Morton as Liquidator of MJ Woodman Electrical Contractors Pty Ltd v Metal Manufactures Pty Limited

• Jurisdiction: Australia Federal only
• Judgment Date: 16 December 2021
• Neutral Citation: [2021] FCAFC 228
• Date: 16 December 2021
• Court: Full Federal Court (Australia)

FEDERAL COURT OF AUSTRALIA

Morton as Liquidator of MJ Woodman Electrical Contractors Pty Ltd v Metal Manufactures Pty Limited [2021] FCAFC 228

File number:	QUD 31 of 2021
Judgment of:	ALLSOP CJ, MIDDLETON AND DERRINGTON JJ
Date of judgment:	16 December 2021
Catchwords:	CORPORATIONS – question reserved for consideration of the Full Court pursuant to s 25(6) of the Federal Court of Australia Act 1976 (Cth) – whether set-off under s 553C(1) of the Corporations Act 2001 (Cth) (Act) available to the defendant against the plaintiff’s claim as liquidator for the recovery of an unfair preference under s 588FA of the Act – effect of a preference, nature of the preference action, and consequences of the success of such an action in Australian insolvency law – nature of mutuality – nature and history of set-off prior to and following the Harmer Report – set-off not available against the recovery of an unfair preference – requisite mutuality not present – right to the recovery of the preference is a right of the liquidator and not the company, in the liquidator’s own right for the benefit of all creditors and the administration of the estate under the terms of the relevant statutory regime
Legislation:	Bankruptcy Act 1924 (Cth) Bankruptcy Act 1966 (Cth) Corporate Law Reform Act 1992 (Cth) Corporations Act 2001 (Cth) Federal Court of Australia Act 1976 (Cth) Federal Court Rules 2011 (Cth) Income Tax Assessment 1936 (Cth) Judiciary Act 1903 (Cth) ; Bankruptcy Act 1883 (UK) Bankruptcy Act 1914 (UK) Companies (Consolidation) Act 1908 (UK) Companies Act 1862 (UK) Companies Act 1948 (UK) Insolvency Act 1986 (UK)
Cases cited:	Airservices Australia v Ferrier [1996] HCA 54; 185 CLR 483 Akers as a joint foreign representative of Saad Investments Company Limited (in Official Liquidation) v Deputy Commissioner of Taxation [2014] FCAFC 57; 223 FCR 57 Burns v Stapleton [1959] HCA 34; 102 CLR 97 Buzzle Operations Pty Ltd (in liq) v Apple Computer Australia Pty Ltd [2011] NSWCA 109; 81 NSWLR 47 Calzaturificio Zenith Pty Ltd (in Liq) v NSW Leather & Trading Co Pty Ltd [1970] VR 605 Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth [2019] HCA 20; 268 CLR 524 Citibank Ltd v Papandony [2002] NSWCA 375 Commissioner of Taxation v Lane [2020] FCAFC 184; 385 ALR 92 Community Development Pty Ltd v Engwirda Construction Company [1969] HCA 47; 120 CLR 455 Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner [2020] FCAFC 192; 282 FCR 1 Cook v Italiano Family Fruit Company Pty Ltd [2010] FCA 1355 190 FCR 474 Day & Dent Constructions v North Australian Properties Pty Ltd (Provisional Liquidator Appointed) [1982] HCA 20; 150 CLR 85 Re Anglo French Cooperative Society; Ex Parte Pelly [1882] 21 Ch D 492 Federal Commissioner of Taxation v Jaques [1956] HCA 40; 95 CLR 223 Federal Commissioner of Taxation v Linter Textiles Australia Limited (In liq) [2005] HCA 20; 220 CLR 592 Flitcroft’s Case [1882] 21 Ch D 519 Foots v Southern Cross Mine Management Pty Ltd [2007] HCA 56; 234 CLR 52 Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher [2014] NSWCA 148; 87 NSWLR 728 Franklin’s Selfserve Pty Ltd v Federal Commissioner of Taxation [1970] HCA 33; 125 CLR 52Wily v St George Partnership Banking Ltd (1998) 84 FCR 423 G & M Aldridge Pty Ltd v Walsh [2001] HCA 27; 203 CLR 662 Gye v McIntyre [1991] HCA 60; 171 CLR 609 Hall v Poolman [2007] NSWSC 1330; 65 ACSR 123 Hicks v Minister [2003] FCA 757 Hiley v People’s Prudential Assurance Co Ltd [1938] HCA 40; 60 CLR 468 In re a Debtor; Ex parte Peak Hill Goldfield Limited [1909] 1 KB 430 In Re Leeds and Hanley Theatres of Varieties Ltd [1902] 2 Ch D 809 In Re Milan Tramways Company (1884) 25 Ch D 587 In re Mouat; Kingston Cotton Mills Co v Mouat [1899] 1 Ch 831 In the Matter of ACN 007 537 000 Pty Ltd (in liq) & Parker [1997] FCA 1264; 80 FCR 1 Jetaway Logistics Pty Ltd (rec & mgrs app’d) (in liq) v Deputy Commissioner of Taxation [2008] VSC 397; 68 ACSR 226 Jones (Liquidator) v Matrix Partners Pty Ltd; in the matter of Killarnee Civil & Concrete Contractors Pty Ltd (in liq) [2018] FCAFC 40; 260 FCR 310 Kuru v New South Wales [2008] HCA 26; 236 CLR 1 N W Robbie & Co Ltd v Witney Warehouse Co Ltd [1963] 1 WLR 1324 NA Kratzmann Pty Ltd (in liq) v Tucker, Liquidator of Reed Murray Developments Qld Pty Ltd (No 2) [1968] HCA 44; 123 CLR 295 NA Kratzmann Pty Ltd (in liq) v Tucker, Liquidator of Reed Murray Developments Qld Pty Ltd (No 1) [1966] HCA 72; 123 CLR 257 National Bank of Australasia Ltd v Mason [1975] HCA 56; 133 CLR 191 Octavo Investments Pty Limited v Knight [1979] HCA 61; 144 CLR 360 Perpetual Trustees Australia Ltd v Heperu Pty Ltd [2009] NSWCA 84; 76 NSWLR 195 Quickfund (Australia) Pty Ltd v Airmark Consolidators Pty Ltd [2014] FCAFC 70; 222 FCR 13 Re A & J Lazzarotto Pty Ltd (unreported) 1977 BC 7700145) Re a Debtor; Ex parte Peak Hill Goldfield Ltd [1909] 1 KB 430 Re Amour (1956) 18 ABC 69 Re Clements (1931) 7 ABC 255 Re Country Stores Pty Ltd (1987) 11 ACLR 385; 5 ACLC 636 Re Discovery Books Pty Ltd (1973) 20 FLR 470 Re Fresjac Pty Ltd (in liq); Campbell v Michael Mount PPB (1995) 65 SASR 334 Re Grezzana (1932) 4 ABC 203 Re Hermann; Ex parte Official Assignee (1916) 16 SR (NSW) 264 Re Kolb; Ex parte England v Commissioners of Taxation (1994) 51 FCR 31 Re Kolb; Ex parte England v Commissioners of Taxation [1994] FCA 359; 51 FCR 31 Re Nortel Companies [2013] UKSC 52; 4 All ER 887 Re Smith (1933) 6 ABC 49 Re Trustee of the Property of O’Halloran [2002] FCA 1305 Re William Hockey Ltd [1962] 1 WLR 555 Re Yagerphone Ltd [1935] 1 Ch 392 Richardson v Commercial Banking Co of Sydney Ltd [1952] HCA 8; 85 CLR 110 Sheahan v Carrier Air Conditioning Pty Ltd [1997] HCA 37; 189 CLR 407 Shirlaw v Lewis (1993) 10 ACSR 288 SJP Formwork (Aust) Pty Ltd (in liq) v Deputy Commissioner of Taxation [2000] NSWSC 604; 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