There follow five subsections, (2) to (6), all of which begin:
"The transaction is voidable if …"
11 It must follow that if a particular "transaction of the company" is shown to be of the description in any of ss.588FE(2) to (6), that transaction will be available as the basis for the making of an application under s. 588FF by the liquidator. In the present case, the liquidator's case that the payment by New Cap to RRL was a voidable transaction of New Cap will be advanced on the footing that the relevant transaction of New Cap (that is, the transaction consisting of the payment) was an "insolvent transaction", that being one of the kinds of transactions mentioned in ss. 588FE(2) to (6).
12 Section 588FC identifies the several classes of "insolvent transaction" of a company. It does so by means of the phrase "if, and only if", followed by a description of criteria. One criterion is that the transaction is "an unfair preference given by the company". Section 588FA sets out the characteristics that make a transaction "an unfair preference given by a company". The leading determinant is stated in s.588FA(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."
13 I should also set out the s.9 definition of "transaction" which applies for these purposes, all the provisions I have mentioned being within Part 5.7B:
"'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."
14 It is to be emphasised s.588FA(1) defines the circumstances in which a "transaction" is an unfair preference "given by a company". It is that concept that is carried into s.588FC and beyond. Furthermore, it is, under s.588FA(1)(a), an essential element of such a "transaction" that "the company and the creditor are parties to the transaction". To the extent that s.588FA(1)(a) requires the company to be a "party", it repeats or reinforces one of the elements of "transaction" dictated by the applicable s.9 definition of that term. All but one of the examples of "transaction" mentioned in the definition focus upon the act of the company (or, as it is called there, the "body") - paragraphs (a) to (f) all start with an abstract noun followed by "by the body", with a connecting verb in several cases ("created", "given", "made" or "incurred").
15 The subject matter with which the s.588FF(1) jurisdiction is concerned, being a "transaction of the company" of a particular quality, is thus in reality an action of the company to which another person is also a party. It is the effect of the company's action that s. 588FF(1) enables to be counteracted by order of the court.
Territorial aspect of the cause of action
16 I turn now to the process of assigning a cause of action to a territorial location. One context in which the question of the location of a cause of action arises is determination of the jurisdictional limits of inferior courts. The rule adopted there was stated as follows by Brett J in Cooke v Gill (1873) LR 8 CP 107:
"Beyond question the Mayor's Court is a court of inferior jurisdiction. … That being so, independently of the Act, every material fact must have arisen within the jurisdiction to entitle the Mayor's Court to entertain the suit. 'Cause of action' has been held from the earliest time to mean every fact which is material to be proved to entitle the plaintiff to succeed, - every fact which the defendant would have a right to traverse."
17 In the present context involving questions of service of process of a superior court the jurisdiction of which is founded on service without reference to geography, a less comprehensive rule has developed. Jackson v Spittall (1870) LR 5 CP 542 was decided three years before Cooke v Gill by five judges of the Court of Common Pleas, including the three who were to hear Cooke v Gill. The application there was an application under s.18 of the Common Law Procedure Act 1852 to set aside a writ of summons on the ground that the cause of action in proceedings for breach of contract with elements in both England and the Isle of Man did not arise within the jurisdiction of the Court of Common Pleas. Brett J, delivering the judgment of the court, said:
"If the section were expanded, it would read thus:- 'That there is a cause of action which arose within the jurisdiction, or a cause of action in respect of the breach of a contract made within the jurisdiction'. In the second collocation, the phrase, 'cause of action' clearly does not mean the whole cause of action, as contended for on behalf of the defendant. It means the breach of contract, which breach occurs out of the jurisdiction. But, if the phrase 'a cause of action', when applied to the second subsidiary phrase, does not mean the whole cause of action in the sense contended for, can it be properly said to have that sense when applied to the first subsidiary phrase? Can the same phrase have two different meanings? Is not the natural reading rather this, that it means the same thing when applied to both? It is that which in popular meaning, - for many purposes, in legal meaning, - is 'the cause of action', viz. the act on the part of the defendant which gives the plaintiff his cause of complaint. In the first collocation, that is supposed to occur within the jurisdiction, in the second, without the jurisdiction."
18 The expression "cause of action which arose within the jurisdiction" thus came to acquire a particular and different meaning because of the juxtaposition of two provisions of the Act of 1852. It has retained that meaning in provisions derived from the statute construed in Jackson v Spittall. As is pointed out in Agar v Hyde, Part 10 rule 10A is such a provision. In Distillers Co (Biochemicals) Ltd v Thompson [1971] AC 458, an appeal from the Court of Appeal of this court, the Privy Council regarded Jackson v Spittall as having laid down a rule that, for present purposes:
"the cause of action arose within the jurisdiction if the act on the part of the defendant, which gives the plaintiff his cause of complaint has occurred within the jurisdiction".
19 In Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538, Mason CJ, Deane, Dawson and Gaudron JJ summarised the message from Distillers as follows:
"The authority of Jackson v Spittall was expressly affirmed in Distillers . In the latter case Lord Pearson said that '[t]he right approach is … to look back over the series of events … and ask … where in substance did this cause of action arise?' …
The approach formulated in Distillers does no more than lay down an approach by which there is to be ascertained, in a commonsense way, that which is required by Jackson v Spittall , namely, the place of 'the act on the part of the defendant which gives the plaintiff his cause of complaint'. That approach has particular point if, as was the case in Distillers , it is necessary to ascribe a place to an omission for the purpose of determining where, if at all, a tort was committed."
Applying the principles to this case
20 In the present case, RRL contends that the only complaint the plaintiffs can conceivably have against RRL is that it received a payment from New Cap; that the only relevant act on RRL's part was an act of receiving payment; that that act occurred outside New South Wales; and that the Jackson v Spittall test therefore leads to the conclusion that the cause of action the plaintiffs assert did not arise in the State.
21 That contention involves, to my mind, an altogether too simple characterisation of the cause of action. New Cap, as a company, does not assert any complaint against RRL. Nor, for that matter, does the liquidator. This case cannot be compared, in any meaningful way, with the ordinary case in which A says that B failed in the due discharge of some legal duty owed by B to A or invaded some legal or equitable right of A in such a way as to produce a wrong on the part of B actionable at the suit of A. That is the usual context in which territorial attributes of a cause of action arise for consideration, whether the cause of action be in tort or in contract or founded upon some failure to measure up to some equitable standard or to observe the requirements of a statute.
22 Section 588FF makes a "cause of action" available to the liquidator. It does not provide a means whereby the company in liquidation attacks the other party to a transaction previously entered into by the company. The sole effect of the section is to enable the court to make, on the application of the liquidator, a range of orders against other persons in relation to transactions of the company that are voidable because of s. 588FE. A person against whom such an order is made by the court on the application of the liquidator may or may not be a person who was a party to the transaction concerned. This is made clear by s. 588FG which precludes an order materially prejudicing a right or interest of a person other than a party to the transaction if certain things are shown.
23 To the extent that it is sensible to regard any "complaint" of the liquidator as underlying a s. 588FF application, it is, in concept, a complaint on behalf of the company as an embodiment of its creditors' interests about the conduct of those responsible for the company's pre-liquidation activities. To the extent that there is an attack, it is an attack upon the actions of the former administration. To the extent that an objective needs to be identified, it is the objective of obtaining, with the assistance of the statute, financial resources to be applied in meeting the claims of creditors and, as to any surplus, those of members. The liquidator seeks to remedy depletion, not to defeat receipt of whatever it was that the creditor received by virtue of the transaction in question. The paragraphs of s. 588FF(1) under which the liquidator may obtain an order for the payment of money do not contemplate "recovery" in the sense applicable to damages and debts. The court's power is simply a power to direct a person to pay money to the company.
24 Any attack on an undue preference or fraudulent conveyance is always an attack on the giver and the giving, not on the recipient and the receipt.
25 These approaches to the regime in Part 5.7B are consistent with those taken to earlier analogous legislation by Cohen J in Staff Integrated Membranes Pty Lyd v Synflex Industries (International) Inc [1984] 2 NSWLR 116. In that case, a liquidator claimed an order under the Companies (New South Wales) Code for the payment of a sum by a party to which money had been paid before liquidation in a transaction alleged to be voidable by a combination of s. 451 of the Code and s. 122 of the Bankruptcy Act 1966 (Cth). That combination had substantially the same purpose and effect as the aspects of the present Part 5.7B concerned with voidable preferences. The moneys in question represented payment for goods supplied and repayment of advances. They were received by the other party in Canada. In proceedings brought on substantially the same basis as the present motion, the payee's argument was as follows:
"The defendant argues that it is the payment which under the Companies (New South Wales) Code, s. 451, may be declared void, and that it was this payment which produced the cause of action; that payment was only complete when it was received by the defendant in Canada."
26 After setting out the relevant statutory provisions, Cohen J said:
"Thus s 122 is the operative section which, by s 451, is adapted to the acts of a company that goes into liquidation. The later subsections of both of those sections need not be considered for the purpose of this judgment. The result is that the following steps or facts lead to the right of a liquidator to have a payment declared void.
1. A payment is made by the company in favour of the creditor.
2. The company at the time of making the payment is unable to pay its debts as they become due.
3. The effect of the payment is to give to the creditor a preference, priority or advantage over the other creditors of the company.
4. The company is wound up.
These elements are all necessary for proving a cause of action. No one of them constitutes the cause, so that the receipt of the payment cannot be the sole measure for deciding where the cause of action arises. What s 122 is attacking is the transaction of the giving by the company of a preference, priority or advantage followed by its winding up. The effect of the Bankruptcy Act 1924 , s 95, (the predecessor of s 122) was discussed by the High Court in Burns v Stapleton (1959) 102 CLR 97. It was said (at 104):
'It is necessary to observe that s 95(1) avoids, not instruments but certain kinds of changes in the legal situation of the person unable to pay his debts. What the sub-section clearly intends to make void, where it applies, is the change which, if allowed to be effectual, would dislocate the statutory order of priorities amongst creditors. So "every conveyance or transfer of property by any person unable" etc. must refer to every passing of property by some act of his, and not to the means by which this result is brought about; "every charge thereon made by" the person must refer to every creation by him of an interest in property by way of security, and not to what he does in order to create it; "every payment made by" the person refers to every passing by him of the ownership of money, and not to the mechanics of the transaction, "every obligation incurred by" the person refers to every arising of an obligation on his part rather than to the event which its binding upon him; and "every judicial proceeding taken or suffered by" the person refers to every alteration which a step taken by or in a court brings about in a legal relationship between the person and others, and not to the taking of the step.'
In the present case, the dislocation of the statutory order of priorities, if it is established, was brought about by the change effected by the company in causing a payment to be sent to a creditor. Upon the winding up commencing, that change is what is to be avoided. It will be noted that s 122 deals with the acts of the debtor and in the present case those acts were apparently carried out in New South Wales, as was the winding up."