA, 588FC, 588FE, 588FF, 588FG - Bankruptcy Act 1966 (Cth) , s.122.

Source

Original judgment source is linked above.

Catchwords

Companies - Winding up - Voidable transaction - Insolvent transaction - Unfair preference - Whether COD payment a payment in respectof an unsecured debt - Whether reasonable person in circumstances of creditor would have no grounds for suspecting insolvency - Onusof proof - Corporations Law, ss.588FA, 588FC, 588FE, 588FF, 588FG - Bankruptcy Act 1966 (Cth) , s.122.

Judgment (1 paragraphs)

[1]

For the reasons given by me, the liquidator's application will be dismissed.

Parties

Applicant/Plaintiff:

Jonas and Lanpac International Pty Ltd

Respondent/Defendant:

Automation House Pty Ltd [1998] VSC 9

Cases Cited (2)

Fox, J. in Re Discovery Books Pty Ltd (1973) 20 F.L.R. 470, said at p.478, that "it is well accepted that in general a payment for goods supplied at about the time of payment, is not a preference". This is because no relevant benefit is conferred by the payment on the creditor given that goods of at least that value or which have that value to the debtor, are given to the debtor by the creditor. The benefit of the goods inures for the benefit of other creditors. A like conclusion was reached by the High Court in Burns v. Stapleton [1959] HCA 34; (1959) 102 C.L.R. 97, where the debtor, who was unable to pay his debts as they became due out of his own money, owed money to the unsecured creditor. The creditor agreed to lend him further money and sell him some cows on terms, so long as the obligation was secured by a mortgage over real estate. The transaction was completed, but within six months, the estate of the debtor was sequestrated. The trustee sought to have the whole mortgage set aside on the ground that it was a void preference. The court distinguished between the antecedent debt, the security as to which was a preference, and the later transaction resulting in a debt which was also secured. It held that when the loan was made and the cows were delivered, the creditor became instantly secured (as equitable mortgagee) for the balance of the amount. Such security was not a preference because the creditor was not a creditor of the debtor for any part of the new balance. Thus, the security did not secure an antecedent debt and, therefore, did not confer on the creditor a preference. This is to be contrasted with the position as to the earlier debt, in respect of which the creditor received a preference in the form of a security in relation to it.

More recently, in Airservices Australia v. Ferrier (1996) 185 C.L.R. 483, the High Court said that if the objective purpose of the payment is to discharge an existing debt, the effect of the payment is to give the creditor a preference over other creditors. If, on the other hand, the purpose is to induce the creditor to buy further goods and services as well as discharge an existing debt, the payment will not be a preference unless the payment exceeds the value of the goods. If at the end of the series of transactions, the creditor has supplied goods to a greater value than the payments made during that period, the general body of creditors are not disadvantaged by the transaction (which includes the payment) and may be better off. In those circumstances, the supplying creditor has not received a preference. (Similarly, a creditor who receives payment on a running account on the condition that he supplies the debtor with further goods to a value no less than the amount paid, does not thereby receive a preference: see Richardson v. The Commercial Banking Company of Sydney Ltd [1952] HCA 8; (1952) 85 C.L.R. 110, at p.133; Queensland Bacon Pty Ltd v. Rees [1966] HCA 21; (1966) 115 C.L.R. 266; Calzaturificio Zenith Pty Ltd (in liq) v. N.S.W. Leather & Trading Co; Victoria Leather Co Pty Ltd [1970] VicRp 80; [1970] V.R. 605, at p.613.)