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[1979] FCA 8
General information, not legal advice.
Federal Court of Australia
1979-12-19
Sweeney J, Jacobs J
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The applicant having established that each of the payments fell within s.122 and the respondent having failed to discharge the burden laid upon it by sub-sec. (3) of proving that it was a payee in the ordinary course of business, the applacant is, in my opinion, entitled to the declarations and orders sought. It 1s unnecessary to consider the question whether the respondent was a payee in good faith within the meaning of s.122, or the claim of the applicant based upon s.123.
The Court declares that the payment of $15,000 made by the bankrupt to the respondent on 28 September, 1976 and the payment of $5,000 made by the bankrupt to the respondent on 9 October 1976 are void as against the applicant as trustee of the property of the bankrupt and orders that the respondent pay to the applicant the sum of $20,000. It 1s further ordered
that the respondent pay the applicant's costs of and incidental to the application, including reserved costs, such costs to be
taxed 1f not agreed. Liberty 1S reserved to either party to
"The question remains, however, whether the circumstances lead to the inference that the appellant, through Mr O'Neil, had reason to suspect that the company was unable to pay its debts as they became due out of ats own money. Much depends upon the connotation of these last words. If they fall to be applied according to their literal terms then quite clearly the circumstances not only lead to but compel the inference that the appellant had reason to suspect. The company had large debts and no ready money with which to pay them. However, if the words meant that the total of liabilities exceeded the total of assets, the figures placed before Mr O'Neil both in the Dun and Bradstreet report and in the 31 March balance sheet showed a surplus of assets. But the words "unable to pay its debts as they become due from its own money" should not be applied in either of these ways. There is an intermediate application of them which has long been established. I shall not set out once again the passages in the judgments of the court in Bank of Austiakasia v Hal (1907) 4 CLR 1514, per Griffith CJ at 1528 and per Isaacs J at 1543. They are set out in the judgment of Taylor J in Rees v Bank of New South Wades (1964) 111 CLR 210 at 229-30; [1965] ALR 139 at 149-50. I shall set out some passages from the_judgment of Barwick CJ (111 CLR at 218-9; [1965] ALR at 141-2) which I think are particularly apposite to the present case:-
(1907) 4 CLR 1514
(1964) 111 CLR 210
(1966) 115 CLR 266
(1966) 115 CLR 666