Breaking news: in a big decision, the Liquidators of Evolvebuilt were just now unsuccessful (in part) on their appeal to clawback unfair preferences from third party payments (relying on Re Emanuel, Kassem, Supaproducts cases).
This is a must read case!
The third party payments arose via pressure exerted by the CFMEU on Evolvebuilt’s (“E”) head contractor ‘Built NSW P/L’ (“B”) to pay unpaid subbies (“S”). B agreed to do so.
The Liquidator of E sought orders that the payments by B constituted unfair preferences, as they had the effect of reducing monies payable from B to E and decreasing the liabilities owed by E to S.
This arguably gave S an unfair advantage over other creditors.
At first instance, the court ruled that the third party payments were not ‘transactions from E’ and therefore, were not capable of being an unfair preference.
The Court of Appeal has just now agreed!!
(1) a chain of causation does not assist in establishing that E was party to the transaction;
(2) B was under no contractual obligation to E to make the payments; and
(3) as result, E was not a party to the transaction.
Unfortunately, the court did not need to deal with the question of diminution of assets.
Link to the case https://www.caselaw.nsw.gov.au/decision/5b442367e4b0b9ab4020daa6.