21 In Airservices Australia v Ferrier (1996) 185 CLR 483; [1995] HCA 57, the creditor was a statutory body that provided services to the debtor, Compass, with respect to the terminal and en route navigation, meteorological information, rescue and firefighting. Airservices provided the relevant services and debited Compass's account on the first day of each month for services provided in the preceding month, and with penalties for late payment during the months July to December 1991. The debit balance of the account after 1 August 1991 was in excess of $10 million. Compass went into liquidation on 20 December 1991. Compass made nine payments totalling $10.351 million and Airservices provided services in excess of $19 million and imposed penalties of $719,000 (approximately). The following passages from the majority judgment (with emphasis added), in addition to the passage already quoted, are I think relevant to the present case, and they also highlight the close connection between the Commercial Relationship Point and the Unfair Preference Point:
(1) "If the sole 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 unless the debtor is able to pay all of his or her debts as they fall due. But if the purpose of the payment is to induce the creditor to provide further goods or services as well as to discharge an existing indebtedness, the payment will not be a preference unless the payment exceeds the value of the goods or services acquired. In such a case a court, exercising jurisdiction under s 122 of the Bankruptcy Act, looks to the ultimate effect of the transaction. Whether the payment is or is not a preference has to be 'decided not by considering its immediate effect only but by considering what effect it ultimately produced in fact' [Rees v Bank of New South Wales (1964) 111 CLR 210 at 221-222]." (at 502)
(2) "As a consequence, a payment made during the six month period cannot be viewed in isolation from the general course of dealing between the creditor and the debtor before, during and after that period. Resort must be had to the business purpose and context of the payment to determine whether it gives the creditor a preference over other creditors. To have the effect of giving the creditor a preference, priority or advantage over other creditors, the payment must ultimately result in a decrease in the net value of the assets that are available to meet the competing demands of the other creditors [cf Re Discovery Books (1972) 20 FLR 470 at 475, per Fox J: 'one must ultimately come back to considering whether by reason of the payment, or dealing, there is less money available for the general body of creditors.']." (at 502)
(3) "Thus, a debtor does not prefer a creditor to the other creditors [Richardson (1952) 85 CLR 110 at 133; Queensland Bacon (1966) 115 CLR 266 at 284; Re Weiss [1970] ALR 654 at 658; Re Discovery Books (1972) 20 FLR 470 at 475; M & R Jones Shopfitting Co Pty Ltd (in liq) v National Bank of Australia Ltd (1983) 68 FLR 282 at 289; CSR Ltd v Starkey (1994) 13 ACSR 321 at 325] if he or she pays a debt, or part of it, to induce the creditor to supply goods of equal or greater value than the amount of the payment. In that situation, it is of no relevance that the debt that is discharged happens to be a stale one. [Re Weiss [1970] ALR 654 at 658] If the present value of the goods supplied is equal to or greater than the payment, the other creditors are no worse off. They are in the same position that they would have been in if the parties had so structured the transaction that the debtor paid for the new supply of goods instead of discharging the old debt." (at 502-3)
(4) "The court looks to the business effect of the parties' dealings which almost invariably proceed on the understanding, sometimes express but more often assumed, that the creditor will continue to supply goods or services to the debtor on a credit basis as long as the debtor substantially adheres to their credit arrangements." (at 503)
(5) "If at the end of a series of dealings, the creditor has supplied goods to a greater value than the payments made to it during that period, the general body of creditors are not disadvantaged by the transaction - they may even be better off. The supplying creditor, therefore, has received no preference. [See, for example, CSR Ltd v Starkey (1994) 13 ACSR 321 at 324] Consequently, a debtor does not prefer a creditor merely because it makes irregular payments under an express or tacit arrangement with the creditor that, while the debtor makes payments, the creditor will continue to supply goods. [Re Weiss [1970] ALR 654; CSR Ltd v Starkey (1994) 13 ACSR 321] In such a situation, the court does not regard the individual payments as preferences even though they were unrelated to any specific delivery of goods or services and may ultimately have had the effect of reducing the amount of indebtedness of the debtor at the beginning of the six month period. [Re Weiss [1970] ALR 654 at 659-61] If the effect of the payments is to reduce the initial indebtedness, only the amount of the reduction will be regarded as a preferential payment. [Queensland Bacon (1966) 115 CLR 266 at 291; CSR Ltd v Starkey (1994) 13 ACSR 321 at 325]" (at 503-4)
(6) "Even where payments are expressly made for the purpose of reducing a debt earlier incurred as well as for the purpose of obtaining further goods or services, only the amount representing the reduction of the opening debt for the period will be regarded as a preference. [Rees (1964) 111 CLR 210 at 221, 223]" (at 504)
(7) "Apart from the fact that Airservices was a public authority determining and imposing charges according to a statutory regime, the case was a common one. It was the everyday case of a creditor supplying services to an undercapitalised and illiquid debtor who promised to clear its debt and pay new debts as they fell due, but who got further behind as month followed month. It was the very common situation of a debtor with a running account whose debit balance at the end of the six month period was greater than at the beginning, notwithstanding the making of large payments during that period. If the result of the dealings of Airservices and Compass is looked at from a business viewpoint, it is difficult to see how Airservices obtained any preferential treatment." (at 506)