Buckleys Earthmoving Pty Ltd, Re [1993] QSC 60

~ • . .,;c..- '73( OfoO )9~~ State Reporting Bureau ' TRANSCRIPT OF PROCEEDINGS (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau.) SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION RYAN J No 18 of 1992 IN THE MATTER OF THE CORPORATIONS LAW and· IN THE MATTER OF BUCKLEYS EARTHMOVING PTY LTD BRISBANE .. DATE 10/03/93 JUDGMENT 1 RE\'!ScD COPIES ISSUED StstE Fje::''J!iing B~reau -- 1 of 7 -- , .. 100393 kak (Ryan J) HIS HONOUR: I declare that the payment of $26,149.71 on 3 September 1991 and the payment of $14,117.72 on 21 November 1991 by Buckley's Earthmoving Pty Ltd to Merritt & Booth Pty Ltd are void as against the liquidators pursuant to s.565 of the Corportions Law. I order that the respbndent forthwith pay to Buckley's Earthmoving Pty Ltd the sum of $40,267.43 together with interest thereon at 10 per cent for 14 months. That amounts in total to $44,965.30. I order that the respondent pay to the applicants the costs of and incidental to the application to be taxed. I publish my reasons. JUDGMENT 2 10 20 30 40 50 60 -- 2 of 7 -- IN THE SUPREME COURT OF QUEENSLAND No. 1 8 of 1 9 9 2 IN THE MATTER of the Corporations Law - and - IN THE MATTER of BUCKLEYS EARTHMOVING PTY. LTD. A.C.N. 010 720 680 JUDGMENT - RYAN J. Delivered the Tenth day of March, 1993 Counsel: Mr. D. McGill for the Applicant Mr. M. Daubney for the Respondent Solicitors: Andrew Abaza for the Applicant Deacon & Milani for the Respondent Hearing Date: 23 February 1993 -- 3 of 7 -- IN THE SUPREME COURT OF QUEENSLAND No. 18 of 1992 IN THE MATTER Corporations Law - and - of the IN THE MATTER of BUCKLEYS EARTHMOVING PTY. LTD. A.C.N. 010 720 680 JUDGMENT - RYAN J. Delivered the Tenth day of March, 1993 Application has been made by the liquidators of Buckleys Earthmoving Pty. Ltd. (the company) for a declaration that a payment of $26, 149.71 on 3 September 1991 and a payment of $14,117.72 on 21 November 1991 by Buckleys Earthmoving Pty. Ltd. to Merritt & Booth Pty. Ltd. are void as against the liquidators pursuant to s.565 of the Corporations Law, and for an order that the respondent forthwith pay to the company the sum of $40,267.43 together with interest thereon. Application was made for winding up of the company on 9 January 1992. An order that it be wound up was made on 1 0 February 1992. On 21 May 1991 the respondent issued a plaint in the District Court claiming from the company $107,072.82 being the balance of moneys due and owing for work and labour done and -- 4 of 7 -- 2 material supplied pursuant to agreements between the plaintiff and the defendant. The company paid to the respondent the sum of $26,149.71 on 3 September 1991 and $14,117.72 on 21 November 1991. It had agreed in August 1991 to pay the sum of $26,149.71 by 30 August 1991 to avoid summary judgment being entered against it. The sum of $14,117.72 was paid after a notice of demand had been served on the company pursuant to .s.460(2)(a) of the Corporations Law on 31 October 1991. Previous to that, on 25 September 1991, it had been agreed that that amount was owing. It is deposed by a director of the respondent that payment of the $26,149.71 was payment of amounts which had long previously been agreed and acknowledged by the company as due and owing to the respondent. The payment of $14,117.72 represented the amounts of moneys owing out of retention moneys to the respondent. He deposes that between 1987 and 1990 the respondent provided plumbing and drainage services on sub-contracts to the company on various projects undertaken from time to time by the company. In December 1989 the Brisbane manager of the company informed the respondent that it would not be required to perform any further sub-contracts for the company apart from those for which it had already been retained. It appears that work was to commence on the last project in September 1990. He states that it was the practice for the company not to make final payments to the respondent until each project went "off maintenance" under the terms of the contract between the company and the particular head contractor. -- 5 of 7 -- 3 On 28 November 1990 agreement was reached at a meeting of representatives of the company and of the respondent on the amount which the company was liable to pay the respondent in respect of all the outstanding accounts. In April 1991 the respondent instructed its solicitors to institute proceedings against the company to recover amounts outstanding. Though $107,072.82 was claimed, it was admitted by the company in the course of correspondence that $26,149.71 was payable immediately and that $1 6, 552. 69 was payable out of retention moneys. The sum of $14,117.72 represented the amount payable out of retention moneys less retention moneys in respect of a particular project. It appears from this affidavit that the ordinary course of business which had begun in 1987 came to an end in 1990, and that thereafter the only matter between the company and the respondent was the collection of moneys owing. It was submitted for the respondent that merely because an on-going business relationship has been determined a course of business did not come to an end, and that it continued so long as money was outstanding. Reference was made in this regard to Re Lee Furniture Pty. Ltd. (in liq.) (1983) 8 ACLR 251. In that case, Thomas J. expressed disagreement with the view that payments received by a creditor as a result of his solicitors' demands cannot be regarded as payments received by the creditor in the ordinary course of business, and on the appeal D.M. Campbell J. expressed agreement with the conclusion of Thomas J. If the only question in this case was whether payments received as a result of the issue of the District Court plaint -- 6 of 7 -- 4 were made in the ordinary course of business where there was a continuing business relationship, it may be that a positive answer would be justified. On the other hand, the decision of the Full Court inK. & R. Fabrications (Old.) Pty. Ltd. v. M. & B. Riggings Pty. Ltd. (1982) Qd.R. 585 would lead to the conclusion that the sum of $14,267.43 which was paid after the issue of a notice of demand under s.460(2) of the Corporations Act would not be made in the ordinary course of business. But in my opinion it cannot be said that payments made by a debtor after cessation of business relations between parties in response to litigation instituted by the creditor are payments made in the ordinary course of business. They are not, in the words of Rich J. in Downs Distributing Co. Pty. Ltd. v. Associated Blue Star Stores Pty. Ltd. (In Liquidation) (1948) 76 CLR 463 at p. 472, "part of the undistinguished common flow of business done", "part of the ordinary course of business as carried on, calling for no remark and arising out of no special or particular situation". I declare that the payment of $26,149.71 on 3 September 1991 and the payment of $14,117.72 on 21 November 1991 by Buckleys Earthmoving Pty. Ltd. to Merritt & Booth Pty. Ltd. are void as against the liquidators pursuant to s.565 of the Corporations Law. I order that the respondent forthwith pay to Buckleys Earthmoving Pty. Ltd. the sum of $40,267.43 together with interest thereon at 10 per cent for 14 months. That amounts in total to $44,965.30. I order that the respondent pay to the applicants the costs of and incidental to the application to be taxed. -- 7 of 7 --